SK Energy, South Korea's largest refiner, said on Friday it will invest 25.4 billion won ($27.67 million) to acquire a 20-percent stake in a coal mine in China.

SK Gas, an affiliate of SK Energy, will also invest 15.3 billion won to secure a 12 percent stake in the Pingding coal mine in Shanxi Province.

The investment comes at a time when increasing amounts of Chinese coal are being diverted for domestic use, while South Korea's demand is rising.

The head of SK's coal division has previously said South Korea, the world's second-largest coal importer, is expected to see demand increasing 7 percent a year.

The Pingding coal mine produces metallurgical coal, mostly used in the production of steel.

The current production capacity of Pingding is 450,000 tonnes per year, and the mine expects to increase annual production to 1.8 million tonnes by 2009.