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On February 12, in Ordos City, Inner Mongolia Autonomous Region, Kailuan Group signed framework agreement on coal chemical project investment with Ordos City ** and Jungar Banner **. Zhang Wenxue, Chairman of Kailuan Group; Li Shirong, **Vice Mayor of Ordos City; and Amu, Head of Zhungeer Banner, signed the Framework Agreement on Coal Chemical Industry Project Investment on behalf of the three parties. The framework agreement covers a project for producing 400,000 tons of formaldehyde per year, a project for producing 40,000 tons of polyformaldehyde per year, and a project for producing 400,000 tons of acetic acid per year. The total investment amount is 3.17 billion yuan, and it is estimated that after all these projects are completed and put into operation, they will generate an annual after-tax profit of 685 million yuan. This coal chemical project is a supporting project for the Hongshuliang mine of Inner Mongolia Kailuan Hongfeng Coal Co., Ltd. Kailuan Co., Ltd. is primarily engaged in coal and coking operations, with these sectors accounting for 30% and 70% of its revenue respectively; furthermore, as projects such as Zhongrun Phase II, Methanol Phase II, 300,000 tons of coal tar production, and 100,000 tons of benzene hydrogenation are implemented, the proportion of revenue from coking operations is set to increase further. In terms of earnings, coal and coking each account for 50%, but due to the cyclical nature of the coking business, its profitability is more volatile than that of the coal business. Xingye believes it is more reasonable to consider Kailuan Co., Ltd. as a company with coal as its core business and coking as a supplementary one. The coal business is expected to experience slight growth, primarily due to the commissioning of the Jinshanpo mine in May-June 2009, which will contribute around 400,000 tons of equity production ； The price of high-quality coking coal has basically stabilized. In the coking business, there is virtually no inventory of coke, the capacity utilization rate is 100%, and the operation is essentially at break-even. It is expected that the 550,000-ton capacity of Zhongrun Phase II (i.e., Coke Oven No. 3) will come online in the second half of the year, resulting in an annual coke production and sales volume of 3.7 million tons. Meanwhile, the second phase of projects involving 100,000 tons of benzene hydrogenation, 300,000 tons of coal tar processing by Cobbs, and 100,000 tons of methanol production will begin trial operations in March. It is expected that the production volumes of benzene, coal tar, and methanol in 2009 will be 25,000 tons, 230,000 tons, and 150,000 tons respectively. Hebei Kailuan Group will develop four major mining areas in Hebei, Inner Mongolia, Xinjiang, and Shanxi. By the end of the 11th Five-Year Plan period, its coal production capacity is expected to reach over 50 million tons per year, with annual revenue exceeding 50 billion yuan. The group is actively considering a full public listing, but the specific timeline and methods have not yet been determined.