ANNOUNCEMENT CONNECTED TRANSACTION ESTABLISHMENT OF SHENHUA GUOHUA JIANGSU POWER SALES CO., LTD.

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1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock Code: 01088) ANNOUNCEMENT CONNECTED TRANSACTION ESTABLISHMENT OF SHENHUA GUOHUA JIANGSU POWER SALES CO., LTD. On 19 January 2017, the Company and Shenhua Renewables entered into an investment agreement on the establishment of Shenhua Guohua Jiangsu Power Sales Co., Ltd. to establish a joint venture, Shenhua Guohua Jiangsu Power Sales Co., Ltd.. Pursuant to the JV Agreement, the registered capital of Jiangsu Power Sales shall be RMB500,000,000. The Company and Shenhua Renewables shall contribute 65% and 35%, respectively, of the registered capital of Jiangsu Power Sales. Shenhua Renewables is a subsidiary of Shenhua Group Co. Shenhua Group Co holds 73.06% equity interest in the Company and is the controlling shareholder of the Company. Therefore, Shenhua Renewables is a connected person of the Company as defined in the Hong Kong Listing Rules. As such, the entering into the JV Agreement and the transaction contemplated thereunder constitutes a connected transaction of the Company pursuant to Chapter 14A of the Hong Kong Listing Rules. 1

2 On 20 July 2016, the Company executed the Shenhua Guohua Ningdong Power JV Agreement with Zheneng Group and Shenhua Ningxia Coal to establish Shenhua Guohua Ningdong Power. The JV Agreement and the Shenhua Guohua Ningdong Power JV Agreement were entered into between the Company and the subsidiaries of Shenhua Group Co. Pursuant to Rule 14A.81 of the Hong Kong Listing Rules, these transactions shall be aggregated. As one or more of the applicable percentage ratios (as defined under Rule of the Hong Kong Listing Rules) of the aggregated transaction amounts of the JV Agreement and the Shenhua Guohua Ningdong Power JV Agreement exceeds 0.1% but all are less than 5%, the JV Agreement and the transaction contemplated thereunder are subject to the reporting and announcement requirements but is exempt from the independent shareholders approval requirement under Chapter 14A of the Hong Kong Listing Rules. I. BACKGROUND On 19 January 2017, the Company and Shenhua Renewables entered into an investment agreement on the establishment of Shenhua Guohua Jiangsu Power Sales Co., Ltd. to establish a joint venture, Shenhua Guohua Jiangsu Power Sales Co., Ltd.. Pursuant to the JV Agreement, the registered capital of Jiangsu Power Sales shall be RMB500,000,000. The Company and Shenhua Renewables shall contribute 65% and 35%, respectively, of the registered capital of Jiangsu Power Sales. II. JV AGREEMENT Date 19 January 2017 Parties The Company Shenhua Renewables Basic information of Jiangsu Power Sales Name of company to be established: Registered capital: Place of registration: Shenhua Guohua Jiangsu Power Sales Co., Ltd. (tentative name subject to registration at the Administration for Industry and Commerce) RMB500,000,000 5 Jiangning Road, Qinhuai District, Nanjing, Jiangsu Province, the PRC 2

3 Business scope: Term of operation: Purchase and sale of electricity and the operation and management of the multigeneration of heat, electricity, cooling, gas and water; technology development of new energy, technology consultation, technology transfer, technical services; technology development of distributed energy and related services; EPC; development, promotion and consultation services of energy conservation technology; set-up and design, construction, repairs and maintenance of the distribution network; set-up and design, construction, repairs and maintenance for electricity generation; set-up and design, construction, repairs and maintenance for heat generation; integration and development of relevant application data and related services. (Except for those businesses prohibited by national laws and regulations. Products under licensing arrangement shall only be rendered after obtaining relevant permits and subject to the final approval of the Administration for Industry and Commerce.) Permanent existence Contribution of registered capital Total amount of contribution (percentage of total registered capital) Payment method of registered capital The Company RMB325,000,000 (65%) To be paid in full within 20 business days commencing from the execution of the JV Agreement Shenhua Renewables RMB175,000,000 (35%) To be paid in full within 20 business days commencing from the execution ofthe JV Agreement After the establishment of Jiangsu Power Sales, if registered capital needs to be increased, the Company and Shenhua Renewables will increase their contribution according to shareholding percentage of 65% and 35%, respectively. If one party does not increase their contribution according to the above ratio and shareholding percentage is changed, the shareholding percentage shall be adjusted on the basis of asset valuation and the actual capital contribution amount of each party. 3

4 The board of directors The board of directors of Jiangsu Power Sales shall comprise five directors, in which the Company shall nominate three directors (one will be the chairman of the board of directors), Shenhua Renewables shall nominate one director, and all of the employees shall elect one director. The supervisory committee The supervisory committee of Jiangsu Power Sales shall comprise three supervisors, in which the Company shall nominate one supervisor, Shenhua Renewables shall nominate one supervisor who will be the chairman of the supervisory committee, and all of the employees shall elect one supervisor. Senior management Jiangsu Power Sales shall have one general manager and one chief financial officer who shall be nominated by the Company. Vice general managers shall be nominated by the general manager and appointed by the board of directors. Consolidation of financial statements The Company will consolidate the financial statements of Jiangsu Power Sales. Share of profits Pro rata to the registered capital actually contributed by the Company and Shenhua Renewables. Applicable law The laws of the PRC. The terms of the JV Agreement were arrived after arm s length negotiation between the parties. III. REASONS FOR AND BENEFITS OF ENTERING INTO THE JV AGREEMENT AND ESTABLISHMENT OF JIANGSU POWER SALES By the end of 2016, the installed capacity of three coal-fired generation enterprises controlled and operated by the Company in Jiangsu Province amounted to approximately 4,580MW; and the installed capacity of wind power and solar power generators controlled and operated by Shenhua Renewables in Jiangsu Province amounted to approximately 691MW. Jiangsu Power Sales will serve as the business platform of the Company and Shenhua Renewables in Jiangsu Province and will mainly be engaged in the distribution and sale of electricity generated by self-owned generation units and third party generation units and are available to be sold in the market. 4

