Yanzhou Coal Net More Than Doubles on Higher Prices

By Wang Ying

Aug. 24 (Bloomberg) -- Yanzhou Coal Mining Co., a unit of China's fourth-biggest producer of the fuel, said first-half profit more than doubled because of rising energy demand and record prices.

Net income increased to 3.91 billion yuan ($572 million), or 0.80 yuan a share, from 1.5 billion yuan, or 0.31 yuan, a year earlier, the company said in a Hong Kong's stock exchange filing today. Sales rose to 12 billion yuan from 6.7 billion yuan.

China's economy expanded 10.4 percent between January and June, boosting demand for coal, used to run almost 80 percent of the country's power plants. Benchmark coal prices at China's Qinghuangdao port reached a record 1,080 yuan a metric ton on July 23, according to data posted on the Web site of China Coal Transport and Distribution Association.

``As China still sees high economic growth, the demand for coal for electricity, metallurgy, chemical, building materials and other fundamental industries will remain strong,'' in the second half, Yanzhou Coal said in the statement.

The shares fell 0.2 percent to HK$11.68 in Hong Kong on Aug. 21, before the earnings. The market was closed Aug. 22 for a typhoon. The stock has fallen 24 percent this year, compared with the 27 percent drop in the benchmark Hang Seng Index.

Output Falls

The company's raw coal production fell 0.4 percent to 18.01 million tons between January and June, it said. Sales of the fuel rose by 9.1 percent to 18.51 million tons, it said.

Coal prices will remain ``at a high level'' this year, especially for high-quality thermal coal for power plants, the company said on April 20. Yangzhou Coal plans to increase capital spending by 26 percent this year to 3.7 billion yuan to raise production capacity, it said then.

China has asked coal producers to boost deliveries to power stations to help ease a sixth year of electricity shortages and ensure adequate supplies before the Beijing Olympic Games that will conclude Aug. 24, Vice Premier Li Keqiang said July 31.

The world's biggest coal producer and consumer said it will take additional steps to boost domestic production of the fuel to help ease the nation's electricity crisis, Zhang Guobao, head of the National Energy Administration, China's top energy regulator, said Aug. 18.

The government said imposed a 10 percent export tax on power-station coal and doubled the rate on coking coal, used in steelmaking, to 10 percent on Aug. 20.

The company plans to export 9.1 percent less coal under term contracts at a higher price in 2008 than a year earlier, Yanzhou Coal said on June 3. Contractual shipments in 2008 will help boost revenue by 224.9 million yuan this year, it said then.

To contact the reporters on this story: Wang Ying in Beijing at ywang30@bloomberg.net;