The nation's biggest coal producer, China Shenhua Group, plans to invest 37.5 billion yuan (US$4.6 billion) by the year 2011 to build coal mining facilities in the Northwestern Xinjiang Uygur Autonomous Region.

 

The Xinjiang subsidiary of the State-owned Shenhua Group will build new mines with an annual capacity of 16 million tons.

 

It will also develop a 3.2-million-ton-per-annum coal liquefaction project, auxiliary generation facilities, as well as railways to transport coal from the region, according to a statement from the National Development and Reform Commission (NDRC).

 

"These projects are scheduled to come on stream by the year 2011," the NDRC statement said.

 

A company official from Beijing-based Shenhua, who declined to be identified, yesterday confirmed the new spending in Xinjiang to China Daily, but did not elaborate.

 

"Xinjiang is the focus of our future development because of the region's coal reserves," the company official said.

 

According to statistics from the NDRC, the nation's top economic policy planner, estimated coal reserves in Xinjiang amount to 2.19 trillion tons, 40 percent of China's total.

 

Recoverable reserves stand at 94.93 billion tons.

 

The Shenhua Group last August took over a mining company based in Xinjiang, creating Shenhua Xinjiang Energy Co Ltd, a major move to break into the resource-abundant west.

 

The vast coal-rich Xinjiang is attracting an increasing number of companies, with Shandong-based Luneng Group Co Ltd and Yanzhou Coal Mining Co Ltd two of them, the Shenhua official yesterday disclosed.

 

Chen Guangshui, a senior official with Hong Kong-listed Yanzhou Coal, yesterday declined to comment, saying only that details were not available until the company announces its annual results on April 24.

 

"The biggest hurdle for developing Xinjiang's coal reserves is transportation - we just cannot get the coal out of there cheaply," said Zhu Deren, vice-president of the China Coal Industry Association.

 

But with the coming of new rail facilities as well as advanced technology to turn coal into oil, there are good prospects for those developing coal reserves in Xinjiang, Zhu added.

 

But he warned that if too many firms moved into the area profits could be reduced.

 

In a bid to meet China's surging energy demands, the Shenhua Group wants to buy a Mongolian coal mine with reserves exceeding 1 billion tons, reports say.

 

It is competing with several global Fortune 500 companies for the mine, located near the Mongolian capital Ulan Bator, media sources report.

 

The Shenhua official said he was not aware of the ongoing bidding.

 

Shenhua Group's Hong Kong-listed unit, China Shenhua Energy Co Ltd, had reserves of 5.74 billion tons by the end of 2005.

 

The firm announced plans last year to invest about 7 billion yuan (US$863 million) annually to expand its production by 15 million tons a year over the next three years.

 

Wu Chenghou, executive director of China Coal Sales and Transportation Association, last week said coal prices would remain flat for the rest of this year.

 

(China Daily April 12, 2006)