China Miner May Seek Toronto Potash Listing
Author:Network sources Source:Network sources Date:2013-03-28













                          Yanzhou Chairman Li Weimin, shown in 2010, said most of the company's

                                                      Australian coal will be exported.

Yanzhou, based in eastern China's Shandong province, is seeking to expand internationally and offset slower domestic coal demand. Over the last two years, Chinese companies have become increasingly involved in Canada's energy and raw materials sector. The most prominent example of that involvement was oil company Cnooc Ltd.'s recent $15.1 billion acquisition of Nexen Inc.

In 2011, Yanzhou bought 19 potash mineral exploration permits in Canada's Saskatchewan province for $260 million and initial data suggest they could hold 39.7 billion tons of resources, according to Mr. Li. Potash is used mostly as a fertilizer, but also has a range of industrial uses.

"Preliminary exploration¡­revealed that the area contains plentiful high-grade potash resources, showing that it has promising development prospects," Mr. Li said.

The company, currently listed in New York, Hong Kong, Shanghai and Sydney, is China's third-largest listed coal miner by output. Yanzhou also plans to invest 600 million Australian dollars ($628 million) to boost coal output at its Australian mines to 50 million metric tons by 2017 from 26 million tons last year, Mr. Li said.

"We have set a conservative target to our expansion plan [in Australia]," Mr. Li said. "We see demand in Asia will pick up in two to three years, and high-quality coal from Australian mines can capture the growth," he said.

Mr. Li said most of its Australian coal output will be exported to Asia markets including China, Korea, Japan and Taiwan.

Yanzhou has been investing heavily in Australia since 2004, in an effort to offset stagnant production at its main base in Shandong. It acquired Australia's Felix Resources Ltd. for 3.54 billion Australian dollars in 2009 and listed Yancoal Australia Ltd. on the Australian Securities Exchange last year following its takeover of Gloucester Coal Ltd.

The company's ambitions mirror China's continuing efforts to grow its foreign resources-sector footprint. On Friday, Shenhua Group, China's top coal producer, signed an agreement with Russia's En+ Group and China Development Bank on a $2 billion project to develop coal reserves and associated infrastructure in Eastern Siberia and the Russian Far East.

"We are still open to any acquisitions at the right price," Mr. Li said.

Dragged down by lower coal prices, Yanzhou on Sunday reported a 30% decline in 2012 net profit, to 6.22 billion yuan ($1 billion). Last year, China domestic coal prices fell 22% from 2011 levels, reflecting a dip in China's economic growth.

China's coal output rose 4% to 3.66 billion metric tons last year, slowing from 2011's 8.7% growth.

Shares of Yanzhou Coal in Hong Kong have fallen 16% since the beginning of the year, underperforming the benchmark index's 2% decline. Yanzhou Coal and the Hang Seng Index both fell 23% last year.

Despite efforts by the Chinese government to promote the use of clean energy like natural gas and renewables, coal still accounts for more than two-thirds of China's energy needs.


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