89 coal mines to be closed in Henan are all involved in Pingmei Zhengmei Group

The coal industry continues to eliminate excess capacity. On September 14, Henan Provincial Development and Reform Commission announced the list of coal mines withdrawn from closure in 2016. In this list, 89 coal mines have been withdrawn from production capacity, including 4 under Zhengzhou Coal Industry (Group) Co., Ltd. (hereinafter referred to as Zheng Coal Group) and 5 under China Pingmei Shenma Energy and Chemical Group Co., Ltd. (hereinafter referred to as Pingmei Group).
Among the five coal mines closed by Pingdingshan Coal Group, only the Ningzhuang Well of Liyuan Coal Mine of China Pingdingshan Shenma Energy and Chemical Group Co., Ltd. is directly affiliated to the Group Company, and the other four are owned by Pingdingshan Coal Group's holding subsidiary Pingdingshan Coal Mine Co., Ltd., including Pingdingshan Tian'an No. 3 Coal Mine Co., Ltd. (hereinafter referred to as Pingdingshan No. 3 Coal Mine) and Pingdingshan Tian'an No. 7 Coal Mine Co., Ltd. (hereinafter referred to as Pingdingshan No. 7 Coal Mine), The second well of Chaochuan Coal Mine of Pingdingshan Tian'an Coal Industry Co., Ltd. is its wholly-owned subsidiary, while Pingdingshan Gao'an Coal Industry Co., Ltd. holds 49% of its shares.
The reporter of the Daily Economic News noted that Pingmei had announced in April this year that it would transfer 100% of the shares of some subsidiaries to Pingmei Group, the controlling shareholder, and the second target was Pingmei No.3 Mine and Pingmei No.7 Mine mentioned in the above list.
According to the asset appraisal results published by Pingmei, the appraisal value of Pingmei No.3 Coal Mine is RMB 1000059000, including the appraisal value of mining right of RMB 8303400, the appraisal value of Pingmei No.7 Coal Mine of RMB 384090500, including the appraisal value of mining right of RMB 28834700. Based on the total appraisal value of 484925200 yuan of other objects of the transfer, the final appraisal value and transfer price of all the object assets are 775700 yuan.
It is worth noting that Pingdingshan Coal Co., Ltd. has announced that Pingdingshan No.3 Coal Mine withdrew from its production capacity in an environment of overcapacity, in order to get rid of difficulties and turn around losses, so as to "stop production and maintain the mine". After Pingdingshan No.3 Coal Mine stopped production in April this year, the company plans to resume production after the coal situation improves. At the same time, during the sale of Pingdingshan Coal Mine No. 3 and Pingdingshan Coal Mine No. 7, Pingdingshan Coal Mine Co., Ltd., the appraisal conclusion of its mining right was based on the designed resource utilization plan, without considering the possible impact of the future mining and disposal plan of mineral resources on the appraisal conclusion. The reporter noted that in the plan of Henan Province to resolve overcapacity in the coal industry, it was disclosed that no new coal production capacity will be added within three years from 2016.
On the basis of the huge net profit loss of 2.14 billion yuan last year, Pingmei realized a net profit of 92.7 million yuan in the first half of this year. The company said that it mainly sold the assets and liabilities of Pingdingshan No.3 Coal Mine and Pingdingshan No.7 Coal Mine, reducing the source of losses. According to the published financial data, Pingdingshan No.3 Coal Mine lost 165 million yuan in 2016 alone, while Pingdingshan No.7 Coal Mine lost 66.71 million yuan.