Two major Chinese state-run coal suppliers, China Shenhua Group and China Guodian Corporation, have both suspended stock trading today giving the reason that their respective shareholders are planning a major issue.
According to market sources, the two groups are currently in talks for a major merger deal, following a series of mergers between major state-run enterprises in China in the past two years.
The merger could involve a total of six listed companies and a number of shipping assets under the two groups. Currently Shenhua Group runs a fleet of 33 bulkers through a joint venture with China Shipping Group, and Guodian Group operates a fleet of 15 bulkers through its subsidiary Tianjin Guodian Shipping.
In a recent central government’s conference, The State-owned Assets Supervision and Administration Commission (SASAC) has called to further promote restructuring in the sectors of coal, heavy equipment and steel.
China’s coal industry has been suffering huge overcapacity issues. In May, the central government ordered the vast majority of its provinces to stop permitting new coal power projects. Beijing also aims to cut 800m tonnes of outdated and inefficient coal capacity while adding 500m tonnes of advanced capacity by 2020.