Tong Gong’s coal and Xing An’s coal are sold to different types of customers.
- Tong Gong’s coal is primarily sold to power plants, cement factories, wholesalers, and individuals for home heating. Coal extracted from Tong Gong coal mine is trucked approximately 500 meters to the nearest rail siding and sold f.o.b. railcar.
- Xing An’s coal, on the other hand, is primarily sold to power plants, metallurgical mills, and fuel-trading companies. Coal extracted from Xing An coal mines is trucked approximately 60 kilometers to a stockyard adjacent to the nearest rail siding and sold f.o.b. railcar.
We sell our coal on a per ton basis directly to our customers. Coal is generally sold to major customers by purchase order signed prior to the beginning of each mining season. These purchase orders generally specify the quantities and timing of purchases planned over a time period generally no longer than one year. The balance of the sales comes from purchase orders issued by the same customers that have additional requirements for coal during the year, or from smaller customers. Net coal sales represent the invoiced value of coal sold and are net of sales taxes, transportation costs, and various miscellaneous fees relating to sales if the invoiced value includes transportation costs to the customers. We have established long-term business relationships with our major customers, and our management believes that these relationships are stable. Once our coal is extracted, it is typically picked up immediately by, or loaded immediately for, delivery to customers, so we do not currently maintain an inventory of extracted coal.