Chinese coal giant Shanxi Lu’an Group issued a statement Saturday denying a recent report that its 50-50 joint venture with Shanghai-based Naco Lubrication Inc. is over-extended with debt.
China Energy, a unit of government news arm Peoples Daily, reported two weeks ago that Lu’an-Naco C1 Chemical Co. built up hundreds of millions of yuan in debt over the past three years. The list of major creditors includes large companies such as state-owned construction firm China National Chemical Engineering, Anhui Cable and Shanghai Outong Electric, the report said.
The report also alleged that Lu’an has blacklisted suppliers that demand debt repayment in order to punish them.
Lu’an’s statement denied all accusations, saying the report was false. The company said that it never defaulted and that the joint venture is running well enough to pay back all debts. For example, it said, the JV so far paid CNCE ¥205.1 million ($30 million) against the invoiced amount of ¥239.6 million.
In 2015 the joint venture opened a plant in Changzhi, Shanxi province, that makes high-viscosity polyalphaolefins using feedstock from a nearby Lu’an coal-to-liquids refinery. That plant’s capacity is now 20,000 metric tons per year. Lu’an is currently negotiating to buy Naco’s stake in the JV, officials said recently.
Lu’an’s statement said it repeatedly negotiated with Naco for the parties increased investment in the JV to improve its ability to repay debt but that the sides have not reached an agreement.