Shenhua Group

Ranking in Global Fortune 2014: 165

Ethical Practices that are followed by the company:Shenhua is a highly integrated coal enterprise with operations spanning from coal mining, coal
transportation, power generation and coal chemical production. Their coal reserves are characterized by
their low sulphur and ash content, and high calorific value; and the costs of its coal mining operation are
low compared with global peers. The company's installed power-generation capacity has also achieved
higher utilization and environmental compliance standards than the national average.

Global Positive Perception about the company:-.

It is the largest coal reserves in China

Achieves economies of scope with its own power sources and transportation network.
It has shown strong technical innovation in production.
It has a very strong technical presence in china
It has a strong workforce of over 75000 employees.

Global Negative Perception about the company:

Very high dependence on only coal as the major product which is a commodity produced by
many competitors.
According to the article Thirsty Coal: A water crisis exacerbated by Chinas new mega coal bases,
projects operated by Shenhua Group has reduced groundwater levels in a region of Inner
Mongolia and discharged high levels of toxic wastewater.
Shenhuas actions directly contravene multiple environmental policies and law.
The right to exploit the local water sources by Shenhua was not approved until January 2006 and
the water extraction permit was not issued until January 2008. When challenged by local
residents, local government officials could produce no water extraction licensing documents.
Local farmers and herders are helpless to protect their water and have been forced to decrease
the amount of land they farm, as well as the size of their herds. The destruction of such a basic
resource has raised strong public anger among outraged local residents, with serious implications
for social stability.
According to Greenpeace, Shenhua has demonstrated nothing other than a huge environmental
catastrophe.

Reasons and Opinions:Coal liquefaction technologies fall into 2 main categories: direct and indirect liquefaction. Indirect
liquefaction requires 14 tons of water for each ton of oil produced, and releases 10 tons of carbon dioxide
into the atmosphere. Direct coal liquefaction uses 12-16 times the amount of fresh water and produces 14
times the amount of carbon dioxide, compared to traditional refining processes. Water in the area has
been relatively abundant in the past. However, since the Shenhua Group began extracting water from the
area on a large-scale in 2006, the groundwater levels have dropped dramatically and there has been
widespread loss of vegetation. Shenhua group lied to the residents, saying that the Shenhua direct

liquefaction project had obtained permission for water extraction from all levels of government, & that the
extraction project must go forward. Construction of a water extraction project prior to approval is an illegal
act, clearly prohibited under the law. Shenhua group is knowingly breaking the law.