Hello, everyone. Thank you very much for coming to the interim meeting. So now let me give you a disclaimer. We are going to present to the investors. Please take precaution. There will be a Q&A session after this meeting. Thank you. Distinguished investors and analysts, good afternoon, everyone. My name is Jiang Qun , Secretary of the Board of Directors of China Coal. Welcome to this briefing, and sincerely thank you for your long-term care and support for the company. Now, I would like to talk to you about China Coal's performance in the first half of 2024, the completion of the key tasks, and the main work arrangements for the second half of the year.
The following figures I'm going to quote are calculated in accordance with the Chinese Business Accounting Standards, unless otherwise stated. In the first half, China Coal resolutely implemented the decisions by the CPC Central Committee and the State Council, focused on high quality development, practiced the philosophy of efficiency improvement for existing business and transition for new business, and steadily pushed forward our operations. According to Chinese Business Accounting Standards, operating revenue was CNY 92.98 billion, down by 15% year-over-year. Operating cost was 68.79 billion RMB, down by 16.7% year-over-year. Overall selling price of self-produced commercial coal was 584 RMB per ton, down 6.4% year-over-year.
The unit cost of sales of self-produced commercial coal was 292.9 per ton, CNY 2.7% up. And total profit was 16.72 billion CNY, down 17%. Net profit attributable to China Coal shareholders was 9.79 billion CNY, down 17.3% year-over-year. Basic earnings per share was CNY 0.74, down 16.9% year-over-year. According to IFRS, revenue was 92.98 billion CNY, a year-over-year decrease of 16%. Cost was 71.63 billion CNY, a year-over-year decrease of 16.1%. The unit cost of sales of self-produced commercial coal was 332.3 per ton, a year-over-year increase of 2.4%.
Pre-tax profit was RMB 17.98 billion, year-over-year decrease of 15.1%, and the profit attributable to shareholders was RMB 10.7 billion, year-over-year decrease of 16%. Basic earnings per share was RMB 0.81, down 15.6% year-over-year. We scientifically organized the production and sales, and orderly unlocked advanced the coal production capacity. In the first half of the year, the company continued to unlock high quality production capacity, increased the supply of high quality coal, and ensured the supply of coal energy. We leveraged the increasing capacity of high quality capacity mines, such as Dahaize Coal Mine and the East Open Pit Coal Mine, while maintained and strengthened the production succession of other mines in an effort to stabilize output.
Raw coal productivity was at 34.7 tons per worker, which is leading in the industry. As of the end of the track record period, the company had accumulated cumulatively 13 coal mines pass the intelligent acceptance and has built 66 intelligent coal mining phases and 43 intelligent tunneling phases, and coal mine safety and security and high efficiency production capacity continued to improve. In the first half, the company completed the production of 66.5 million tons of commercial coal, basically flat year-over-year. In the first half, the company thoroughly implemented the national decision to secure energy supply, strengthened production and the sales synergies, enhanced the management of medium and long-term contracts for thermal coal, and made every effort to maintain supply and stabilize prices.
The company stepped up its business development, actively adjusted marketing strategy, optimized resource flow and investments, accurately understood market trends to effectively respond to the downstream downward pressure of the market rather than stabilize and increase sales. In the first half of the year, the sale of commercial coal was at 133 million tons, a year-over-year decrease of 8.9%. The sales of self-produced commercial coal was 66.19 million tons, a year-over-year increase of 2.1%. The main in terms of our coal chemicals business, we achieved safe, stable, long-term at capacity and optimal. We had at the output of main coal chemicals was two, it was, 2.927 million tons, a year-over-year decrease of 2.5%.
The sales of major coal chemicals was 3.3 million tons, down 4% year-over-year. We strengthened lean management and took multiple measures to optimize costs. In the first half, the company incurred operating cost of 68.79 billion yuan, a year-over-year decrease of 13.8 billion yuan, down 16.7%. Each enterprise continued to strengthen production and operating management. The self-produced commercial coal unit cost of sales was 292 yuan per ton, an increase of 7.71 yuan per ton. But 14.13 yuan per ton less than the average level of 2023.
Particularly, the unit cost of sales was 5,866 CNY per ton, a year-over-year decrease of 218 CNY per ton. The company continued to optimize its debt structure. Total interest-paying debt was 69.15 billion CNY, a net decrease of 3.55 billion CNY from the beginning of the year. Financial expenses decreased by 298 million CNY year-over-year. The overall cost of funds was 3.11%, down 14 basis points from the beginning of the year. We strengthened marketing and management and prices of our main products tracked the main market fluctuations.
In the first half of the year, the average selling price of self-produced commercial coal was CNY 584 per ton, a year-over-year decrease of CNY 40 per ton, and the 6.4% negative. The sales price of thermal coal was at CNY 511 per ton, a year-over-year decrease of CNY 37 per ton, or 6.8%, down. The sales price of coking coal was CNY 1,371 per ton, a year-over-year decrease of CNY 41 per ton, down by 2.9%, and the sales price of the proprietary coal trading was CNY 603 per ton, a year-over-year decrease of CNY 89 per ton, down 12.9%.
(Uncertain) sales price was 6,955 per ton, increased by 52 RMB per ton, and up by 0.8% year-over-year. The polyethylene sales price was 7,287 RMB per ton, an increase of 131 RMB per ton, up 1.8%. The polypropylene sales price was 6,600 RMB per ton, year-over-year decrease of 40 RMB per ton, 0.6%. Urea sales price was 2,167 RMB per ton, year-over-year decrease of 317 RMB per ton, down 12.8%.
