Huaneng on the prowl for assets

08:53, January 05, 2010      

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Electricity producer Huaneng Power International Inc (Huaneng) is spending 8.625 billion yuan to acquire electricity, mining and port assets to expand its geographical coverage.

Beijing-based Huaneng plans to buy power, mining and port operators in Yunnan, Shandong and Fujian provinces from Shandong Electric Power Corp and Shandong Luneng Development Group Co, it said in a statement to the Hong Kong bourse.

The acquisition would help further strengthen the company's position in the power market in Shandong province. It will also help the company to enter the market in Yunnan province, said the statement.

Moreover, the company can improve its portfolio through the acquisition of coal and harbor facilities, said the statement.

After the deal, Huaneng will obtain additional coal-fired generation capacity of 3,300 mW and an additional 716 mW of capacity under construction.

It will also get coal projects with geological reserves of 2.777 billion tons, two harbors with 10 docks and five vessels.

The move to have more coal assets in hand is in line with domestic power companies' strategy to reduce costs. "With a foothold in coal production, the upstream of power generation business, companies can reduce their risks," said Li Chaolin, a coal analyst.

"With more coal mine assets in hand, power companies can also have a stronger say when they bargain with coal producers for prices," he said.

China's major power firms have all quickened their pace in acquiring coal mine assets in northwestern China, especially in Inner Mongolia and Xinjiang Uygur autonomous regions, he said.

Source: China Daily
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