Merger of two coal giants in China was approved

Merger of two coal giants in China was approved

It’s reported recently that the merger of Shandong Energy Group and Yankuang Group , two of Shangdong province’s top state-owned coal company, has been approved. This decision will effectively creates a new major company in the world’s top producer and consumer of the fossil fuel.

The combined company, China’s second-largest coal producer after China Energy Investment Corporation (CEIC), will operate under the name Shandong Energy Group.

It is expected to account for close to 7% of the country’s total coal output.

Gewin Ho, a Moody’s vice president and senior credit officer, said that because the combined group will derive most of its businesses from coal mining, its credit profile will remain constrained by significant carbon transition risk and by its exposure to coal-price volatility.

“While support from the Shandong Provincial Government should remain forthcoming, it will be constrained by the predominantly commercial and competitive businesses of the combined group,” Ho said in a July note to investors.

The merger of Yankuang and Shandong Energy comes as China forges ahead with the reform of its stated-owned enterprises. The newly merged company will further increase its competitiveness on the market as it will have a whole industrial chain integrating coal production, coal-fired power plants and coal chemicals, International Energy Agency’s analysts said in July. (more details to visit https://www.mining.com/china-approves-merger-of-two-coal-giants/)