China Shenhua Energy (01088) has reported that its board approved entering into a new 2026-2028 Continuing Connected Transactions Framework Agreement with Taiyuan Railway Bureau, which acts on behalf of China Railway. The agreement will become effective on January 1, 2026, and expire on December 31, 2028.
Under this agreement, both sides aim to provide each other with transportation services, coal supply, and other related products and services. According to the announcement, the proposed annual revenue cap for the Group’s provision of products, services, and coal to China Railway is RMB120 billion each year, while the proposed annual expense cap for transportation, coal supply, and other services received from China Railway is RMB250 billion each year. These limits are based on historical transactions, anticipated business expansion—including new logistics contracting projects—and market factors such as coal demand and pricing conditions.
China Shenhua Energy highlights that the pricing terms will follow government-prescribed or guided rates when applicable. Where no official guidance exists, a combination of developed industry standards, comparable market prices, or cost-plus approaches will apply. The move is intended to support the Group’s logistics growth and further expand its transportation revenue and coal supply capabilities.
According to Hong Kong Listing Rules, these activities constitute continuing connected transactions. As certain size thresholds exceed 5%, they are subject to reporting and announcement requirements but are exempt from independent shareholders’ approval. China Shenhua Energy has put in place internal control measures—including regular transaction monitoring, monthly implementation reporting, and annual reviews—to ensure fair pricing and adherence to preset limits. The board, including independent non-executive directors, has deemed the agreement fair and reasonable, stating it serves the company’s and shareholders’ interests.
Execution of the final agreement is pending, and the company will issue an additional announcement in due course upon completion of the signing process.