Hong Kong-based property development and energy firm Sino Prosper Holdings Ltd yesterday said it would buy 51 per cent of a coal mining company in the north-western Xinjiang Uygur Autonomous Region.

Sino Prosper will pay about HK$480 million (US$61.5 million) to completely buy Sky Gain Development Ltd from Ample Pacific Group Ltd and On Faith Group Ltd, the Hong Kong-listed firm said in a statement to the Hong Kong stock exchange.

Sky Gain holds 51 per cent of Xinjiang Jingxin Mineral Development Co Ltd, a Sino-foreign coal mining venture which has obtained a permit to explore Barkol Kazakh Autonomous County of Xinjiang.

Coal is the primary energy source for China's booming economy so companies are vying to secure stakes in new reserves. Coal supplies 70 per cent of the country's energy needs.

Sino Prosper will buy Sky Gain using shares and cash.

It will hand over shares worth HK$319.97 (US$40 million) and HK$160 million (US$20.5 million) in cash, Sino Prosper said in the statement.

Trading in the company's shares, which was suspended on March 24, resumed yesterday.

The stock was boosted by the purchase announcement yesterday, closing at HK$1.46 (18.7 US cents).

Principally engaged in resources related projects and infrastructure construction, Sino Prosper has been seeking various opportunities to diversify its business portfolio.

"It is the directors' intention to further expand its natural exploitation (energy) business into this enormous market," the company said in the statement.

Coal has been one of the most lucrative businesses in recent years, as prices remain high because of increasing demand.

Wu Chenghou, executive director of the China Coal Sales and Transportation Association, said coal prices were unlikely to drop sharply since no big changes in supply and demand are expected in the near future.

According to statistics from the country's top economic policy planning body, the National Development and Reform Commission, coal reserves in Xinjiang amount to 2.19 trillion tons, 40 per cent of China's total.

Reserves at Sino Prosper's new mine are 100 million tons, the company said.

The resource-abundant region, where a poor transport network has hindered development, is now attracting an increasing number of energy companies.

The nation's biggest coal producer, China Shenhua Group, plans to invest 37.5 billion yuan (US$4.6 billion) by 2011 to build coal mining facilities in Xinjiang. It will build new mines with an annual capacity of 16 million tons.

Other firms, such as Shandong-based Luneng Group Co Ltd and Yanzhou Coal Mining Co Ltd, also want to explore the region.

(China Daily 05/09/2006 page10)