The Huangda Railway has a total investment of 11.144 billion yuan. Shuohuang Railway Development Co., Ltd., a controlled subsidiary of China Shenhua, holds a 75% stake, while the other investor, Shandong Railway Construction Investment Co., Ltd., holds 25%. The railway is 223.7 kilometers long, with a total construction period of 36 months. The main line of the Huangda Railway lies within Shandong Province.

　　Zeng Hao, a thermal coal analyst at Shanxi Fenwei Energy, told reporters that against the backdrop of a sluggish coal market, it is entirely understandable for Shenhua to increase investment in railway freight, which is a key profit-making project, and Shenhua's ambition in the Shandong coal market is already evident.

　　Increasing Railway Freight

　　Continuously optimizing the structure and layout of its coal, power, and transportation businesses has been a strategy China Shenhua has adhered to since 2009. The company's 2013 interim report shows that in the first half of the year, the operating profit ratio of China Shenhua's coal, power, and transportation segments had adjusted from 65:15:20 in 2009 to 55:23:22. This means that in the first half of this year, amid the coal market downturn, China Shenhua's profits are increasingly supported by railway and port transportation businesses and power operations.

　　According to the announcement released by China Shenhua yesterday, to improve the coal and passenger transport network in the Bohai Rim region and promote economic and social development along the route, the National Development and Reform Commission agreed to build the new Huangda Railway.

　　According to information from Shenhua Group previously published on the website of the State-owned Assets Supervision and Administration Commission, the Huangda Railway starts from Huanghua South Station on the Shuohuang Railway, passes through Cangzhou City in Hebei Province, and Binzhou, Dongying, and Weifang cities in Shandong Province, and connects to Dajiawa Station on the Yidu-Yangkou Railway. The freight volume is 25 million tons in the near term (including 23.7 million tons of coal) and 42 million tons in the long term (including 40.5 million tons of coal), and it also accommodates passenger transport (1 pair in the near term, 2 pairs in the long term).

　　China Shenhua currently owns railway lines in its railway segment including the Daqin, Baoshen, Shenshuo, Shuohuang, and Dazhun lines. Pu Xiaohua, a coal industry analyst at Jinyindao, told reporters that the approval of the Huangda Railway will further consolidate Shenhua's dominant position in coal railway transportation.

　　In fact, Shenhua Group's "grand railway ambitions" have gradually emerged since the railway freight reform. In late June this year, the Baoshen Railway Group Corporation established by Shenhua Group was founded, with a total main line mileage of more than 800 kilometers, accounting for more than half of Shenhua's total railway mileage.

　　Wang Xingzhong, chairman of Shenhua Baoshen Railway Group, revealed that Shenhua Group currently operates more than 1,700 kilometers of railway lines, with planned and under-construction railway mileage of nearly 2,000 kilometers, which will reach more than 4,000 kilometers by 2020. By then, Shenhua Group's operating railway mileage will be second only to China Railway Corporation.

　　Getting a Share of the Shandong Coal Market

　　"Wherever Shenhua's railway reaches, it means coal will be sold there." Zhang Zhibin, an analyst at China Coal Yuanda Consulting Center, told reporters that in terms of market layout, Shenhua Group is currently developing and laying out markets in coal-deficient areas along the Yangtze River and coastal regions. It has successively established strategic partnerships with Chongqing and Fujian, relying on its strong financial strength and competitive advantages to attract government cooperation in building ports, railways, power plants, and other facilities.

　　"In the northern coal market, Shandong is the biggest piece of the pie," Zeng Hao said.

　　According to reporters, Shandong Province currently consumes about 200 million tons of coal annually, of which 100 million tons are self-produced and the other 100 million tons need to be sourced externally. In recent years, with environmental pressure and coal overcapacity emerging, Shandong Province has successively introduced many measures to "control coal."

　　According to a report by Shandong's Qilu Evening News, in the future, Shandong Province will implement total coal consumption control, striving to achieve a historic turning point of "no increase but a decrease" in total coal consumption by the end of 2015; by the end of 2017, total coal consumption is targeted to be reduced by 20 million tons compared with 2012; by 2020, total coal consumption will continue to decline. This presents an opportunity for Shenhua to get a share of the Shandong coal market.

　　Reporters learned that Shenhua has recently implemented many sales strategies in the Shandong market. An industry insider from Shanxi Province said that according to internal documents from Shanxi coal enterprises, Shenhua has currently introduced a new sales strategy in Shandong. Shenhua promises to provide all costs for power plants to retrofit their boilers to use Shenhua coal. However, reporters have not yet received confirmation of this news from Shenhua Group as of yesterday.

　　"Shenhua will provide door-to-door service in the future, transporting directly to factories, which will also enhance its competitiveness in the coal market," Zeng Hao told reporters. The Shandong provincial government recently issued pollution control policies requiring power plants to use low-ash, low-sulfur thermal coal as much as possible, which happens to be the characteristic of "Meng coal" (Inner Mongolia coal), and Inner Mongolia is home to a considerable portion of Shenhua's coal production areas.