Kailuan and Beijing Gas to Jointly Form New Coal Chemical Company     

Kailuan Group Co., Ltd. and Beijing Gas Industrial Co., Ltd. have agreed to restructure Tangshan Zhongrun Coal Chemical Company and Tangshan Jiahua Coal Chemical Company. Both sides signed an agreement on August 8th, aiming to create a new company that will become a leading coal chemical company in domestic market.
   Both Tangshan Zhongrun and Tangshan Jiahua are at the Tangshan Seaport Economic Development Zone in Hebei province, being close to each other and sharing the same business coverage and development directive.
   Tangshan Zhongrun, founded in 2006, is a joint venture, its 94.08% stake owned by Kailuan Energy Chemical Co., Ltd.(SH: 600997). Kailuan Energy is 56.73% owned by Kailuan Group. Tangshan Zhongrun's coking project first phase started operation in October 2006 and the methanol plant first phase came on stream in November 2007. And Tangshan Zhongrun began construction on the second phase project, which includes a 2.2 million t/a coking unit, 250 000 t/a methanol unit and a 100 000 t/a benzene hydrogenation project, and is expected to come on stream in the second half of 2009.
   Tangshan Jiahua, jointly funded by Beijing Gas Industrial Co., Ltd., Shougang Group and ThyssenKrupp AG, has a 3.3 million t/a manufacturing capacity for coke at present. It also has advantages in technologies in energy saving and environmental protection.
   Tangshan Zhongrun and Tangshan Jiahua will be restructured into a new company. Part or all of Tangshan Tongbao Coking Co., Ltd. will also be put into the new company. Tangshan Tongbao is 74% owned by Shougang Group. Kailuan Energy will also put its 51% interest in its 300 000 t/a tar processing plant into the new company.
   The new company will focus on the construction of new coal-based chemical projects. Kailuan Energy will take a 51% stake in the new company.
   The restructuring will be completed by the end of the year. By that time, Kailuan Group will have a designed capacity of 6.1 million t/a for coke, 800 000 t/a for methanol, 1 million t/a for tar, 200 000 t/a for benzene hydrogenation, 150 000 t/a for adipic acid and 60 000 t/a for polyoxymethylene in the Tangshan Seaport Economic Development Zone.