Yanzhou Coal sees 2007 exports lower, capex higher

Yanzhou Coal sees 2007 exports lower, capex higher

Yanzhou Coal Mining Co. Ltd. , which posted a 17.6 percent fall in 2006 earnings, will cut exports by half in 2007 to 3 million tonnes due to higher domestic prices.

Director Wu Yuxiang said on Monday it aims to sell 8 percent more coal this year, or 37.5 million tonnes, including 3 million for exports, down from 6.14 million tonnes in 2006.

With annual economic growth in the first quarter of more than 11 percent, China turned into a net importer of the fuel during the period for the first time ever and helped tighten international supplies, particularly in Asia.

Domestic spot coal prices hit historic highs late in January, although they have since pulled back due to seasonal factors.

Asked about imports, Wu said Yanzhou had no plan to import coal, unlike China’s top coal producer Shenhua Group Corp. Ltd. .

He said export prices would be higher this year, without providing details. Domestic spot prices would be stable, he said.

Coal traders said some Chinese coal exporters were seeking export prices of $70 a tonne, a 32 percent rise from 2006, due to strong domestic demand and higher production costs as Beijing tries to ramp up environmental and safey measures at mines.

Wu told reporters the company planned capital investment of 4.15 billion yuan this year, up from 3.36 billion last year, as it expands production abroad as well as at home.

He said it was looking into investment in Australia, Mongolia and Russia, though he gave no further details.

Yanzhou Coal, China’s third largest listed coal miner, has signed domestic coal sales contracts of 13.03 million tonnes this year, with the average contract price rising 19.21 percent from 2006, the company said.

It earned 2.37 billion yuan in 2006, down from 2.88 billion yuan in 2005, with average coal prices slipping 2.4 percent to 341.12 yuan per tonne, mainly due to a 5.5 percent decline in export prices to 382.13 yuan per tonne.

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Wu said a net loss of 255 million yuan at its Australian mine — Austar Coal Mine — was also behind the company’s lower 2006 earnings.

But the company expected the mine to produce 2 million tonnes this year, which should lead to the first profits from the investment.

Wu said the company expected the domestic market to be in balance this year, helped by changes in Beijing’s policy, such as an end to tax rebates for coal exports, the introduction of coal export taxes and lower import tariffs.

Shares in the company edged up 0.12 percent at HK$8.14 at the midsession close.

But the stock has risen 30 percent this year, compared with a 9 percent rise in bigger rival Shenhua and a 69 percent rise in China Coal Energy , China’s number-two coal miner.

Information from: Reuters via asia.news.yahoo.com

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