Methanol sales 1,773 RMB per ton, an increase of 83 RMB per ton, up 0.2% year-over-year. Ammonium nitrate sales price was 2,178 per ton, a year-over-year decrease of 236 RMB per ton, down 9.8%. Now let's talk about the profit drivers. The main coal chemical enterprises increased profit by 553 million yuan, increasing sales of self-produced commercial coal brought 462 million yuan in profits. Financial costs is decreased by 298 million yuan, rather. The financial business brought in 88 million yuan of profits.
Our finance company realized the profits of CNY 709 million, an increase of CNY 88 million year-over-year, thanks to shrewd fund management. The major reducing factors are self-produced commercial coal prices fell by CNY 2.66 billion. Second, investment income decreased by CNY 767 million. Third, the increase in unit cost of sales of self-produced commercial coal reduced profits by CNY 677 million. Four, the provision of assets impairment grew by CNY 248 million, and the power generation and heating business reduced profit by CNY 193 million. The admin expenses grew by CNY 179 million. In 2024, our main CapEx was CNY 16 billion.
CNY 5.3 billion was spent so far. We have the Antaibao project, which is about to deliver dual commissioning. The construction of the 100 megawatts agricultural photovoltaic PV complementary project in Pingshuo, and the subsequent 260 megawatt PV project is accelerating. The Wushen Banner 2x 660 megawatts integrated coal power project is being promoted with high quality. Shaanxi Yulin Coal Chemical Phase two is under construction, and the Tuke 100,000-ton Liquid Sunshine demonstration project is being implemented at a faster pace. Phase one of Shanghai Energy new energy demonstration base, a 263 megawatts project has been put into operation and achieved sound economics, and Phase two has entered the accelerated construction phase.
The construction of China Coal Huajin Libi Mine, with an annual capacity of four million tons of anthracite, is going smoothly, is scheduled to put into production next year. Now let me talk to you about the dividend payouts. The company's cash dividend so far has totaled more than 30 billion CNY. The company started distributing cash dividends of CNY 5 billion, 860 million, 214 thousand, 700. The company also distributed special dividend of 1.5 billion CNY to the shareholders, amounting to 11.3 cents per share. The aforementioned dividends are expected to be fully paid out by August twenty-sixth, 2024.
The special dividends will also be paid out by October twenty twenty-four. Now, let me talk to you about the second half plan. We will deeply study and publicize and implement the spirit of the Third Plenary Session of the 20th Central Committee of the Party. We will be focusing on high quality development. First, we will focus on the requirements of deepening reform and upgrading, continue to enhance core functions and competitiveness, resolutely accomplish the tasks of reform, deepening reform and upgrading, especially the latest reform tasks proposed by the Third Plenary Session. Second, we will focus on the goal of building a world-class energy enterprise, accelerate the construction of key projects in the development plan, enhance the ability of energy supply, and accelerate our green and low carbon transition.
Third, we will adhere to the world-class standards, deepen the quality and efficiency improvement, strengthen lean management subtly, and completely the annual production goals. Fourth, we will continue to improve our R&D and accelerate the development of new quality productivity. Five, we will continue to improve the internal control management system and the risk prevention and control system to address risks...
... and achieve safety, environment, production, energy conservation, and emission reduction. After, we will enhance information disclosure, strengthen investor communications, and maintain a positive image in the capital market. We will continue to work on returning the maximum returns to the shareholders and investors. Thank you so much for everyone. So that included my presentation. Let's see if you have any questions. We are more than happy to answer your questions.
Thank you very much for sharing. Now, let's go into the Q&A session. So for those of you who dialing on phone, please press star, then the number one. If you joined online, then you can use the Raise Hand function or the chat function of the online portal.
Again, if you have a question on the phone, you can press star then the number one. For the web participants, you can use the chat room or, use your, use the Raise Hand function. Phone number ending in oh six oh oh, please go ahead and, introduce yourself and your affiliation.
Hello. I'm from Kaiyuan Securities. Thank you very much, Mr. Jiang, for your presentation. I have a few questions for you. Firstly, regarding dividend payouts, we saw that starting May, this year, there was a special, dividend payout, and we can feel that, you are giving back more to the, small and medium shareholders. And, this time around, it's 30% of, total profit. So, for the whole year, it's about 15% of the total profit, which is, the dividend, amount.
So there will be another, no less than 30% dividend payout, right? So for your annual payout, could it be... So for the whole year, could it be about 45% of the profit for the dividends? Will you continue to increase the proportion of the dividends, or do you have such plans? Because in the industry, for some companies, they have a promise of no less than 60% of the profits for the dividends. What's your take on that, and do you have any plans?
Thank you very much for your question. So actually, we've addressed that in the previous meeting. Our main consideration is, of course, we are trying to strike a balance in between the stable operation and also paying enough to our shareholders. Basically, we paid 30%, and basically, it's all cash dividend. And with the improvement of our performance, the absolute value is increasing very obviously. You need to look at the ratio as well as the absolute number. In terms of the development of the enterprise, that makes more sense. And also, about the dividend payout ratio throughout the year, I think it's like this: We will look at the overall business situation of the company, and then we will have to look after the need from all sides.
You said that you want more dividend payout, but some of the investors would say that, "Yeah, for the future, the company has the need for the development." Also, the State Council issued the document on the all-around low-carbon and green transition of the economy, and we also need to carry that out. So they asked, "Do you need to reserve some funds for that kind of development initiative?" We need to balance all sides and then look at the overall situation throughout the year. But one thing is for sure: for the RC, they already said that we need to maintain the continuity of our profit so that we can have a very good expectation. So I can only answer like that.
