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Chinese rail capacity hurting coal profits

Steel News - Published on Tue, 10 Apr 2012

Nasdaq reported that US China Mining Group reported solid profits of USD 7 million on USD 54 million in sales today. The Chinese coal mining company brought up concerns about China railway system, however, noting that some sales decisions were based on who could move the coal instead of who could pay the most for it.

Mr Hongwen Li CEO of US China Mining said the company in 2011 produced more, brokered less, and had fewer customers. The tightened capacity for coal transportation by rail was one of the main reasons for our increased efforts in selling more coal extracted from our mines to certain customers who were able to book railway cargoes for delivery during 2011.\"

China has been pursuing an ambitious railway development program, and BCA Research says the nation total track length has increased 50% since 1995. Railway usage is up even more, though with passenger traffic doubling and freight increasing by 150%.

Until recently, railway building has been keeping up with the growing demand. Approvals for new railway projects were reduced in 2011 however then halted completely as concerns rose about railway safety and China\'s overheating economy.

According to JP Morgan, China is now pushing forward with railway developments again, encouraging developers with cash and tax benefits. However it may take some time to get the engine moving.

Source - Nasdaq


Posted By : admin on Tue, 10 Apr 2012
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