Shougang Fushan Resources Group Limited (the "Group") owns and operates three operating coking coal mines, namely Xingwu Coal Mine, Jinjiazhuang Coal Mine and Zhaiyadi Coal Mine, in Liulin County, Shanxi Province, China. Each mine is allocated with preparation plant at mine-mouth. The Group is engaged in the business of raw coal mining and processing, and sales of raw and clean coal.

Production Capacity

The approved production capacity of each coal mine is 1.75mt/a, and the aggregate production capacity is 5.25mt/a. Currently, each coal mine is supported with independent preparation plant, and the processing volume of all three preparation plants is 6.30mt/a. In the future, the Group will continuously enlarge the current operation for better scale effect.

Geography and Transportation

All subordinate enterprises of the Group are located in Liulin County, Shanxi Province, where National Highway NO. 307, Taiyuan-Suide Highway, Houma-Yueshan Railway, Xiaoyi-Liulin Railway, Zhongnan Railway, Taiyuan-Zhongwei-Yinchuan High Speed Railway runs through. Subordinate coal mines and preparation plants are 6-10 km from the county.

Coalfield and Resources Quality

The Group's coalfield is located within the Lishi-Liulin mining area of Hedong Coalfield, which is one of the key premium hard coking coal reserves areas in China. The Group's main products are premium hard coking coal and semi-hard coking coal. The premium hard coking coal has the characteristics of low sulfur, low ash, low phosphorus content, high calorific value and high caking index, which is the essential material coal for coke plants, steel enterprises and metallurgical enterprises. Therefore, the Group's principal clients are large-scale steel producers in China.

Main safety production systems

The Group is Advanced Production Enterprise of Shanxi Province, and has always placed safety production as priority in business operation by investing in technical innovation of coal mines. All these three coal mines are applying comprehensive mechanical coal mining technology, and no incident of fatality caused by works over these years. The Group has been awarded the prize of Superior Enterprise by ACFTU (All-China Federation of Trade Union), State Administration of Work Safety, Shanxi Provincial Labor Union, and Shanxi Provincial Administration of Work Safety.

In addition, the Group has developed and formulated a comprehensive set of system and method for safety and quality management by ways of "Safety Quality Standardisation Construction". With all three coking coal mines having been awarded "First Class Certificate for Safety and Quality Standardisation", the system enables production safety in the coal mines and keeps safety in a stable and improving level.

Operation and Management

The Group has attached much emphasis to organizational management by improving technology, enhancing cost management and promoting performance appraisal to strengthen the operational management. Also, the Group has outsourced professionals, held both online and whole workforce training sessions to improve the working skills of labor force and the safety level of the coal mines; in addition, the employees are rewarded by housing fund, package incentives and further development opportunities, in which way both the Group and the employees could attain a win-win situation.

Products Sales

The Group has sizable and stable customers, of which most are national large-scale steel producers, like Hebei Iron and Steel Group Co., Ltd. (HBIS), Shougang Group and Taiyuan Iron & Steel (Group) Co., Ltd. (TISCO), etc. Among them, Shougang Group, one of the national largest-scale steel producers, is also the substantial shareholder of the Group and has maintained long term co-operational relationship with the Group.