Okay, thank you. So, the second question. For the coal sector, we saw that for the company, in terms of the performance, the growth of the coal sector is pretty high, and for the company, in the future, is there any possibility for the coal sector to further grow? Because from the announcement, you said that there is the Libi and Xinjiang and Dahaize Coal Mines, so do we have any other new mining rights for the new coal mines to expand our scale, or do we have, like, any capital injection to increase our volume? Do we have any plans like that,
so I will ask Mr. Li Xiangfeng from the Coal Business Unit to talk about that.
S o for the company, we always have this overall planning for the coal business. First, we will look at the incremental volume of the resource, so that means we will commit, we get involved in the bidding for the resource. And second, we would look at the producing mines. There is still some potential to increase our capacity, and we are communicating with the national authorities to release our existing capacity. Thank you.
Okay, thank you. So I have the third question about the coal chemical sector. So we saw that for the coal and chemical integration, in terms of their deployment, it's very well done. I remember it in 2022 or in 2023, when coal chemical projects are under heavy surveillance, we got the Shanxi Yulin phase two project approved, 900,000-ton capacity. So I just wanted to ask about the future deployment plan for the coal chemical, any new projects, and for the overall coal chemical deployment. For example, in the 15th Five-Year Plan, how many new projects will we build and commission?
So I will ask our chief expert, Mr. Yi Peng, to talk about that.
So last year, we did the process for the phase two, and we are in full swing in construction. And the next phase in coal chemical, there is still new opportunities. In the future, we're planning for the 15th Five-Year Plan. For example, in Shuozhou, Shanxi Province, the olefin big base, and we also have coal chemical projects in other places in their pre-work phase. Thank you.
Thank you. I have another question, a follow-up question.
So in other places, if we want to build coal chemical projects, for example, in Shanxi, then is it matching the coal mine project, or are we getting a standalone mine to build a coal chemical project?
So I think we are still relying on the coal from Shuozhou, and we will build this national level demonstration project, because in Shuozhou, the coal chemical is still a blank space. So building a big coal chemical base is very significant for the country as well as our group. So for the coal, we will still use our existing coal resource, the big surface coal mine.
I want to add something.
Yeah, please.
Currently, for the coal chemical project in Shanxi, it is still in the pre-phase. We are not undergoing the decision-making process.
So when we have finished that decision-making, we will disclose to the capital market. We are still in the FSR, the feasibility study phase.
Okay. So for the coal chemical, I have another follow-up. For the coal cost, for the coal chemical, in terms of the coal feedstock, do we consume the long-term contract or do we use spot? So it's all at market price. It's always market price, right?
Yeah. It's purchased at market price.
Okay, got it. Thank you. So I have nothing else. Thank you.
Thank you for the answer.
6704, please speak with your names, please.
Thank you, Mr. Zhang. And dear leaders, I'm from CITIC. My name is Zhu Guopeng. So I want to ask about the cost.
So I think in the interim reports, we saw a 7% rise on the cost. So compared to last year, actually, it's down a bit, because I remember that in the latter half of the year, last year, the cost went gradually up. So I just wanted to ask about the pace of cost control in this year. Will it be like there's a clear increase in the latter half of the year compared to the first half? And second, we talked about the phase two project in Shaanxi. The tax rate is up a bit, so what is the impact on that for the Q2?
I want to ask Mr. Xu Ling from Finance to answer that. Ms. Xu Ling, to answer that.
So I will answer your first question.
For the commercial coal sales cost increase, I think first thing is due to the rise of the cost, because the surface coal mine there is some geological condition changes, and the second is about labor cost increase. So we looked at the overall business, and we also released some of the salary, and that cost some cost up. And also the depreciation and write-off that was down a bit, that created some impact. And then we are also paying the mining right return or income tax for the next thirty years. So the base number is up, so also the depreciation went a bit lower. And the third thing is the usage of the fund. The cost also went down. So that's for the cost. The second thing is about the re...
The resource tax. As we all know, for the resource tax, it was released in April, in Shaanxi province, and there was an adjustment. So for the coal, the tax rate was up from eight to 10, and then,
... from the business, it can create some impact. That's it.
And also the beneficiation was up a bit. Okay, Mr. Zhang?
Yeah, I want to add something. As I understand, your question is about the cost. So we are trying to write off the annual impact in advance, as in the first half of the year, to maintain a quite smooth performance. But of course, it's not ended. We cannot guarantee that the cost will not change. But, you know, cost is pretty rigid, but we are trying to reduce the fluctuation of the cost. We can only say that.
Yeah. Thank you, Mr. Zhang and Ms. Xu, and that's it.
Okay, eight one zero four, please provide your institution and name.
Okay. Leaders from China Coal, my name is Li Miao from Haitong, and congratulations on your interim results. We saw that among all the coal sector, you are pretty outstanding. I have two questions for the leaders. First, in Q2, we saw the comprehensive price for the first half of the year, on a year-on-year basis or for the Q2 quarter-on-quarter basis, the decrease is pretty minimal. That showed our stability in such a fluctuating market. Could you shed some light on the relatively small change? What is the reason behind it? Is it because of the high ratio of our long-term contract, or is it because of our sales structure, which is changed from last year?
