Economic Observer Online
Dec 15, 2011
Translated by Zhu Na
Original Article: [Chinese] 

A new round of mergers for coal mines in Ordos in Inner Mongolia has stepped into a key stage.

The government of the autonomous region has set a goal of consolidating the 280 existing coal mines into 40 larger companies by June 2012, meaning that each of the enlarged mining groups will on average consist of seven companies. If the process goes smoothly, the number of coal mine enterprises in Ordos will be greatly reduced by next June.

Currently, Ordos municipal government has identified eight exisiting mining companies into which to fold the smaller mines. These include Yitai (伊泰), Huineng (汇能), Manshi (满世), Wulan (乌兰), Mengtai (蒙泰) and Tehong (特弘). Each of these companies has been set a target of swallowing up no less than five small coal mining companies. Coal mining enterprises with production capacity of below 300 tons are likely to be pushed out of the market completely.

“Right now all enterprises are in the process of negotiation, but the current prices are too high; we still need to wait”, the head one of the above coal groups told the EO. Currently, the purchasing prices of the mines are too high, so negotiations are at a deadlock. The mining executive wasn't optimistic that the mergers can be completed by the end of next June.

This translation was edited by Nathan Wakelin-King, a Tsinghua University student interning at the EO