China - Changcun (Luan) Coal Mining Project

Document of The World Bank FOR OFFICIAL USE ONLY Reprl No. P-3950-CTA REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO $126.0 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE CHANGCUN (LUAN) COAL MTNING PROJECT February 21, 1985 This docunent has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Yuan (Y) = 100 Fen Calendar 1983 January 1985 $1.00 = Y 1.98 Y 2.80 Y 1.00 = $0.51 $0.36 FISCAL YEAR January 1 - December 31 Weights and Measures BTU - British Thermal Unit (= 0.252 kilocalories) GWh - Gigawatt hour (= 1 million kilowatt hours) kcal - Kilocalorie (= 3.97 British Thermal Units) kcal/kg - Kilocalorie per kilogram (= 1.805 British Thermal Units per pound) kgce - Kilogram of coal equivalent (= 0.641 kilogram of oil equivalent) MW - Megawatt (1,000 kilowatts) km2 - Square kilometer (= 247.1 acre or 0.3861 square mile) t - Tonne (metric tone) (1,000 kg = 2,205 pounds) PRINCIPAL ACRONYMS AND ABBREVIATIONS CCD - Capital Construction Department CCDCC - China Coal Mine Design and Consulting Company CIC - Coal Industrial Company CMA - Coal Mine Administration CNCDC - China National Coal Deve!.opment Corporation CNCEIC - China National Coal Expc.t and Import Corporation rNTIC - China National Technical Import Corporation GVIAO - Gross Value of Industrial and Agricultural Output LRMC - Long Run Marginal Cost mtpy - million tonnes per year PCB - Provincial Coal Industry Board PPCC - Priority Project Coordination Committee ROM - run-of-mine SAA - State Audit Agency SPC - State Planning Commission t/ms - tonne per manshift toe - tonnes of oil equivalent  FOR OMCIAL USE ONLY CHINA CHANGCUN (LUAN) COAL MINING PROJECT Loan and Project Summary Borrower: The People's Republic of China Beneficiary: The Luan Coal Industrial Company (Luan CIC) Amount: $126.0 million Terms: 20 years, including 5 years of grace, at standard variable interest rate Onlending Terms: The proceeds of the loan will be onlent from the Government to Luan CIC, with a term of 20 years including 5 years of grace and an interest rate of 8.0% p.a. The Luan CIC will bear the foreign exchange risk (between the dollar and the Borrower's currency). Project Description: The project is an important element in the Govern- ment's policy to double coal output to 1,200 million tonnes per year (mtpy) by the year 2000. The project is the first of a series of large-scale, fully mechanized coal mining operations in the country. It will contribute to: (a) increasing coal production by about 4.5 mtpy by the early 1990s; (b) transferr- ing technclogy in mine design, engineering and construction (especially the highly productive, mechanized longwall exploitation technology); (c) introducing modern coal washing technology; and (d) fostering improved management techniques for project scheduling, monitoring and cost control. The project will finance construction of the Changcun mine, including vertical shafts, underground roadways, and longwall faces; construction of a coal preparation plant; equipment for coal extraction, washery and loadout operations; and surface infrastructure including a railway spur line, an electrical substation, water supply lines, workshops, and warehouses. Risks are normal for a major coal mining project of this type. The project's technical assistance and training program will assure adequate support for project implementation and facilitate development of technical and managerial skills of local staff. The Government is planning to raise coal prices to approach the long run marginal cost of production within the Seventh Five-year Plan (1986- 90) and maintain that level in real terms thereafter. I This document has a restricted distribution and may be used by recipients only in the performance | of tl-eir official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Cofinancing (grant aid) has been secured from the Federal Republic of Germany ($1.9 million) and UNDP ($384,000) for project preparation and technical assistance. Estimated Costs: Local Foreign Total