That is the first thing. And the second question is for the group. We're interested in the asset or the CapEx in the future, because we do have a lot of good resources in coal as well as the power and new energy. So in the first half of the year, the valuation is already over a hundred times the... So it's more capital operation. So for the group, do we have any detailed plans or specific plans for the new capital investments? So the first question, Zhang Hongchen. Mr. Zhang will answer that from the company.
So let me explain to you the first thing. Yeah, for the cost of price of the coal compared to last year, on a year-on-year basis, there's not much change. So actually, it was explained a bit before.
For the coal sales, 80% is long-term contract. So of course, our own ratio is higher. So in the spot market, the spot doesn't account for a big percentage, and also for the long-term contract, price this year compared to last year, from January to July, there's just a minor change, with not a big change. So for the market price, it's also going down a bit. But with the same heat value, the ratio is not down that much compared to the nominal. That's my answer. The second question will be answered by me. So thank you for giving us such long-term attention. So I believe that you've noticed that we've been developing the coal power or thermal power at full swing.
So it is also a response to the call of the government, and in the last two to three years, in coal power, we invested a lot. So the growth rate was pretty high for the coal power of our company. But up to now, we don't really have a clear plan to enter the capital market for the coal power sector. So we should say, in the long term, for the coal power asset or for the other coal asset that we own, we are not ruling out the possibility of entering the capital market when there are optimal conditions. But which company we should release those into or, in what forms, is not decided yet.
Our coal power plants are still being built. Once we have achieved the economies of scale, the group will study these possibilities and feasibility. Right now, we don't have any conclusions, but there's a possibility.
Thank you very much for your answer. Thank you, leaders. I have no questions.
Thank you for your answers. Six three two two, please go ahead. Please start off with your name and, affiliation, please.
... Hello, leaders at China Coal. Thank you very much for this opportunity, and thank you for giving me this opportunity to ask questions. I have a few questions here. I'll go one by one. Regarding the CNY 250 billion of impairment, what caused that for the first half, and what's your prospect for what's your outlook for the second year? So Mr. Xu will take that question.
Ms. Xu, rather. So regarding impairment, we provisioned about two hundred something million RMB of impairment according to the accounting standard based on the losses.
So we did an impairment test on relevant assets, and for the second half of this year, we will use the same set of standard and be looking at the existing projects to evaluate the quality of the assets. If the conditions weren't met, then we would continue to do the impairment to keep increasing the quality of our assets.
Thank you. Can I ask a follow-up? So when you said the existing assets or stocks, which are you referring to? So for coal, the costs are pretty low, the costs are pretty low, right? So which inventories did we impair on?
Answer. Sure. So we have some you know geological changes to some of the coal mines.
There's some disruptions in the geology, so that led to some of the impairments. Understood. So you're saying that there are some situations where sales prices were lower than costs, right? Got it. So the second question is, regarding costs, if we were to look out to the costs for the whole year, year- over- year, could you do a year- over- year comparison? And if you look forward, look at, beyond 2024, then, how is the cost of self-produced commercial coal trending? Answer. So we already talked about the cost breakdown. So, I'm going to talk to you about, compared to last year, can we, you know, at least stay flat in terms of cost?
We all of our mines are automated and the technologies are quite advanced, and we can effectively control the costs. At the same time, we are enhancing our efforts in safety, security, environmental protection, and automation to beef up our competitiveness and sustainability. So the increasing cost on those fronts is again it also needs to be considered, but we will continue to drive up production and the sales so there will be more output that can spread the costs thinner. So there won't be too much fluctuation in terms of cost. It will be maintained within reasonable range.
Understood. Very clear. Thank you very much for your answers.
My last question is this: So for the first half, in terms of thermal coal, how much was the long-term thermal coal, and what's the percent for the second half of this year? Thank you.
I'll take this question. So for long-term coal, long-term contract coal, technically speaking, it's part of the national policy from 2021 to now. We are all focused on securing supply and stabilizing prices. Of course, under those circumstances, we have ensured that the stable development of players along the value chain. So long-term coal, long-term contract coal, is a very useful tool for the market. So in my presentation, or when I was answering one of the questions, so again, this is part of the policy, and according to the policies, it needs to be 80% of the total coal.
So from the beginning of this year, and on a monthly basis, it's pretty smooth and flat for us. For the first half, second half, across all quarters, the percent of long-term contract coal is pretty even and stable.
Got it. Thank you very much. That was it from me. Thank you so much.
Thank you very much. Next, 8549. Please state your name and affiliation before you ask a question.
Thank you very much, company management, for giving us so much returns, giving us shareholders so much return. I'm Chen Jing from Fullgoal. I have two questions. Interpreter cannot hear the answer, the question. So the output of steel and cement declined. Would that impact the long-term coal...
prices, and what's your current debt level, how much it will get down by when?
Sorry, you're breaking up. Could you repeat your first question?
Sure. So steel and demand, prices, and output are going down, will that impact your, coal market prices and long-term contract prices?
And your second question?
Were you asking about the liability ratio of the company?
Yes.
Okay, I will take the first question. So in terms of the long-term, price versus spot price, China is such a vast country, so there's so many factors impacting the prices. So you can't really pinpoint which factor led to what results. But in the short term, there's some factors that are more prominent.
But overall, over the long term, it's primarily determined by supply and demand dynamics. In terms of the long-term prices, long-term contract prices, so the entire supply and demand is pretty balanced right now. Of course, supply is slightly excessive. And in terms of prices, they are within the normal rational range. And so it's normal to have market fluctuations price-wise. And overall, we believe that the prices are within the range that is within our expectation and is acceptable by us. So Mr. Xu will take the second question. Ms. Xu, rather.
