International Mining Machinery Holdings Limited Announces Shanxi JV with Shanxi Coal Transportation
HONG KONG, Dec. 8, 2010 /PRNewswire-Asia/ -- International Mining Machinery Holdings Limited ("IMM" or "the Company"; HKEx: 1683), a leading designer and manufacturer of underground longwall coal mining equipment in China, is pleased to announce that IMM has entered an agreement with Shanxi Coal Transportation and Sales Group Co., Ltd. ("Shanxi Coal Transportation") to establish a joint venture to meet the enormous demand for coal mining machinery in the rapidly consolidating coal mining market in Shanxi. This landmark agreement is a significant milestone for IMM, as it lays a solid foundation to add to the Company's already rapid growth.
According to the terms of the agreement, the two parties will set up a joint venture (the "JV"), under the name of Shanxi Meijia Mining Machinery Company Limited, with Shanxi Coal Transportation holding 51% and IMM controlling the remaining 49%. IMM will be responsible for the daily management of the joint venture. With a 50-year term, the joint venture company will be principally engaged in the production, sale and marketing of roadheaders and other mining machinery. The two parties have already signed the joint venture agreement, and the planning stage of production, sales and operations for the joint venture is in full swing. Production is expected to start by the end of 2011.
Pursuant to the JV agreement, the registered capital of the JV company will be RMB69 million, RMB33.81 million of which will be contributed by the Company (through a wholly-owned subsidiary, Jiamusi Machinery) with the remaining RMB35.19 million from Shanxi Coal Transportation through a wholly- owned subsidiary. It is expected that the JV company will invest about RMB83 million as an initial investment. Initially, the JV company will focus on the production and sale of roadheaders and will later include shearers, armoured- face conveyors and other coal mining machinery.
Shanxi Coal Transportation is a large, modernised coal mining and logistics group established by the Shanxi State-owned Assets Management Committee and 11 municipal state-owned assets management committees. Shanxi Coal Transportation is engaged in a wide variety of coal-related businesses, including the sale of coal and coke, coal and coke technology development, the sale of coal chemicals and the production of coal mining machinery. Shanxi Coal Transportation is an industry leader with strong experience in the entire supply chain of coal, from production and sales to transportation-related logistics. Shanxi Coal Transportation, with an annual coal sales volume of about 200 million tons, ranked as the second largest company among China's top 100 coal enterprises in 2009 according to China National Coal Association and is the 85th largest of China's top 500 enterprises in 2010 according to China Enterprise Confederation.
As a leading coal enterprise, Shanxi Coal Transportation has rich management experience and is a significant player in Shanxi's coal mining market. Shanxi Coal Transportation owns 163 modern coal mines sharing the same centralised planning and procurement. It is expected that Shanxi Coal Transportation will be producing more than 100 million tons of coal annually in 3-5 years.
Shanxi is a key coal mining province with annual coal production reaching 615 million tons. The province has an acute demand for coal mining machinery, making it a strategic market with vast development potential. The central government has placed a priority on the coal mine consolidation in Shanxi province in order to lift overall productivity, mine safety and quality of coal produced. In the last quarter of 2009, the monthly coal production in Shanxi reached a record volume of 61.03 million tons. As the industry consolidation continues, hundreds of small and non-mechanised mines will be closed and replaced by much bigger and more modern mines. These new mines will require mining machinery from companies such as the JV company. Moreover, the central government has given top priority to mine safety and the demand for modern coal mining machinery will continue to rise, providing the JV company with ample development opportunities in the Shanxi market.
Mr. Thomas H. Quinn, Chairman of IMM, said, "Shanxi Coal Transportation is a leading coal mining enterprise and we are delighted to partner with such an impressive organisation. Apart from having strong backing from the Shanxi provincial government, it is leading the industry in many ways including a wide scope of businesses and services and an outstanding management track record. We are confident that the joint venture will achieve outstanding results based on the leading industry position of Shanxi Coal Transportation and the progressive and talented management of IMM."
Mr. Kee-Kwan Allen Chan, CEO of IMM, said, "The partnership with Shanxi Coal Transportation is mutually beneficial, and will boost IMM's competitiveness in such a huge market. The ongoing consolidation in the coal mining industry gives rise to huge market opportunities, which the joint venture company will successfully exploit to expand its market share, given its geographical advantage in Shanxi."
About International Mining Machinery Holdings Limited (IMM)
International Mining Machinery Holdings Limited is a leading designer and manufacturer of underground longwall coal mining equipment in China. Three of its products are roadheaders, shearers and armoured-face conveyors. Its end customers include all of the 50 largest coal producers in China, which collectively accounted for approximately 60% of the total coal production in China.
The Company has been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 10 February 2010 (stock code: 1683). On 6 September 2010, IMM became a constituent stock for the Hang Seng Composite Index and its sub-indexes, namely the Hang Seng Composite Industry Index -- Industrial Goods and Hang Seng Composite SmallCap Index.
To learn more about the Company, please visit the Company's website at: http://www.immchina.com
SOURCE International Mining Machinery Holdings Limited