China’s largest coal company, Shenhua, has announced a series of writedowns to loss-making coal mining, processing, transportation and power assets after suffering “sustained losses” at certain of its operations on the back of lower coal prices.
The company will writedown assets by RMB4.809 billion (US$731 million). Twelve of the company’s coal-fired power plants will record impairment charges, including the Guohua Beijing thermal power plant, which was closed in March 2015 following a decision by the Beijing Municipal Commission of Development and Reform.
Other impairment charges relate to: the Wanli No.1 mine of Shenhua Baotou Energy Co., and associated Shuiquan coal processing plant; the Shenhua Bayannur Energy Co, which owns a coal processing plant, coking plant and methanol plant; Hulunbeier Shenhua Clean Coal Co., which owns a trial project to upgrade low-rank coal; and the Tahan railway.
Separately, Shenhua also noted the decision by the National Development and Reform Commission to reduce on-grid tariffs for coal-fired power plants that are not fitted with what the commission calls “ultra-low emission” technology. Plants that are fitted with this technology will receive tariff support in a bid to promote the use of cleaner coal technologies in the Chinese power sector.
According to Shenhua, this decision will lower the tariffs on power output from its coal-fired power plants by about 8% – further hitting the company’s 2016 operating revenue. Shenhua also warned that “with the intensive reform of the mechanisms for the power industry, there may be relatively considerable differences in the structure of actual power sales volumes of the company in 2016 compared to that of 2015.”
Shenhua operate 13 700 MW that conform to the requirements on ultra-low emission limits with an additional 6610 MW currently underground approval testing. It is also planning to further roll out ultra-low emission technology in its existing fleet, as well as on new-build plants, through 2016.
Edited from various sources by Jonathan Rowland
Read the article online at: https://www.worldcoal.com/coal/09022016/shenhua-announces-asset-writedowns-2016-195/