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En+ and Shenhua join forces to explore for coal

World Coal,

Razrez Ugol, a joint venture between En+ Group’s subsidiary, Vostsibugol, and the Chinese coal producer, Shenhua Group, has announced the acquisition of a license to explore for coal and develop the Zashulanskoye deposit in the Transbaikal territory, near the Russia-China border.

The company’s bid at the auction for the license amounted to US$ 7.4 million. The Zashulanskoye deposit is estimated to contain 252 million t of high calorie and low sulfur coal.

The joint venture intends to build an open pit mine with a capacity of up to 6 million metric tpa. The coal produced from the mine will be used for electric and thermal power generation in the Transbaikal territory, as well as exports to China.

En+ and Shenhua also plan to build a road approximately 100 km in length, to access the nearest railway station, utility lines, permanent residences for key personnel and social facilities.

The companies are prepared to spend over US$ 902 million in estimated investments, which they believe will create over 1000 jobs. They will also explore the potential to build an underground mine to recover deeper coal.

The joint venture is scheduled to have the exploration completed and approved by the authorities within the next two years in order to confirm the reserve estimate. The mine is expected to begin operations in 2018 and to reach its full capacity in 2021.

Maxim Sokov, deputy CEO of En+, commented: “East of Russia possesses huge coal resources and China is the world’s largest coal consumer, a perfect match. I believe the Zashulanskoye deposit, our pioneer joint project with Shenhua, is the first step of a very long and fruitful strategic partnership which will be beneficial for our companies and countries”.

CEO of Vostsibugol, Evgeny Masternak, added: “The Zashulanskoye deposit development is something we are starting from the scratch. I am confident that Vostsibugol and Shenhua will unite their resources, expertise and competencies to make a breakthrough in coal mining in Russia”.

“The En+ Group partnership is Shenhua’s first coal project in Russia, and it is an important step towards greater Sino-Russia cooperation in coal. Shenhua is well equipped to cooperate with our Russian partner to achieve a relationship that will be of mutual benefit. We will adhere to the highest standards of safety, cost-effectiveness and environmental protection, so that the local community can enjoy a positive working and living environment, and the economic development of the region will prosper,” said Junjie Shao, chairman of Shenhua.

Adapted from press release by Katie Woodward

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