Datong Coal to Exchange $365 Million Stake for Mine

By Winnie Zhu and Jiang Jianguo

Aug. 11 (Bloomberg) -- Datong Coal Industry Co., a unit of China's second-largest producer of the fuel, plans to transfer a stake worth 2.5 billion yuan ($365 million) to its parent in exchange for a coal mine and processing plant.

The Datong, Shanxi province-based company will give parent Datong Coal Mine Group 120 million shares valued at 22.08 yuan ($3.22) each, it said in a statement to the Shanghai Stock Exchange today.

The state-owned coal producer is acquiring mining assets to expand and gain from energy demand in the world's fastest- growing major economy. Coal prices at Qinghuangdao, the country's biggest port for the fuel, rose 58 percent this year and reached a record $154 a metric ton on May 30.

The transaction will increase the company's coal reserves, expand sales and improve profitability, Datong Coal said in the statement.

The Yanzishan coalmine has an annual capacity of 4.8 million tons and exploitable reserves of 168.4 million tons, it said in the statement. The transaction includes a coal- washing facility.

Datong Coal slumped 10 percent, the daily limit, to 21.39 yuan in Shanghai on resuming trade today after a suspension that started July 15. The decline follows a 14 percent drop in the benchmark CSI 300 Index in the same period amid government efforts to cool inflation.

First-half profit may have tripled because of higher product prices and lower income tax, Datong Coal said last month. Net income was 244.4 million yuan a year earlier.

To contact the reporters on this story: Jiang Jianguo in Shanghai at jjiang@bloomberg.net; Winnie Zhu in Shanghai at wzhu4@bloomberg.net.