By Wan Zhihong (China Daily)
Updated: 2008-01-07 11:30

Coal production bases

Along with building large coal enterprises, China will not approve new coal mine projects with an annual capacity of less than 300,000 tons during the 11th Five-Year Plan period (2006-10), according to the industry policy published last November.

In coal-rich provinces such as Shanxi, Shaanxi and the Inner Mongolia Autonomous Region, proposed coalmine projects will need a capacity of over 1.2 million tons per year for approval.

A total of 13 coal production bases will be built before the year 2010. All of them are located in the central and the western parts of the country, the policy says.

China will further develop coal projects in central regions while accelerating the exploration and development of coal resources in western regions.

China has proven coal reserves of 1 trillion tons, the third largest in the world. During the 10th Five-Year Plan (2000-2005), the industry has seen an increase of 11 percent year on year.

As the world's largest coal producer, China's production accounts for over one third of coal mined worldwide. "Raising entry requirements for coal projects is good for sustainable development for the industry," says Liang.

Going overseas

In search of further development, some leading domestic coal enterprises have begun cooperation agreements with foreign companies. In 2004, Yongcheng Coal & Electricity Group Co Ltd, a coal producer in central China's Henan Province, signed a coal production agreement with Brazilian mining giant CVRD.

The deal allows the company to learn advanced business practices and technologies from CVRD, President Chen Xuefeng tells China Business Weekly.

Some of the Chinese companies have their sights set on overseas coal assets. In 2004 Shandong-based Yanzhou Coal bought a coalmine in Australia, which is the first overseas acquisition of Chinese coal enterprises.

Shenhua is also considering overseas investments to boost production. The company is now in talks to buy a coking coal deposit in Mongolia to increase its coal resources, Huang Qing told China Business Weekly earlier.

If approved, the deposit will yield more than 10 million tons of coking coal annually. The deal still depends on the Mongolian government's offer, Huang said, without elaborating.

Earlier media reports said Shenhua was considering a $4 billion bid for a controlling stake in an Indonesian coal producer. However, sources with Shenhua have not commented on the deal.

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