The State Council has approved to establish the China Taiyuan Coal Business Centre in the middle of May. It means the original local coal market will be promoted to a national coal business center.

Establishing the center will help form an integrated national coal market and build a national pricing system -- the "China price", which is likely to impact the pricing of the world coal market in the future, according to Ouyang Yexin, general manager of the Taiyuan Coal Business Center.

The governor of Shanxi province, Yu Youjun said the planned economy has controlled the coal industry for a long time and needs to be changed. Although Shanxi produces coal for the whole country, the government, for years, has controlled the price, not the market, which is not fair to coal companies.

Zhang Genhu, general manager of the Shanxi Province Coal Transportation and Sale General Company is advocating the establishment of the new center. He said the only way to resolve the country's problems in coal supply and demand is to reform the marketing system, and the establishment of the coal business center is a beginning of it.

Zhang said the center is also expected to help the country build up or improve the systems in mining, transportation and consumption It can form a transparent, fair business market to support the coal industry.

A report from the China Youth Daily said that China exports 80 million tons of coal per year, which is the third biggest coal exporter in the world, with the export of coke making up 57 percent of the world total. However, the coal companies don't have any power to decide the coal price because the domestic market system is inefficient and disorganized.

By establishing this coal business center, China can release the China price to the world coal market, Zhang added. The coal business center will sell 800 billion yuan (US$104.4 billion) of coal per year, and he hopes the centre will become one of the most important exchange markets in the world, on par with New York and London oil markets

According to the plan of Shanxi government, China Shanxi Coal Business Center will complete its development planning before June, and construction is expected to start in late September.

The new center will have an Internet system to support online business and e-banking, providing a convenient way for clients to do business transactions, an official said.

The first stage of the project will need an investment of 1 billion yuan (US$130 million) to establish a company that will be named China Taiyuan Coal Business Center Co Ltd.

(For more biz stories, please visit Industry Updates)