CONSTRUCTION IN PROGRESS

3 Months Ended

Mar. 31, 2013

Receivables, Long-Term Contracts Or Programs [Abstract]

CONSTRUCTION IN PROGRESS

6. CONSTRUCTION IN PROGRESS

Construction in progress was for constructing power generation systems.  As of March 31, 2013, the Company had construction in progress of $21.40 million for the Shanxi Datong Coal Group Power Generation project. As of December 31, 2012, the Company had construction in progress of $19.27 million for the Shanxi Datong Coal Group Power Generation project and $3.72 million for the Shenqiu Project Phase II. Shenqiu Project Phase II was completed at the end of March 2013. As of March 31, 2013, the Company was committed to pay an additional $7.89 million for the Shanxi Datong Coal Group Power Generation project.

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 stopping 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) as of the termination date; Hengfeng returned $13.72 million (RMB 86.70 million) to Erdos TCH for construction in progress payments made by Erdos TCH; 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.