TAIYUAN, China, June 30 /PRNewswire-Asia-FirstCall/ -- Puda Coal, Inc. (NYSE Amex: PUDA), a supplier of high grade metallurgical coking coal used to produce coke for steel manufacturing in China and a consolidator of twelve coal mines in Shanxi Province, today responded to the recent announcement by the National Development and Reform Commission (NDRC) seeking to curb significant hikes in thermal coal prices.
On June 25, 2010, the NDRC issued an announcement to some of China's major coal mining players, stressing the importance of adhering to contract coal prices, with the aim to ease inflation pressure and ensure sufficient supplies of electricity during the summer. According to the Qinhuangdao Coal website, the thermal coal price for 5,000 kilocalories increased 12.8% to $97 per ton in June 2010, as compared to $86 per ton in April 2010. The bidding price for 5,500 kilocalories of thermal coal rose to $112 per ton in June 2010, up 33.3% from $84 per ton for the same period last year.
"We do not anticipate that the recent announcement by the NDRC will have a major impact on Puda Coal, since our well-established coal washing business benefits from solid relationships with long-term customers from the steel industry and, thus far, we have not experienced any significant changes to our coal supply or distribution," commented Mr. Liping Zhu, President and CEO of Puda Coal. "Our coal mine consolidation projects include the Jianhe Project, comprised of coking coal mines, and Pinglu Project, comprised of thermal coal mines. As part of the Pinglu Project, we are in the reconstruction process for the Dawa and Guanyao coal mines and are in negotiations with the owners of the remaining 6 coal mines for the purchase of the coal mining assets. Therefore, we do not expect that this announcement by the NDRC will have any immediate effect on our coal mine consolidation projects, since they remain in the reconstruction or purchase negotiation phases. Further, we believe that the NDRC announcement may prove beneficial to us, since it provides a more reasonable benchmark for the asset assessment of the remaining six Pinglu Project coal mines. In conclusion, we expect that the NDRC announcement will be effective in the short-term to combat the recent hikes in thermal coal prices but over the long-term there will be opportunities for thermal coal pricing to increase as this energy source is critical for China's economic development."
About Puda Coal, Inc.
Puda Coal, through its subsidiaries, supplies premium high grade metallurgical coking coal used to produce coke for steel manufacturing in China. The Company currently possesses 3.5 million metric tons of annual coking coal capacity. The Company has recently moved upstream into coal mining, as a consolidator and acquirer of coal mines in Shanxi Province, including the Pinglu projects and the Jianhe projects. On September 30, 2009, Shanxi Coal, a 90% indirect subsidiary of the Company, was appointed by the Shanxi provincial government as an acquirer and consolidator of eight thermal coal mines located Pinglu County in southern Shanxi Province. Shanxi Coal plans to consolidate the eight coal mines into five, increasing their total annual capacity from approximately 1.6 million to 3.6 million metric tons. Shanxi Coal received another approval by the Shanxi provincial government to consolidate four additional coking coal mines into one coal mine in Huozhou County. After the completion of the consolidation, the Jianhe project is expected to increase the total annual capacity from 720,000 metric tons to 900,000 metric tons, according to the Shanxi provincial government's approval. For more information, please visit http://www.pudacoalinc.com .
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. For example, our ability to acquire and consolidate the target coal mines are subject to, among other things, the risks and uncertainties relating to the market and geological condition, due diligence, negotiation for definitive agreements, etc. which are beyond our control, as well as our management's ability and capacity to execute our coal mine acquisition strategy and manage the coal mine operations. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
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SOURCE Puda Coal, Inc.