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Tuesday, 03 November 09
CHINA TO BE NET COAL IMPORTER IN 2009


China is accelerating its importation of coal to cope with fallen output caused by the consolidation of small coalmines, and is likely to become a net importer in 2009 for the first time, said a JPMorgan report.

Under the circumstance, domestic companies began seeking investment opportunities in the overseas coal market in order to ensure domestic supplies.

On October 27, China Investment Corp. announced it would invest 500 million US dollars in Canada-based SouthGobi Energy Resources through the purchase of its 30-year convertible bonds. If China Investment Corp. were to convert all the bonds, it would acquire 22 percent equity of SouthGobi.

SouthGobi mainly explores for power coal resources in Mongolia and sells to China's Gansu province. The cooperation between China Investment Corp. and SouthGobi conjoins the two Gansu's power coal market.

Similarly, Huaneng Group, one of China's five power giants, also announced this July that it planned to acquire 51 percent equity of PT. Berau Coal, Indonesia's fifth largest coal producer, to guarantee its own coal supply to domestic power plants.

In fact, quite a few domestic power producers have shown overseas acquisition interests. Although overseas acquisitions are difficult, they still provide a way to maintain steady coal imports, noted an insider with Huaneng Group.
Source: China Mining



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