OPPORTUNITIES

The Chinese government has updated and issued its Foreign Investment Industrial Guideline Catalogue. Effective from 1 January 2005, foreign coal players are encouraged to invest through JVs or wholly foreign-owned enterprises in:
· exploration and development of coal and related resources such as coal-bed methane;
· comprehensive development and utilisation of clean coal such as gasified coal, liquefied coal, water-coal, industrial-type coal;
· coal dressing and washing, and comprehensive utilisation of coal ash and coal refuse.

The goal of the mining industry in the longer term is to build new production systems, reduce production costs, and improve safety and the quality of personnel so as to maintain healthy and sustainable development. This will, in particular, offer opportunities for foreign heavy plant manufacturers. There are also opportunities for foreign–made electrical switchgear, monitoring equipment and other ancillary equipment.

The government plans to develop the standardised order for development of coal resources and speed up the construction of 13 more large, modern coal production bases in Shaanxi, Shanxi provinces and other places to replace small ones, and improve productivity and safety.

Generally, China encourages its coal mining companies to choose domestic equipment and technology, however if it is not available and cost is not an issue, importing is justified. Over the past two decades, China has spent billions of US dollars on importing various advanced technologies and equipment for coalmine construction, development, transportation and processing from foreign countries. For instance, Shenhua Group and Yankuang Mining Group Co. Ltd. have spent almost 50 million US dollars on importing equipment

The preferential policy in funding will be used to support the building of large coal production bases. China will also take measures to greatly improve the basic conditions for coalmine safety in order to effectively stem the tendency for fatal accidents. The government is urging the policy-related banks, state-owned commercial banks and stock banks to support coal development projects, which accord with the state industrial policies and markets access requirements.