SPIC News: Stick to Imported Coal Advantage

Since 2012, SEP has been deeply involved in the imported coal business through "first try and first pilot", with the coal imports totaling 27.48 million tons. Compared with the standard coal price delivered at the plant in 2019, it registered a year-on-year decrease of 14.44%, ranking first in Shanghai. Behind this achievement was SEP's "ten-year effort of grinding a sword".

First, we played "three cards" internally to improve the safety of blending combustion continuously. The first card was reversing the value and concept of production personnel from "I am asked to blend" to "I want to blend", from "blending imported coal" to "blending Shenmu coal", from importing coal with high calorific value to importing coal with low calorific value. The second card was strengthening the "appetite" of the units, i.e., improving the blending combustion capacity of the units through technological renovation of the equipment so as to coordinate with the purchase of imported coal. The third card was reinforcing the assessment and incentive. The most important thing for improving the blending combustion ability is to establish the imported coal management and assessment system oriented to the minimum unit price of standard coal delivered at the plant, with higher blending combustion proportion of economic coal type as an incentive, and to insist on special incentives implemented to the unit and to the person. In 2019, the assessment rewards for blending combustion incentive alone exceeded RMB 10 million.

Second, we played "two cards" externally to increase the scale of upstream procurement and maintain a stable supply. The first card was adhering to value creation as first priority. As long as there is good cost performance, we will choose blending combustion, with the aim to form a procurement scale, obtain cooperation with capable suppliers, improve access to quality resources, maintain stable supply, establish reliable supply channels, and enhance our capacity to secure supply. The second card was improving multinational operation capability and expanding self-operated procurement capability through the establishment of a professional team.

Regarding the next-step work, we should find the uncertainties in the certainties. While we have the advantage of the price difference between imported coal and domestic market coal of more than 70 yuan/ton, we also need to have in mind the policy and financial risks such as flat control of total imports, suspension of customs clearance at different places and exchange rate fluctuations, plus the impact of the epidemic on the seagoing vessel transportation, etc. Meanwhile, we should find the certainties in the uncertainties. In the face of the post-epidemic stage, we must run against time, and focus on solving the problems such as imported coal quotas and lack of regional coordination.

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