Energy

Strategic consolidation of resources benefits industry

By Xiao Han (China Daily)
Updated: 2010-11-17 16:46

Wirerope workshop in one of Datong Coal's many factories.[Photo/China Daily]

China may have the world's largest coal industry, but it is also the most fragmented. And, consolidating the country's coalmines is imperative, but it is also difficult.

However, Datong Coal has been a major force in the recent move to consolidate.

Before 2008, it acquired 23 small coalmines in three cities in Shanxi.

In 2008, it examined more than 500 mines around the province and took in 129 square kilometers of coalfields, with 2.1 billion tons of coal in all.

Since last year, the group took in 85 collieries in six cities in the province and turned them into 31 larger, more mechanized mines. That move brought 2 billion tons of additional coal reserves and 22.5 million tons a year in additional capacity.

"The consolidation of resources laid a base for a bigger, stronger company," said Wu Yongping, Datong Coal's president.

"This is a strategic project that will benefit the country, the province, the industry and the people. It can drive the regional economy and protect the nation's energy safety," said Wu.

This year, Datong Coal continued its integration effort. By the end of this year, the group will complete its technological improvements at seven mines and add 9.5 million tons of annual capacity.

It wants to do upgrades at 18 mines next year for 20.1 million tons of additional capacity a year.

"We have regular meetings on consolidation work and discuss issues like compensation, takeovers, and technical alteration," said the company's general manager, Zhang Youxi.

The company has had to accommodate the interests of partners, local governments and local people in the consolidation process.

And, cultural integration is one tool that has been successful in taking over small mines. Each mine it acquires is given the same badges, flags, and uniforms of the parent group. They also have to familiarize themselves with the management concepts.

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Since last year, the company has trained 170 production safety managers and 1,500 technicians, then sent them to the newly acquired properties to apply standard operating procedures.

The group also accelerated construction work on new collieries. Three mines, each with an annual capacity of 10 million tons, will be operational by the end of this year.

Last year, the company sold a total of 113 million tons of coal and had revenues of 42.5 billion yuan.

Its production and sales volume in the first nine months of this year already surpassed that of last year, reaching 115 million tons.