CONSTRUCTION IN PROGRESS

12 Months Ended

Dec. 31, 2012

Receivables, Long-Term Contracts Or Programs [Abstract]

CONSTRUCTION IN PROGRESS

6. CONSTRUCTION IN PROGRESS

Construction in progress was paid for constructing power generation systems.  As of December 31, 2012, the Company had construction in progress of $19.27 million for the Shanxi Datong Coal Group Power Generation project (See Note 20) and $3.72 million for the Shenqiu Project Phase II (See Note 20). As of December 31, 2011, the Company had construction in progress of $19.77 million for Phase III of the Erdos TCH power generation system projects; however, this construction was terminated in September 2012 due to Erdos stopped construction of the refining plant; and $12.70 million for the Shanxi Datong Coal Group Power Generation project. As of December 31, 2012, the Company was committed to pay an additional $10.02 million for the Shanxi Datong Coal Group Power Generation project and $7.10 million for Shenqiu Project Phase II.

In September 2012, Erdos TCH, Erdos and general contractor Xianyang Hengfeng Energy Engineering Co., Ltd (“Hengfeng”) terminated the construction of Phase III of the power generation system projects due to Erdos stopped construction of the refining plant as a result of a change in business strategy. Cost of construction in progress which Erdos TCH paid for Phase III of the project was $19.86 million (RMB 125.44 million) at termination date, Hengfeng returned $13.72 million (RMB 86.70 million) to Erdos TCH towards payments made for construction in progress; and Erdos compensated $3.58 million (RMB 22.04 million) to Erdos TCH for the loss, Erdos TCH in turn paid $0.32 million (RMB 2.0 million) to Hengfeng for the loss from the project termination; accordingly, Erdos incurred a net loss of $2.96 million (RMB 18.74 million) from termination of this project.