Rapid transformation of the coal industry

"Now, this line only runs occasionally. It needs less coal, and it won't earn much money if it is down." Master Hu of the cargo driver said.

Master Hu shuttles coal between Ordos, Inner Mongolia (6.57, -0.07, -1.05%) and multi-site power plants all year round.

“In the past, we were able to answer more than a dozen phone calls a day. The prices are good to talk about. Now that we are not only living, the price has no room for negotiation.” For the current situation of the coal industry in Ordos, Master Hu has learned.

The bleak status of the coal industry affects not only Master Hu’s personal income. Coal companies, even leading companies, are also facing difficulties in survival. At the same time, they have a strong impact on the GDP of provinces and regions where coal is the main industry.

It is understood that with the sharp drop in coal prices, nearly half of coal mines in Ordos have been shut down. The GDP growth rate of Ordos has been directly pulled from the first position in the Inner Mongolia Autonomous Region to the bottom of the list. According to data from the Bureau of Statistics of Ordos, as of the end of May this year, the total fiscal revenue of Ordos City has completed 31.85 billion yuan, a year-on-year decrease of 15.8%.

According to industry sources, the coal industry, as a leading industry driving GDP growth in Inner Mongolia, Shanxi, and other provinces, once occupied half of the local GDP, and led the local GDP growth rate among the forefront of provinces. But now, with the slowdown in coal demand, this situation is undergoing a reversal. For Shanxi Province alone, in the first two months of this year, Fenji Group replaced coal companies for the first time to become Shanxi's most profitable company.

In the past ten years, the average growth rate of the coal industry was nearly 10%, and the highest growth rate was once 18%. However, when the coal industry encounters a “cold wind”, the days of leading coal companies are rather sad, and many coal companies’ profits are almost “lost”.

According to statistics released by the National Bureau of Statistics, the profits of coal enterprises above designated size in the first quarter of this year fell by 40.3% year-on-year, some large enterprise groups suffered losses, and individual enterprises issued wages. According to Wind statistics, A-share listed coal companies achieved a net profit of only 18.3 billion yuan in the first quarter of 2013, a sharp drop of 27% from last year.

At the same time, people in the industry expect that the results of this year's interim report may be even more pessimistic. Up to now, a total of nine listed coal mining companies have announced 2013 interim results announcements, of which 4 have been slightly reduced, 2 have suffered the first loss, 3 have been reduced, and no one has seen a net profit increase. Hengyuan Coal and Power (7.76,0.13,1.70%), Yanzhou Coal (9.41,-0.08,-0.84%), Shanghai Energy (9.73,-0.03,-0.31%) and other companies in the first quarter after the sharp decline in net profit Both of them announced that the net profit of the interim results was significantly reduced.

However, for the leading coal companies, the transition has become a threshold that has to be taken. At present, the transformation of coal companies is mainly focused on the extension of the industrial chain, through the integration of the coal industry chain, infiltrating the relevant business areas, seeking new revenue growth points, reducing the risk of a single business model.

The announcements issued by a number of listed coal companies show that coal companies are extending upstream and downstream to power, coal chemical and other industrial chains. China Coal Energy (4.93,-0.01,-0.20%) subsidiary China National Coal Shaanxi Energy & Chemical Co., Ltd. invested 19.335 billion yuan to build a series of deep processing and comprehensive utilization of methanol acetic acid, starting from a simple coal mining business to explore coal chemical breakthroughs However, Yankuang Group has started to promote the coordinated development of the industrial structure from a single coal industry to coal, coal chemical industry, coal aluminum and electromechanical equipment manufacturing, and the industrial chain will be weak in natural resources such as potash and mineral resources. The expansion of the mineral resources sector; Kailuan Group has begun to set up a fleet to enter the maritime industry, to achieve "road and port" integration, expand the field of logistics.