China Coal Energy is expected to raise as much as HK$13 billion (US$1.7 billion) through its Hong Kong initial public offering (IPO), the company said yesterday.

 

In addition, the institutional tranche of the mainland's second-largest coal miner's IPO has been oversubscribed, sources said.

 

"Ninety percent of the raised proceeds will be invested in future mines' construction and repayment of bank loans and the remaining 10 percent will be used as working capital," said China Coal Energy's Chairman Jing Tianliang.

 

"A majority of the raised proceeds will be invested in the construction of new open pit mines and underground mines especially in Pingshuo Mining Area," Jing said.

 

Jing's remarks came yesterday as the Beijing-based coal giant formally unveiled its public offering details in Hong Kong.

 

The company is selling about 3.25 billion H shares at a range of HK$3.2 (41 US cents) and HK$4.05 (52 US cents), with 95 percent of them earmarked for institutional investors and the remaining 5 percent offered to the public.

 

Its public offering begins today and will close next Monday before the formal trading of its shares on December 19 under the trade number 1898.

 

"China Coal Energy should do fine in Hong Kong given that local investors' passion for coal stocks remains high," said Fulbright Securities General Manager Francis Lun.

 

China Coal Energy is the third mainland coal producer seeking a listing in Hong Kong after Yanzhou Coal and Shenhua Energy, both of which had attracted a great deal of interest from local investors.

 

"Good market performance of Yanzhou and Shenhua has provided a very comfortable cushion to China Coal Energy's listing," said Phillip Asset Management's Director Louise Wong.

 

Jing felt upbeat about his company's future development, saying "positive factors such as stable coal price and abundant resources of the company" would help ensure healthy growth of China Coal Energy.

 

"China's demand for coal as a whole will remain strong in 2007," Jing said. "We believe China's coal price will keep running at a high level and there is still room for the price to grow further."

 

(China Daily December 6, 2006)