China's second-largest coal producer listed in Hong Kong, the Shandong-based Yanzhou Coal Mining Co Ltd, intends to buy a 95.67 per cent stake in Yankuang Heze Power Chemical Co from its parent company for 584 million yuan (US$70.6 million).

　　The acquisition is expected to wra p up by the end of this year at the latest, the listed coal producer said to the Hong Kong stock exchange yesterday.

　　Heze Power Chemical will be entitled by the government to exploit two coalmines at the Juye Coalfield in Shandong Province.

　　A shareholders' meeting is to be held on August 19 to vote on the deal after the coal producer signed an initial agreement with the Yanzhou Coal Mining Group as early as November 16 last year.

　　Under the terms of the agreement, Yanzhou Coal has already paid its parent company 574 million yuan (US$64.9 million) as an advance payment, and will add the remaining 10 million yuan (US$1.2 million) when the acquisition finalizes by year-end.

　　The deal has yet to win the final nod from pertinent departments of the central government, the announcement said.

　　"The takeover will greatly increase Yanzhou Coal's coal reserves, as well as in the long term advance our profitability if China's economic and market situation remain unchanged," said president Wang Xin.

　　Heze Power Chemical Co, established in 2002 as a joint venture between Yanzhou Coal Mining Group and another two local coal firms in Shandong Province, currently has two coal mines named Zhaolou and Wanfu in the province's only undeveloped Juye Coalfield, which boasts coal reserves of at least 208 million tons.

　　The Zhaolou Mine has already won the central government's approval to start building the infrastructure within the year, and is expected to commence operations from December 2007 to turn over 3 million tons of coal a year.

　　Companies involved are still conducting a feasibility study into the other Wanfu Mine, production capacity of which is unknown, company sources said.

　　Yanzhou Coal said it will have to spend some 1.2 billion yuan (US$145 million) to get the Zhaolou Mine into commercial operation, and at most 1.5 billion yuan (US$181 million) is on its budget for the Wanfu Mine.

　　Yanzhou Coal Mining Group owns 1.67 billion shares of its subsidiary Yanzhou Coal Mining Co Ltd, or 54.33 per cent of its total share capital.

　　The 2006 International CES, the world's largest annual technology tradeshow, runs January 5-8, 2006, in Las Vegas, Nevada.

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