8. Risk from limited services and coal transportation routes
The company still relies on public pathways, transportation services and loading facilities in transporting the Company’s
coal to the delivery points at the shore. The possibility of barriers during the road trip is due to the restoration or
development of
transportation infrastructure
by the
authorities or the Companys restricted ability to utilize the land and sea routes that will cause delays in the delivery of
coal that becomes the obligation of the Company in accordance with the agreements and consumer demands which in the future
may cause claims to the Company or otherwise damage the Companys relationships with its customers. This will cause
material loss to the business, financial condition, results of operations and prospects of the Company.
9. Risk of declining coal quality
The Company sells coal in accordance with certain quality specifications
determined in
the sales
contracts. The
specifications of the quality of coal produced the Company may decline in line with exhausted reserves in some areas of
mining operation of the Company. The decline in coal quality specifications can result in decreasing of the Company’s coal
sales price. Price reductions can cause negative impacts on the financial condition, results of operations and prospects
of the Company.
10. Risk of coal oversupply
Growth in world coal markets and increased global demand for coal has attracted new players in the industry and encourage
the development of new mines and expansion of existing mines in various countries which resulted in increase in global coal
production capacity. Increasing rate of development and the excess of global coal supply in the future may reduce the
global coal price and the coal sales price.
11. Risk of failure or delay in the implementation of the Company’s strategy
The Company through its subsidiaries produces 2.0 million tons of coal in 2010 and plans to increase the amount of production
to 6 million tons in 2011. The ability of the Company and its subsidiaries to increase their coal production, including
their ability to meet coal sales contractual commitments during year 2014 and in the years ahead, has some risks,
including:
The inability of the Company and its subsidiaries to renew contracts with existing contractors or achieve
agreements with new contractors, with profitable terms and conditions.
The inability of the Company and its subsidiaries andor
the contractors in providing equipments and machineries required in coal production chain.