Power firms shop overseas for cheap coal
China's major power generating companies are planning to buy more coal from overseas markets, as high domestic coal prices have cut their profit margins significantly.
The country's main power generators, including China Huaneng Group, China Datang Corp, China Guodian Corp, China Huadian Corp, China Power Investment Corp and China Resources Power Co, are contacting coal producers in other countries. They're planning to hold a conference for coal contracts after the Chinese Lunar New Year, celebrated on Jan 26, reported China Times, citing an executive with one power company.
"We are now talking with coal companies in Australia, Indonesia, Russia and Mongolia to secure stable coal supply," said the executive, who declined to be named.
In the first half of 2008, the sharp rise in domestic coal prices put many power companies into the red.
Xue Jing, director of the statistics department at the China Electricity Council, earlier told China Daily that China's power companies may incur 70 billion yuan losses in 2008 due to rising fuel costs and lackluster electricity demand.
"Although now the coal price has seen a sharp drop compared with last summer, we are still under big pressure," one source with China Huaneng Group told China Daily.
He said in past years Huaneng has imported some coal from foreign companies, but the amount was "not very big".
The company is now considering some investments in overseas coal mines, such as in Australia, he said.
To cope with the rising prices of raw material, Huaneng is eyeing abundant coal reserves in western China to increase its coal production, he said. For instance, the company plans to take part in some coal projects in Shaanxi, Ningxia and Xinjiang.
China's leading power companies have failed to reach an agreement with coal miners on coal supply contracts in 2009 as they are unwilling to concede to the miners' demands for higher prices.
Coal companies were set to sell 840 million tons to power producers at the annual coal contract negotiations. However, only about half of the coal offered by the miners was sold, said an official with China Coal Transport and Distribution Association, who declined to be named.
(China Daily 01/24/2009 page10)
