In March last year, with a loud rumble, a sudden ground collapse and fracture occurred in the Shantui Heavy Industry Business Park located in the Jining High-tech Industrial Development Zone, damaging and deforming two factory buildings in the park.

　　Shantui believes that the underground coal mining operations at Tianzhuang Coal Mine in Shandong Province were the culprit behind the accident, and has filed a lawsuit with the court demanding a huge compensation of 325 million yuan. Previously, Tianzhuang Coal Mine had also provided Shantui with 20 million yuan for resuming production.

　　Now, the case has taken a dramatic turn.

　　"Requesting the Company to return the 20 million yuan borrowed from the counterclaimant for resuming production, and the counterclaim litigation costs to be borne by the Company." On the 19th, Shantui announced that Tianzhuang Coal Mine has filed a counterclaim with the Shandong Provincial High Court, not only demanding Shantui to return the 20 million yuan, but also demanding Shantui to compensate for various losses caused by the shutdown, amounting to approximately 345 million yuan.

　　The Shandong Provincial High People's Court officially accepted the counterclaim request of Tianzhuang Coal Mine on the 15th.

　　345 Million PK 325 Million

　　According to Shantui's disclosure, the ground settlement and collapse caused deformation of the steel structure, doors and windows, and wall cracks in the road machinery joint factory building and the second metal forming factory building of the Shantui Heavy Industry Business Park. Subsequently, the Jining High-tech Zone Management Committee commissioned the National Construction Engineering Quality Supervision and Inspection Center under the National Academy of Building Research to appraise the damage to the factory buildings and the structural safety of the factories. The appraisal report's handling opinion stated that both factory buildings need to be demolished and rebuilt.

　　After organizing experts to conduct a technical appraisal of the cracks in the Shantui factory buildings, the Shandong Provincial Government's Coal-Pressed Village Relocation Office issued the "Technical Appraisal Opinion," determining that coal mining at the 5602 working face of Tianzhuang Coal Mine was the main cause of the cracks in the two factory buildings of the "Road Machinery Division" and "Material Forming Division" in the Shantui Heavy Industry Business Park.

　　For Shantui, demolition and reconstruction will undoubtedly be costly.

　　Therefore, Shantui filed a claim of up to 325 million yuan against Tianzhuang Coal Mine, including 186 million yuan for the reconstruction losses of factory buildings and other structures, 46.77 million yuan for the replacement loss of 210 mu of land, and 50 million yuan for shutdown and production suspension losses.

　　However, just one week before the court hearing, Tianzhuang Coal Mine unexpectedly took Shantui to court.

　　"Tianzhuang Coal Mine legally holds the mining right of the Xinji Minefield in the Yanzhou Coalfield. Shantui invested in the construction of factory buildings above the 5602 working face of the Xinji Minefield without fulfilling mineral resource approval procedures and without reaching an agreement with the mining right holder," Tianzhuang Coal Mine stated in its counterclaim.

　　"All our buildings were constructed with the approval of the Jining Municipal Government, and the procedures are legal," Yuan Qing, securities affairs representative of Shantui, told our reporter on the 20th. "At that time, we obtained the plan, and the coal-pressed area below was designated by the Jining High-tech Zone for construction."

　　Tianzhuang Coal Mine believes that the ground collapse and factory damage in the Shantui Heavy Industry Business Park, in order to avoid expanding losses and protect Shantui's interests, Tianzhuang Coal Mine had no choice but to suspend production and evacuate the coal mining face, which in turn caused significant losses to Tianzhuang Coal Mine, and thus filed a claim against Shantui.

　　According to Shantui's disclosure, the losses claimed by Tianzhuang Coal Mine include: 253 million yuan for the loss of coal value due to the inability to mine coal resources in the pressed area; 13.074 million yuan for the damage and loss of major equipment invested in mining the pressed coal resources; 70.262 million yuan for losses caused by a 30-day shutdown to avoid expanding Shantui's losses; 2.9044 million yuan for labor cost losses due to the evacuation of the working face; and 5.1415 million yuan for labor, electricity, and sewage treatment costs due to continuous drainage of the 5602 working face after the shutdown.

　　At the same time, Tianzhuang Coal Mine also demands the return of the 20 million yuan previously lent to Shantui for resuming production. According to statistics, the total amount claimed by Tianzhuang Coal Mine this time is as high as approximately 345 million yuan, which is even more than 20 million yuan higher than the 325 million yuan claimed by Shantui.

　　"This is also a defensive measure by Tianzhuang Coal Mine in response to the lawsuit," Yuan Qing said, adding that Shantui is actively responding to the lawsuit and the hearing date has not yet been set.Diversification Suffers Setback

　　Shantui's third-quarter report shows that the company achieved operating revenue of 8.175 billion yuan in the first three quarters, with a net profit loss of 25.9 million yuan. If non-recurring gains and losses are excluded, the loss will expand to 43.44 million yuan.

　　"As long as we can get half of the claimed compensation, we can turn the loss around," an investor of Shantui told our reporter.

　　Seeing the positive news of turning losses around mired in an unpredictable litigation battle, Shantui in 2013 seems to be showing symptoms of "everything going wrong."

　　"Since the diversification strategy was proposed in 2008, markets like concrete and road rollers have not performed particularly well and have not brought much profit," a person familiar with the matter inside Shantui told our reporter on the 19th.

　　Going back to January 25, Shantui Investment Co., Ltd., a wholly-owned subsidiary of Shantui, signed a "Capital Increase and Equity Change Agreement" with Manitowoc Asia Crane Group Co., Ltd., Tai'an Taishan Heavy Industry Investment Co., Ltd., and Manitowoc Dongyue Heavy Industry Co., Ltd.

　　Shantui Investment and Manitowoc respectively increased capital by 216.8 million yuan and 88.2 million yuan in Dongyue Heavy Industry. After the capital increase, Taishan Heavy Industry Investment Co., Ltd. withdrew from Dongyue Heavy Industry, and Shantui Investment obtained 51% equity of Dongyue Heavy Industry.

　　Industry insiders believe that Shantui's cooperation with Manitowoc this time is its first entry into the crane field after road machinery, concrete machinery, and aerial fire trucks.

　　Given the current weakening demand in the construction machinery market and the failure to meet the preconditions related to the equity acquisition, after more than half a year of effort, Shantui announced at the end of September that it would terminate the project delivery, and the expansion plan to enter the crane field was declared "aborted."

　　"This (investment) has also been negotiated with Manitowoc for many years, but we couldn't get government approval, plus some of Shantui's own conditions are not very good."

　　Meanwhile, on the 19th, Shantui also revealed news of the departure of three vice presidents. The announcement stated that Cao Yongxin, Yu Zewu, and Zhang Jian have applied to resign from their positions as deputy general managers due to work reasons. The company's 2012 annual report shows that the terms of Cao Yongxin and Yu Zewu were set to expire on May 31, 2014, and have not yet expired.

　　"President Cao is definitely going to serve as vice president of Shandong Construction Machinery," the person familiar with the matter said. Yu Zewu and Zhang Jian may also continue to stay within the company, "but their positions have not yet been determined."