So regarding liability ratio, as of June 30th, liquidity position, that ratio was about 48%, three percentage points up compared to the same period last year, and that was primarily thanks to a larger dividend payout. So that caused the liability. Regarding the CNY 300 billion, with the CNY 300 billion RMB, 48% of liability is pretty healthy and sound. So we will continue to maintain that level of healthiness in terms of the liability. Thank you.
Got it. Thanks.
Thank you.
So, thank you very much. Next, number ending 9990. Name and affiliation, please.
Thank you. Hello, everyone. I'm from CITIC. I have two questions for you. Firstly, I would like to follow up on the cost of China Coal. Mr.
Jiang talked about how this year you might want to lower the labor wages and to fend off the impacts from Q4. So traditionally Q4 cost was thirty-something RMB higher than Q3. So does that mean that all else being equal Q4 labor cost Q over Q change would be smaller than previous years?
Thank you very much for your question. So we try to smooth over or stabilize labor costs, but in Q4 there will usually be things like bonuses and incentives. So the chances of it being higher than other quarters are higher. So we will try to spread the incentives and bonuses across different quarters so that the spike will not be as much. But of course it depends on the actual performance.
So we're trying to smooth things out and spread the incentives and bonuses across the year.
Thank you. Second question is, could you take stock of this for us as of the first half of this year? So after the impact of restricted funds, how much cash do you have on hand, and how much debt do you have?
So our colleague from the finance department will take that question.
... Hi, I will take this question. At the end, as of the, we have CNY 94 billion cash as of the end of June, and close to CNY 30 billion of debt. So I would say CNY 50 billion of funds is what we have, and considering some one-year maturity debts and the interests. So for the list call, the cash funds liquidity is about 110 billion RMB. And for our debts, it's about the 69-something billion RMB, which is pretty healthy. Thank you.
Got it. Thank you so much. That was it for me. Thank you again.
Thank you for your question. Sixteen eighty-three, name and affiliation before your question. Thank you.
So I'm from Shandong Energy, and we are always optimistic about China Coal, and we are a firm long-term shareholder. So I just want to congratulate you on your performance in the last few years, and also for the liquidity and also for the dividend payout. And the market response was good. So I have several small questions about some details. So the first is that I saw the announcement in July. The production was up a lot year-on-year, and compared to last month, the month-on-month was pretty big. So where does that increase come from?
So for the coal production, it's related to the geological condition under the well.
The other factor is that we have this kind of periodical work, and it can cause some changes month on month, month to month. So in Shanxi.
Is there more increase in July for Shaanxi province?
Generally speaking, for your question, as I said, for the surface mines or for the wells, it's related to the geological condition, and also for our process. So for our company, it's mostly from Shaanxi Province and Inner Mongolia. For the production on both sides, throughout the year, we can maintain very stable. But if we talk about different seasons, well, in different months and different seasons, for Shanxi and for Inner Mongolia, there can be some fluctuations.
I want to add something. I understood where your question comes from. So just now, Mr.
Li Xiangfeng talked about the production coal. The coal production capacity is related to the turnaround and also the deployment of different work phases and the geological conditions, which are pretty normal. In the half of year, our production was already over the production guideline for the half year. For the incremental volume, well, of course, compared to last year, it was break even. Maybe there is a minor decrease, but for the places with big incremental, that's for Shaanxi Yulin Dahaize. Actually, they contributed much more than 2023. You are interested in Shanxi from our company. I think the condition there is pretty normal, and we're going as planned. Then compared to the whole nation productivity, well, is it a big impact? Well, it depends.
So the production decrease in Shanxi will not necessarily impact on the whole company. Okay, so the second question is, I saw that for Shuozhou work report in the first half of the year, they mentioned about some key works. For example, the approval work of the mining zone. That was one of the key initiatives. So what is the progress of that approval? So, if we get the approval, how much time do we need to take for commissioning?
So currently, for that mine, in order to maintain smooth operation and production, the current production is somehow suppressed. And when it comes to the expansion and also the processes, we are actively cooperating with the provincial and municipal government with their authorities. And we are trying to go through the relevant processes-...
When the things are done, then we will apply for the expansion. As for the overall process, we still need to communicate with the government. We don't have a specific timeline, but we will have active interaction with the government and try to accelerate the approval process of the expansion. We expect to basically get it done by the end of this year or maybe the beginning of next year. Thank you.
Thank you for the detailed answer. I have the last question. For phase two, what is the process like for approval? And when do we expect to pass?
Just now, you asked a strange question, so I want to correct something. For the Dahaize Coal Mine, for the expansion, this is the so-called phase two, right?
But I think you wanted to know about, you know, after the breakdown of the mining right, we are trying to get the number two well of the Dahai, right? So it involves the breakdown of the mining right, and things are under rapid progress. So it is very detailed work. It involves different disciplines, different departments, and different authorities. And there is still also some of the regulatory limits. And this is one of our key words in our group. So we would like to accelerate the pre-work or pre-project processes.
Okay, thank you. I don't have anything else. Good luck.
Okay, thank you for the answer. So 6461, please ask your question. Please inform us of your institution and your name.
So good afternoon.
For China Coal, in the last few years, in terms of the reserve and in terms of the dividend payout, in terms of the cost down, you're doing a very good job. I have several questions. In this year, I think I want to ask a detailed price about the cost or the price. I want to ask about the coking coal. For the coking coal, it was down by CNY 41 compared to last year. It's just 3% decrease. Compared to the other companies that released their reports with coking coal, well, the range is pretty small. I just wanted to ask, is it because our some of our company's approach? Why did we have such good price for coking coal? That's the first question.
