Hengyuan Coal Industry & Electricity Power said its controlling shareholder recently secured a coal exploration right in Shanxi province, but there is no clear plan or timetable for injecting the asset into the listed company.

The controlling shareholder, Anhui Wanbei Coal-Electricity Group, obtained the exploration right for the Sheke block in Lanxian county, Shanxi province, the company said at its 2026 interim results briefing. The block will be integrated with existing mines for joint mining once procedures are completed.

The Sheke block exploration right was listed for transfer earlier this year with a starting price of 1.1 million yuan, a bid increment of 1 million yuan, a bidding deposit of 200 million yuan and an area of 5.25 square kilometers. The proposed transfer period was five years with a transfer yield of 2.4%.

The block has proven resources of about 131 million tonnes and recoverable reserves of about 92 million tonnes, mainly 1/3 coking coal and gas-fat coal.

On March 17, Shanxi Lanxian Changheng Coal & Coke Co., Ltd. won the bid at 5.19 billion yuan, 4,721 times the starting price, marking Shanxi's first successful public transfer of a coal exploration right this year and setting a record premium at the time.

The winner is required to complete exploration within two years, complete the transfer from exploration to mining registration within three to four years, and build the mine to green mining standards.

Changheng Coal & Coke, established in October 2007 in Xiahui village, Sheke township, Luliang city, has registered capital of 220 million yuan. Anhui Wanbei Coal-Electricity Group holds a 51% controlling stake. The company's main business is coal mining and washing, with existing capacity of 1.5 million tonnes per annum (Mtpa).

Wanbei Coal-Electricity Group has said the exploration right will serve as a replacement resource for Changheng Coal & Coke, a subsidiary of the controlling shareholder.

Wanbei Coal-Electricity Group is a state-owned enterprise in Anhui province, with its main business focused on coal mining and related operations. It is also the founding entity of Hengyuan Coal, holding a 54.96% stake, with the Anhui provincial state-owned assets supervision commission as the ultimate controller.

In September 2024, Hengyuan Coal said it planned to bid for a coal exploration right in the Huashuta block in Baode county, Shanxi province, but the bid was unsuccessful.

The western side of the Sheke block is adjacent to Changheng Coal & Coke's existing mine, which covers 3.00 square kilometers with original resources of about 60 million tonnes and recoverable reserves of more than 30 million tonnes.

The Sheke block can form a contiguous mining area with Changheng's existing mine, with combined recoverable reserves exceeding 122 million tonnes, enabling seamless resource integration and effective capacity expansion. Hengyuan Coal has publicly said there may be potential for asset injection in the future.

Hengyuan Coal said it will track the progress of preliminary procedures and resource integration, and will evaluate the feasibility of asset injection after the relevant procedures and integration are completed.