Shenhua overhauls half of its railway assets

Shenhua Group Corp Ltd, one the country's largest coal companies, is integrating over half of its railway assets to increase transport efficiency and lower costs, China Business News reported on Tuesday.

The overhaul covers more than 800 kilometers of track and is scheduled to be completed by the end of July.

Since these railways are located in coal mine clusters in northern China, the move could maximize efficiency and lower costs, according to an employee with a railway subsidiary of Shenhua.

Shenhua reported 10 billion yuan ($1.62 billion) in rail costs in 2012, up 11.7 percent from the previous year, while the rail operational income grew by only 9.1 percent.

"Shenhua has been investing generously in railways," said Yu Hong, an analyst with Datong Securities.

"Meanwhile, the railway located on the border of the Inner Mongolia autonomous region is going to facilitate charred coal imports from Mongolia. "

Rail has become an important part in Shenhua's business portfolio, according to its 2012 annual report. More than 176 billion tons of coal were transported by its wholly owned railways in 2012, an increase of 8.6 percent year-on-year.