The second is that starting from January and February, the steel industry was facing very serious situation, and for the coking coal delivery, it's also going down. So in the latter half of the year, for the coking coal sector, what is the domestic demand like and what is the price like in terms of trend? So in China Coal environment or in the coking coal delivery margin, will they face more pressure? Thank you.
So let me answer the question. For coking coal, for our sales price, and I think compared to the market price, we are maintaining very good stability. So the reason is, for coking coal, in terms of our national annual sales strategy, so we sell a certain percentage of long-term contract.
In this year, for the long-term contract price of the coking coal, it was always outperforming a bit compared to the spot. It's more advantageous. Since our customers are long-term strategic customers, they are very good at fulfillment with the contract. That is one of the main reasons. In this year, for the coal, coking and for steel, and of course, for the whole industry chain, the steel industry is under a lot of pressure for coking coal and for coke. Basically, that kind of bad situation passed on. We are still confident about the macroeconomy of China. In the latter half of the year, on the national level, on the policy level, the stimulation of the economy will be even stronger. If we look at the demand side, and if we look at the supply side...
We think that things will still be pretty balanced. And for Shanxi, we are very strict in safety control, because for the coking coal, the main production base is in Shaanxi. So in the latter half of the year, the downward pressure is very big. But we are still preparing very early for the latter half of the year, so we are very confident. Okay.
So the second question is that for China Coal, about the reserve increase and production increase. So we know that in Lu'an and Huayang, they already spent like CNY 10 billion or CNY 6 billion to buy the mining, right? Well, Shanxi is doing some auction. We're bidding for that, but it's pretty expensive. So for China Coal, we know that in Shaanxi province, well, we don't really have that much resource left.
Are we participating in those bidding of the mining right? And for the current market, do we intend to participate, or what is our take on the price? And also, for the big shareholders, do we have any plans to purchase more resource? Thank you.
So Xiangfeng from Coal, please answer.
So recently, we're in Mongolia or Shaanxi. There were some of the open biddings of a resource transfer, so I think that will be the mainstream way of getting more resource. So for the bidding price of the resource... So it's always based on the per ton price. But I wanted to correct your concept. So for the per ton price, it depends on the scale of the mine and also the coal quality. So for the same resource, if the mine is bigger, then the price can be higher. If it's smaller, then the price is smaller. So this is more reasonable this way. It's not like we are looking just at the per ton price. And the second thing is that it's related to the quality of the coal.
Recently, just now, you talked about Huayang, and you talked about several other companies. In Shanxi market, for those mines, they have a geological advantage, and also they are very good quality coal. For example, it's anthracite. For China Coal, China Coal is following up on the bidding situations of the mines. When we are trying to decide whether we participate, we will look at the situation from different angles, as I said before, and then determine our, you know, planned price. Of course, the detail is trade secret, but we will also talk about, you know, if we don't get some of the resource, of course, that's just the existing results, but we will still keep track of the new biddings and try to participate the ones that are favorable.
Okay. Thank you. Nothing else from my side.
Thank you for the answer. 4090, please ask the question with your name and your institution name. Thank you.
Hello, everyone. I'm from Guohai Securities. I'm really glad to have this opportunity. Two questions here. For the first half, the net profit was CNY 3.4 billion for Pingshuo and Shaanxi Yulin Coal Chemicals, CNY 2.1 billion. For your peers, a lot of their profits dropped by 20%. How did you achieve the smooth profits or stable profits for these two subsidiaries?
Sorry, could you repeat your first question?
For the first question, I would like to understand for Pingshuo, the net profit was at CNY 3.4 billion for the first half. It was only down by CNY 80 million, and Dahaize was at CNY 2.1 billion, and it was down by CNY 40 million. And the decline, both declines were pretty small. In terms of prices and volumes, how were you able to achieve such a smooth and stable net profit level?
Ms. Xu will take the first question.
Hello. I will answer this question. So for Pingshuo... It was indeed, net profit was indeed very, very stable. Firstly, the long-term contracted coal prices are pretty stable. And secondly, our costs are pretty stable. As for financial expenses, all of the expenses have come down year- over- year, so that's why we were able to achieve a pretty good net profits even though we had price fluctuations. So for Dahaize Coal Mine, there was an increase. So, for Dahaize, it was thanks to smart coal mines unlocking capacity potential, so volumes or output keeps going up. That's why the net profit was pretty good.
How much was volume up by? How many tons?
How many tens of thousands of tons?
For the first half, it was about 9 million tons, something like that for Dahaize. I would like to add something. So for the incremental, for the increment, it was about 2.8 million tons for Dahaize.
Understood. Is that raw coal or commercial coal?
Commercial coal.
Got it. Thank you. Second question is about the average heat value of the market. Were you asking about the heat value of our products? Yes. Specifically, commercial thermal coal.
Our heat value is pretty stable. You know, it varies slightly depending on when and where it is mined, but it's pretty stable. For Shaanxi and Inner Mongolia, the heat value is different from that of Shanxi.
For Dahaize, for example, the heat value is pretty high, about, over 5,000. And for Pingshuo, the heat value is relatively low. So there's no major differences, okay? But, it doesn't really make sense to do a complete, weight, weighted average. That doesn't really work.
Got it. Thank you very much for that, insight. Thank you.
So thank you.
Two two five one, please state your name and affiliation, and, make your remark. Thank you.
