Sentient makes first direct investment in China

The Sentient Group, a private equity firm focussing on metals, minerals and energy sectors, has backed a joint venture that will operate two mines and a power station in China.

The Sentient Group, a private equity specialist in metals, minerals and energy, has invested $34 million for a 30 percent stake in Xiyang Energy, a joint venture with the Chinese government’s State Development and Investment Corporation

It will operate two anthracite coal mines and one 270 megawatt coal-gangue fired power station in Shanxi province, according to a statement.

China’s energy and power consumption has been accelerating on the back of the country’s impressive economic growth. Globally, the surge in global oil prices has raised interest and not surprisingly, private equity investments in the resource and power sectors. Washington DC-based Paladin Capital and a fund led by Credit Suisse, together with the backing of the Abu Dhabi government, recently invested $77 million in a US solar film maker.

The State Development and Investment Corporation is a government-owned investment holding company with an asset base of more than $15 billion. It owns 60 percent of Xiyang Energy and is the operator of the mines and power station. Xiyang Feng Hui holds the remaining 10 percent in the venture company.

The first mine and power station will be commissioned in September 2007 and the second mine is due to be commissioned toward the end of 2008.

Xiyang Energy is the sixth investment from $375 million Sentient Global Resources Fund II, a 2006 vintage. The fund has been invested in coal bed methane, gold and copper in Argentina, Australia, Papua New Guinea and Namibia.