Puda Coal, Inc. (OTCBB: PUDC)
Written by John Pentony on July 10, 2009
Puda Coal, Inc., through its operating subsidiary, Shanxi Puda Coal Group Co., Ltd., specializes in providing premium grade cleaned coking coal to the steel manufacturing industry for the use in making coke in China. Headquartered in Taiyuan City in the Shanxi Province, the Company currently has three coal washing facilities with annual coal washing capacity of 3.5 million metric tons. Shanxi Province provides 20-25% of China’s coal output and supplies nearly 50% of China’s coke.
Corporate Headquarters in Taiyuan City, Shanxi Province
CLEAN COAL IS CRITICAL FOR CHINA
The Chinese government places great value on the coal industry. With coal reserves of over 1,000 billion tons and production of more than 2 billion ton per year, China is currently the world’s largest coal producer and consumer. Approximately 97% of coal production is used by China’s internal market and this contributes over 70% of the country’s primary energy supply. Puda Coal is ideally located in Liulin, Shanxi province, which has the largest reserve base of high quality raw coal in China. Known as the”King of Coal,” Shanxi provides 20-25% of China’s coal output and supplies nearly 50% of China’s coke. According to the 11th Five-Year Plan for the Shanxi Province, the Shanxi government will spend 318.3 billion RMB in order to improve infrastructure such as railway constructions and other related public services and become the main transportation center of coal in China. In the last two years, the Shanxi government has closed a large number of small companies in order to address economic, environmental and safety issues. This resulted in the elimination of over 1,000 coal-related enterprises in the Shanxi province.
There are two coal cleaning processes predominate in the industry: dense medium (DM) separation and JIG washing. Currently, 56% of the raw coal washed in China is processed by JIG washers, 26% by DM separation, 14% by froth flotation and 4% by other processes.
Puda Coal utilizes JIG washing, which is widely perceived to be a simpler and lower-cost option than DM separation. JIG washing is a water-based process that relies on the pulsation of water through the particle bed to stratify particles of different density. However, JIG washing requires consistent water supply which restricted its usage in China. Puda Coal’s cleaned coal is of a higher quality than its peers, containing less than 0.6% sulfur compared to 0.8% – 1.0% sulfur for other cleaned coked coal on the market.
Puda Coal sells its cleaned coal through a direct sales force that markets directly to its customers. Puda Coal’s primary customers are coking companies that supply steel mills and steel mills with their own coking facilities. Primary geographic markets include:Shanxi Province, Inner Mongolia Autonomous Region, Hebei Province, all of which are accessible by rail lines, which is the most cost effective method for coal transport.
THE MANAGEMENT
Liping Zhu – President and CEO Mr. Zhu became President and CEO of Puda Coal in July 2008, and also serves on the board of directors of the company. Mr. Zhu has over 20 years of experience in executive management, including 11 years of experience in the coal industry. From 1997 to 2008, Mr. Zhu served as the Deputy General Manager of Shanxi Loudong-Junan Coal & Gas Company (“Shanxi Loudong-Junan”), which is engaged in the coke and coal business in Shanxi Province. At Shanxi Loudong-Junan, Mr. Zhu was responsible for public and government relationships and financing. Prior to that, Mr. Zhu served as Vice President of Junan Company, HK from 1991 to 1997 and from 1986 to 1991 he served as Vice President of Shenzhen-Hong Kong Industry & Trade Group and as Deputy General Manager of Shenzhen Luohu International Trade Company. Mr. Zhu holds a B.A. degree in English from Xinjiang University and a Master of Economics degree from Beijing Institute of International Economy Management.
Pengxiang Lang – Chief Operating Officer Mr. Lang served as vice president of Shanxi Puda Coal, an operating subsidiary owned 90% by the company, since 2002. From 2000 to 2002, he was general manager of Rudi Science Industry & Trade Co., Ltd. Prior to that, he served as the representative officer of Shanxi Coking Coal Group’s Tianjian Representative Office and vice general manager of Shanxi Coking Coal Group’s Taiyuan subsidiary. Mr. Lang obtained his Master of Business Administration from Tianjin Commercial College.
Laby Wu – Chief Financial Officer Ms Wu joined Puda in July 2008. Prior to joining the Company, Ms. Wu was CFO and Vice President of Financing and Investor Relations at Sinoenergy Corporation since 2006. While employed by Sinoenergy Corporation, Ms. Wu was responsible for preparing and reporting financial statements as well as managing investment affairs. From 2004 to 2006, Ms. Wu was employed by Ernst & Young Hua Ming Accounting Firm as a Senior Auditor, responsible for financial audits and designed internal control processes. From 2000 to 2004, Ms. Wu was an Accountant and Tax Consultant at HLB-Beijing Yongtuo CPAs, responsible for financial audits and internal control design. Ms. Wu obtained her master’s degree from Australia Deakin University. In addition to her native Chinese, she speaks fluent English.
Yao Zhao – Manager, Coal Washing Plants Mr. Yao Zhao was one the two co-founders of Shanxi Coal. He was appointed to be Chief Operating Officer of Shanxi Coal and manager of its coal washing plants in 1999, and Chief Operating Officer of Puda on July 15, 2005. He resigned from the Chief Operating Officer position in November 2006. Yao Zhao currently is a 75% owner of Shanxi Liulin Jucai Coal Industry Co., Limited, a coal mine which supplies raw coal to Shanxi Coal.
CONTACT THE COMPANY
Company Contact
Laby Wu Puda Coal Inc.
CFO and Director of Investor Relations
Tel:+86-10-6439-2405
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