Hello, everyone. I'm from Huatai Securities. I'm a coal analyst. My name is Wang Mengzhen. Thank you very much for speaking with us. I have a small question. So for your CapEx plan, you only achieved about 33% of your whole year plan for the first half. So for the, pursuing CapEx, how is the progress gonna be like?
Could you maybe detail or breakdown your CapEx? How much of it is gonna be used for maintenance? How much of it is going to be used for expansion?
Mr. Tang from the development department will be talking about this. Thank you for your question. China Coal 2024 total CapEx was budgeted at CNY 16 billion, and we achieved about 33% for the first half, which was a pretty normal level, because from the whole year's perspective, most of the spend will be realized in the second half, because there was a lot of discussions and study in the first year. Most of the spend happens in the second half. It's pretty typical compared with the previous years.
For the next three years, our CapEx will remain around 15 billion CNY. And so we have some new projects, some, you know, new energy projects and coal chemicals projects, where most of the CapEx will be spent on. Thank you very much.
Thank you for that answer.
6402, please, state your name, affiliation, and your question. Thank you.
Hello, everyone. I'm Wang Shanshan from Minsheng Securities. Thank you very much for giving me this opportunity. I have three questions. So firstly, you bought 42% of stake from Yihua. What was the consideration behind that deal? Second, somebody asked about asset acquisition, right? But my connection wasn't very good. Do you have any plans regarding equity acquisition from...
And third question is from is regarding Inner Mongolia. Thank you.
Sorry, your line is not very clear. I got your first question. You were asking about the Yihua shareholder change, right? Or equity change. Yes. For Yihua equity, you bought their 42% of their equity.
And what was the reason for that? And did you have any plans for increasing your ownership stake?
Mr. Tang will take that question. For Yihua acquisition, it's for securing our control, because we don't want others to take the shares or take the equity, so that we might lose the control. Your second question was regarding for other equity or other. So I understand your point.
So for other JV equity, do we have any plans to take more equity of those JVs, right?
That's right. For Yihua equity, Mr. Tang already explained to you the reason why. So we wanted to maintain the control of Yihua Mine. That's why we acquired the shares. So that was pretty special. For other JVs that are running normally, we don't have any plans to buy more equity. If things go smoothly, we will maintain the shareholder structure. If there's special situations, we will take them case by case. Could you repeat your third question?
Sure. So for the first half, for polyolefin, there was a big increase in your volume. What was the reason for that?
You're talking...
Oh, we're talking about, okay, gross, gross profit per ton. Okay. And the reason for the increase in that. Mr. Zhang will take that question, rather.
So you're saying that for the first half of this year, gross profit per ton for polyolefin, grew year- over- year, right?
Investor. Yes
I would like to know the reason why that is.
So several reasons. Firstly, polyolefin price was higher than previous years. That was a major driver. Second, it was due to better management. So we deployed lean management. So, the all of the expense items, labor, all went down. That's why, the gross margin was up. Thank you. "And I would like to add something," said Mr. Zhang.
And our COGS is declining. The cost of unit coal is coming down, so prices are going up. COGS costs are going down. That's why the gross margins or gross profits are higher.
Understood. Thank you very much. That's it from me. So thank you.
Sixteen eleven, please state your name and affiliation and make your remark. Thank you.
Thank you very much, company management. I have a few questions. So from your interim report, there's three types of coal. There's firstly, is a resource volume. Second is volume for extraction. Third is formal volume for available for extraction. But the third one is much less than the first two. Why is that? And also, in Shaanxi, in Mongolia, you have so much resource there.
Do you have any plans to tap into those resources? Because you have a lot of resource, but the actual production capacity is at a relatively low level. My second question is your interest-bearing debt that grew from CNY 72 billion to CNY 69 billion. Do you have plans to incur more interest-bearing debts going forward? Thank you.
You mentioned something quite technical. You said. So you talked about the resource volume. Second is the resource available for extraction. Third is the formal resource for extraction. So basically, when we disclose our resource, we disclose our resource ownership. So basically, the resource that's in the wells.
... And we would exclude the extracted volume, and the remaining is the ownership quantities. And the amount available for extraction, so during the design and the feasibility study, we would be studying all conditions, and then we would come up with a quantity for-- that's available for extraction. So for a coal mine, if the geological situation is good, then that ratio should be 60%. So the extraction availability ratio should be 60%. For Central China, it's about 30% to 40%. So as for the formal amount for extraction, so that is for amount that has been verified as feasible and economical or it makes economic sense. So that is our definition for those three types of quantities.
So I would like to add something. Just because the formal amount available for extraction is small, doesn't mean that we don't have enough coal to extract. Resource amount is the total amount, right?
And it includes coal that has undergone geological exploration, and it has also included coal mines that haven't been fully developed. Even for you know, coal mines where wells have been established, we would have a clear extraction volume. But for the formal extraction volume, it won't necessarily stay the same, because for the formal extraction volume, it takes more geological, more detailed work. So the formal extraction volume changes year- over- year as well.
So you can't simplify and just use the formal extraction volume to sort of map our capacity and to you know gauge how many more years before we will run out run out of our resource. Time for the second question.
As I understand it's about the future situation so I will ask Ms. Chai from Finance. So let me answer. At the end of June our debt was CNY 69 billion down by CNY 3.5 billion. We will look at our current situation and also the long term to try to deploy the overall year-long financing and we will try to get the swap of the debt and also look at our funding need. Thank you.
Okay, so for the company, we do have, like, a long-term, like, interest-paying debt planning of a certain plant scale, or what?