5 The establishment of Jiangsu Power Sales will help the Company in capturing market opportunities arising from the national electricity system reform, proactively participating in the establishment of the electricity distribution and retail market in Jiangsu Province and further strengthening the Company s competitiveness in the electricity retail market in Jiangsu Province. IV. HONG KONG LISTING RULES IMPLICATIONS Shenhua Renewables is a subsidiary of Shenhua Group Co. Shenhua Group Co holds 73.06% equity interest in the Company and is the controlling shareholder of the Company. Therefore, Shenhua Renewables is a connected person of the Company as defined in the Hong Kong Listing Rules. As such, the entering into the JV Agreement and the transaction contemplated thereunder constitutes a connected transaction of the Company according to Chapter 14A of the Hong Kong Listing Rules. On 20 July 2016, the Company executed the Shenhua Guohua Ningdong Power JV Agreement with Zheneng Group and Shenhua Ningxia Coal to establish Shenhua Guohua Ningdong Power. The JV Agreement and the Shenhua Guohua Ningdong Power JV Agreement were entered into between the Company and the subsidiaries of Shenhua Group Co. Pursuant to Rule 14A.81 of the Hong Kong Listing Rules, these transactions shall be aggregated. As one or more of the applicable percentage ratios (as defined under Rule of the Hong Kong Listing Rules) of the aggregated transaction amounts of the JV Agreement and the Shenhua Guohua Ningdong Power JV Agreement exceeds 0.1% but all are less than 5%, the JV Agreement and the transaction contemplated thereunder are subject to the reporting and announcement requirements but is exempt from the independent shareholders approval requirement under Chapter 14A of the Hong Kong Listing Rules. V. GENERAL INFORMATION The Directors, including the independent non-executive Directors, consider that the terms of and the transactions contemplated under the JV Agreement are fair and reasonable, on normal commercial terms or better and in the ordinary and usual course of business of the Group, and are in the interests of the Company and its shareholders as a whole. The Board has resolved and approved the JV Agreement and the transactions contemplated thereunder on 19 January Of the Directors attending the Board meeting, Dr. Zhang Yuzhuo, Dr. Ling Wen, Dr. Han Jianguo, Dr. Li Dong, Mr. Chen Hongsheng and Mr. Zhao Jibin were considered to have material interests by virtue of being employed by Shenhua Group Co, and had thus abstained from voting on the relevant Board resolution in respect of the relevant transaction. 5

6 VI. GENERAL INFORMATION ON THE PARTIES INVOLVED IN THE TRANSACTION The Company is a world-leading integrated energy company. The main business of the Company and its subsidiaries includes production and sales of coal and power, railway, port and ship transportation, and coal-to-olefins and other coal related chemical processing business. Shenhua Renewables is a subsidiary of Shenhua Group Co, the holding company of the Company. Shenhua Renewables is mainly engaged in wind and solar power generation, and investment and financing activities. DEFINITIONS The following expressions shall have the following meaning unless the context requires otherwise: Board Company Director(s) Group Hong Kong Listing Rules Jiangsu Power Sales JV Agreement PRC RMB the board of Directors of the Company; China Shenhua Energy Company Limited ( ), a joint stock limited company incorporated in the PRC with limited liability, the H shares of which are listed on The Stock Exchange of Hong Kong Limited; the director(s) of the Company; the Company and its subsidiaries; The Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited; Shenhua Guohua Jiangsu Power Sales Co., Ltd. ( ), a joint venture to be established by the Company and Shenhua Renewables in Nanjing City, Jiangsu Province, the PRC; the investment agreement on joint establishment of Shenhua Guohua Jiangsu Power Sales Co., Ltd. executed on 19 January 2017 by and between the Company and Shenhua Renewables; the People s Republic of China; Renminbi, the lawful currency of the PRC; 6

7 Shenhua Group Co Shenhua Guohua Ningdong Power Shenhua Guohua Ningdong Power JV Agreement Shenhua Ningxia Coal Shenhua Renewables Zheneng Group Shenhua Group Corporation Limited ( ), the controlling shareholder of the Company as defined under the Hong Kong Listing Rules; Shenhua Guohua Ningdong Power Generation Co., Ltd.. ( ), a limited liability company incorporated in the PRC, and is a subsidiary of the Company; the Shenhua Guohua Ningdong Power Generation Co., Ltd. JV Agreement executed on 20 July 2016 by and among the Company, Zheneng Group and Shenhua Ningxia Coal; Shenhua Ningxia Coal Industry Co., Ltd. ( ), a limited liability company incorporated in the PRC, and is a subsidiary of Shenhua Group Co; Shenhua Renewables Co., Ltd. ( ), a limited liability company incorporated in the PRC, and is a subsidiary of Shenhua Group Co; and Zhejiang Provincial Energy Group Co., Ltd. ( ), a limited liability company incorporated in the PRC. By order of the Board China Shenhua Energy Company Limited Huang Qing Secretary to the Board of Directors Beijing, 19 January 2017 As at the date of this announcement, the Board comprises the following: Dr. Zhang Yuzhuo, Dr. Ling Wen, Dr. Han Jianguo and Dr. Li Dong as executive directors, Mr. Chen Hongsheng and Mr. Zhao Jibin as non-executive directors, and Ms. Fan Hsu Lai Tai, Mr. Gong Huazhang and Mr. Guo Peizhang as independent non-executive directors. 7