Shenhua Group temporarily suspends 2 coal mines in Inner Mongolia
China Shenhua Energy Company Limited, part of the Shenhua Group, has temporarily suspended or reduced coal production at two open-pit coal mines in the Inner Mongolia Autonomous Region, Ha'erwusu and Baorixile, the company announced on August 3. The move could benefit producers across the border in Mongolia, according to Reuters.
The reason given for the temporary suspension of earthwork stripping process was cited as the delay of the land requisition of the open-pit mines.
Shenhua expects after a preliminary forecast, that the temporary suspension and reduction of production at the two open-pit mines will lead to decrease in the volume of self-produced coal, transportation turnover of self-owned railways and sales volume of coal of the company for 2017, and an increase in allocation of unit production cost of coal at the two mines.
Shenhua forecasts a decrease of about 3.08 billion RMB in profit but the suspension is expected to not cause material adverse impacts for the company to achieve its yearly financial target. The company has reportedly been proactively taking responsive measures in this regard to minimize the impact of the temporary producing suspension and reduction at the two mines to the greatest extent.
The delay of earthwork stripping process will also reportedly affect the production plan and operation of the two mines for the next year but the specific influence is still uncertain at this stage.
Currently, the said mine has temporarily suspended coal exploitation and it is estimated to result in a decrease in commercial coal production of about 13 million tons at most for the year 2017, representing 4.5 percent of the commercial coal production of the company of 289.8 million tons for the year 2016.
News outlets such as Reuters and economists predict that the stoppage of production could even add on to the demand that Mongolia has enjoyed due to China’s coal import ban on North Korea.
"It is bullish for Mongolian coal producers," Harris Kupperman, chief executive officer of Mongolia Growth Group and investor in Hong Kong-listed Mongolian Mining Corp told Reuters.