Weighty partners and keen business sense drive revenue
Though at the forefront of the Chinese coal mining industry in terms of per capita output value and per capita income before March 2003, Yongcheng Coal and Electricity Group Co Ltd used to be little known overseas.
That changed completely on March 1, 2003, when the Henan-headquartered company entered into a partnership with Baosteel Group, a leading Chinese steel maker.
The two companies established joint-venture projects, ushering in a close partnership between coal and steel industries in the country, which hit the headlines on many news agencies.
As a regular provider for Baosteel, Yongcheng Coal and Electricity Group began to attract increasing attention for its quality coal.
By 2005, the coal company was working in collaboration with two Fortune Global 500 firms Baosteel and CVRD, a leading international iron ore provider.
Baosteel and CVRD invested nearly 1.3 billion yuan and became new major shareholders of Henan Longyu Energy Resources Co Ltd, a subsidiary of Yongcheng Coal and Electricity Group, holding 12.95 and 25 per cent stakes respectively.
Dubbed a "golden triangle" by insiders, the three companies coal and iron ore providers and a steel maker strengthened their business relations in the industrial chain in this way.
The alliance with the two weighty strategic investors is expected to facilitate the coal maker's expansion abroad, a company source said.
While remaining focused on the coal industry, Yongcheng Group has also extended its business to related fields, such as coal chemicals and thermal power, which have widened channels for international cooperation.
In April 2005, Thailand-based Chia Tai Group signed up to participate in a coal-chemical project initiated by Yongcheng Coal and Electricity Group.
Knowhow from the Chia Tai Group is expected to help lift the added value of coal chemicals, said a senior executive of Yongcheng Coal and Electricity Group. The same year, the coal company signed a strategically cooperative agreement with XJ Group Corporation, a leading Chinese power equipment manufacturer.
Over years of investment in the power industry, the Henan-based coal maker has an installed power-generating capacity of nearly 3 million kilowatts per year, according to data posted on Henan Daily.
Meanwhile, the company is stepping up efforts to build a coal-methanol-olefin industrial chain.
Last year, the company took an active role in restructuring a number of methanol and fertilizer firms and constructed a 500,000-ton methanol project, expected to be put into operation this year.
At the same time, the company has invested heavily in building a comprehensive aluminum industrial chain in Dengfeng in Henan Province.
Recent years have even witnessed Yongcheng Group exploring industries unrelated to coal, including shipping, real estate, rubber and machinery manufacturing.
"Ample capital, managerial expertise and rich human resources are the keys to our expansion," Henan Daily cited Chen Xuefeng, president of the company, as saying.
"We are prudent in choosing investment projects, valuing asset quality and development prospects," he said.
His investment acumen has contributed to the rapid growth of the company.
Yongcheng Group has grown into a leading industrial player in the province within six years, realizing more than 20 billion yuan in sales revenue in 2006.
(China Daily 03/16/2007 page19)