No. We don't have, like, a specific number in the plan, but we will look at the need of the business and also for the future development need, and we would look at the swap of the terms of the debt.
Okay. Thank you.
Thank you for the answer. Next, a question. So the question is about the introduction of talents. Any plans?
So let me briefly talk about that. For China Coal, we highly value the introduction and recruitment of talent and also the fostering of our talent ladder. So we're committed in building a high-quality talent team.
In the last few years, our companies used different approaches, including the campus recruitment initiatives, as well as the social recruitment initiatives, to attract the talents to our company. So that is the overall target. And for our annual reports, we also talked about our situation of the talent ladder building, and we talked about our talent structure. So the investors are welcome to look at the relevant documents.
Thank you for the answer. The next question is for Anjialing.
The service life is still. There's still eight to nine years left. So can we still continue after that?
So it's like this, for Anjialing Mine, if we look at the 25 million ton per year, yes, that's years left, but still there are surrounding regions involved.
We can also work with the local government to try to introduce the resource into our company.
Thank you for the answer. The next question: So for Q2 compared to Q1, the revenue was up, but the net profit was down. So compared to last Q2, it was, you know, a higher margin, lower revenue. So what is the why is there such difference compared to last year? So Ms. Xu, from finance.
So hi. So it's influenced by the price, and it's also due to the lower cost. That's it.
Okay, thank you for the answer. Next question: about the financial status starting from last year, the accounts payable is always CNY 5.5 billion, so CNY 700-800 million compared to last year. So is that? Well, how do we view that increase?
Is it more, just, more temporary provision, or is it higher labor cost? And is labor cost something that goes up easily and it's very hard to go down? And if it goes down, can it go down by, like, 20%? Thank you.
So for our company, that increase is because of some of the personnel changes, and we would provision according to the comprehensive situation. So every year, we will look at our performance and conduct the provisioning of the wage and salary and release of the salary. So for that 20% number, well, it's hard for me to determine whether yes or no. So let me add something. For the payable wage, so that's hooked with the performance.
So if the performance is good, then according to our KPI and performance review clauses, we will, of course, provide reward. And if it's the performance is bad, of course, they will be influenced. But as for how much, well, it's related to the actual situation of the business. So for that 20%, well, I don't think it's an accurate measurement of that.
Okay, thank you for the answer. Next question: currently, for Mongolia, their coking coal production and export was increased a lot, mainly towards, you know, Northeast China and North China. So what is the influence on China Coal Huajin? And also, what is the impact on the main coking coal and the relevant coal?
So let me answer the question. Thank you. So, yeah, due to geopolitical reasons, for Mongolia, when they export...
Now, they're mostly exporting to our country. So in this year, for the coal import, right now, it's not that controlled, and the coal import hit the historic high. So last year, we created the historic record, and this year, we broke the record. So from January to July, it was already two hundred million, up by 13% compared to last year. And of course, there's metallurgical and there's power, and there's other types of coal. And this year, the metallurgical accounts for a bigger percentage.
And of course, for the coal import, for the market and also for China Coal Huajin, will there be any influence?
Of course, there is influence, but we need to look at it from the, you know, comprehensive point of view.
Every year, for the coal sector in China, for the import and for the metallurgical, well, in this year, things are on the rise, but of course, the demand is also higher. We also need to take into account the types of coal that we're importing from other countries. So I mean we need to put this into context. And after the import of coal from Mongolia, so the metallurgical coal is consumed in Northeast China and North China. And actually, they're going down south because the transportation infrastructure is getting more established and more convenient. But in terms of the volume of import, I think compared to the demand of China, the volume is still limited. Thank you.
Thank you for the answer. So the next investor has two questions.
Let me ask one by one. So the first is self-produced coal. For the labor cost, it's CNY 3.77 billion. Last year, it was CNY 2.6 billion, so it's up by a lot. So the company mentioned that for some of the cost, it will be provisioned in Q4. So this year, we provisioned by quarter. Is that kind of increase related to that? And if so, does it mean that in Q4, the labor cost or the... There won't be a big provision of the bonus? Thank you.
So for the labor cost increase, well, actually... You already said it. There is some influence from that, and we will orderly give out the wage and bonus. So actually, Mr.
Zhang already said, at the end of the year, there will still be some more new situations coming up, so we have to, you know, plan things in an orderly manner. And the actual situation depends on the performance of the end of the year. Thank you.
Thank you for the answer. The second question is, in the first half of the year, for depreciation, it's CNY 2.9 billion. Last year, it was CNY 3.5 billion. So it's down by a lot. So explained some, but can you talk more? Because we didn't quite understand.
So let me answer this question. So it's about Anjialing Coal Mine. So with the transfer of the mining right, with the document, we confirmed the remaining thirty years of the transfer income.
So that means we increased the income of the right transfer, and we got more resource, so we need to amortize, so the base number is bigger, so the amortization is smaller. Thank you.
Okay, thank you for the answer. So just a final notification on the ways to ask questions.
So if you have any questions, if you're dialing in from the phone, you can press star one. If you're dialing in from the internet, you can ask by text or raise hand. Thank you.
Okay, leaders, currently, there are no other questions, so maybe the leader can give us a summary.
Yeah. So thank you, investors and analysts, for your attention and support for China Coal. Today, we took more than an hour to review and analyzed our performance in the first half of the year.
We also answered some of your questions. I do believe that you may have some other questions, and we're willing to connect with you very closely. If you have any other questions, you can talk to our IR further. Thank you. That's it.