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Planet Ark World Environment News China's Yanzhou Plans to Double Coal Output by 2012

Date: 05-Nov-07
Country: CHINA
Author: Niu Shuping and Nao Nakanishi

The company was investing two to three billion yuan (US$268 million-$402 million) to develop new mines as part of the expansion, including a project with Thailand's C.P. Group in Shaanxi province, an official from the mine told Reuters at the company's headquarters on Friday .

But Yanzhou's 2007 coal exports were likely to reach just two million tonnes, falling short of an initial target of three million tonnes, said investment relations officer Jin Qingbin.

China, the world's top coal producer and consumer, emerged as a net importer of the commodity for the first time in January and remained so in each month during the first half of the year, helping to push up global prices to record highs.

Asked about future exports, Jin said: "If the prices are good, we will increase our exports next year. Otherwise we may reduce them further from the current level."

He declined to say at what price the company would be willing to sell more, including spot cargoes, but said domestic sales were more attractive than exports at US$80 a tonne, free-on-board, due to transport costs of about US$10 per tonne.

The company's exports totalled 1.5 million tonnes for the first nine months, including spot sales, Jin said.

SAFETY, AUSTRALIA, SHAANXI

Yanzhou planned to keep output at its six mines in Shandong province at around 34 million to 35 million tonnes -- lower than its historic maximum output of 42 million tonnes -- amid stricter safety regulations imposed by Beijing.

Yanzhou's Austar mine in Australia was unlikely to reach its designed capacity of 3 million tonnes per year until the second half of next year or the first half of 2009, due to serious port congestion, he said.

Austar's 2007 sales would remain low at 1.6 million to 1.7 million tonnes, despite an initial target of two million tonnes, following delays caused by the port bottleneck and typhoons.

Asked about overseas investment, Jin said: "We are looking into Indonesia and Mongolia ... When there is an opportunity, we would also consider acquiring more mines in Australia."

He gave no details.

Its new mine in Shaanxi, in which it has a 41 percent stake, was expected to produce four million tonnes of coal next year.

C.P. Group, the world's No. 2 poultry producer that holds 40 percent, had yet to acquire approval for the mine to start operation.

Its capacity would reach 20 million tonnes by around 2012.

In its home province of Shandong in northern China, Yanzhou was developing two new mines, of which one would start operations in the second half of 2008 with designed capacity of 3 million tonnes, he said. The second one, with capacity of 1.8 million tonnes, would not start production until around 2010.

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