The global development of coal industry is inseparable from China nor can the development of coal industry in China be separated from the world." The flourishing atmosphere seen at the China international coal industry conference 2005 held the other day in Beijing has put a note down to what a responsible person of the Chinese Coal Industry Association said before.

Along with the hike of international oil and gas price the coal industry left heel-cool aside due to the air pollution a few years ago is now turning out a thing very much sought for. China, as a big country of coal production and consumption in the world is arresting the world attention with the development of its coal industry.

Revelation of opportunity for foreign investment

On the first day of the convocation of the coal industry conference when the speeches by responsible person of the energy bureau of the State Development and Reform Commission and the coal industry big-shots from Shanxi, Inner Mongolia and Ningxia, the large coal-producing province and autonomous regions just came to an end we saw many investors from overseas begin to raise questions one following the other at the time putting aside for "questions and answers", expressing their great interests for investment.

An executive director of the Asian acquisition of French Paris Peregrine Group held that the Chinese coal industry had not only to get in foreign investors but also to go out for financing by "looking far into the overseas capital market," because "the Chinese coal industry has already displayed a wider and wider space for profit gains for overseas investors."

Jin Shanzhong, vice governor of Shanxi Province expressed definitely, Shanxi encourages its coal enterprises to develop cooperation with electric power, iron and steel, chemical industry, construction materials and communication and transportation and some other related industries at home and abroad, encourages them to get listed through normal channels, or by way of selling their equities and displacement of property rights or some other means and ways so as to cultivate and develop them into enterprise groups of a comprehensive and international type, thereby raising the competitiveness of the coal industry in Shanxi.

Price for coal used for generating electricity receives high attention
The coal price trend in China, especially the orientation for the reform of the price-setting system for coals used for generating power has turned out a focal point attracting the popular attention from persons concerned at home and abroad.

Person in charge of the price department of the State Development and Reform Commission said frankly, the coal consumption in China is mainly focused in the field for power-generating which accounts for some 50 percent of the coal consumption in society as a whole. As the coal makes up some 50 percent of the power-generating cost and so the price changing of the coal used for power-generating will effect a bigger impact on the benefit of the power-generating enterprises. The production layout of power plants must either be disposed at the mouth of the coalmine pit or designed to cater to the coalmining industry. The coal and electricity depends quite closely on each other with little room to maneuver, which has, to some extent, restricted the competitive role of the coal in the market.

An executive director of Goldman Sachs holds the opinion that the cost of coal is the key variate of the production cost and we've seen an obvious rise of the coal price in China over the past one and half a year. Though the government has already raised the price for electricity yet it is still not sufficient to keep pace with the rise of the fuel cost and so the benefit for electricity has been pressed hard.

"To retain a transparent price-setting and standardized contract will become a very important factor for the Chinese energy department and the international market for coal-shipment," said Preston Chiaro, chairman of international coal industry consultant commission, director of the world coal research institution and CEO of Rio Tinto Energy.

Bottleneck for coal reserve and transportation requires to be solved
One of the major reasons for unreasonable price in the coal market lies in the capacity shortage for coal reserve and transportation. Officials including the transports bureau of the Ministry of Railways present at the conference are all of the opinion that at present, the transportation capacity constitutes the major "bottleneck" restricting the healthy development of the coal market.

"The Chinese enterprises of electric industry have come to realize that the coal transportation to power plants is a serious challenge they have to face with," said Stephen Oldfield, executive director of the Goldman Sachs. As transportation capacity is restricted it has become hard nut to crack for the coal industry to carry out agreements with power plants.

The transportation has not only restricted the price of the coal used for generating power but also incur an influence on the coal industry in drawing in investment. Though most of the energy enterprises from the US, Japan and Holland and from Shanghai and Zhejiang all expressed their strong interests for the rich coal deposits in Inner Mongolia yet they are worried about the transportation ability there.

Person in charge of the transports bureau of the Ministry of Railways said, "Up to now, the annual coal transportation capacity has already exceeded 1.17 billion tons, accounting for more than 47 percent of the total rail transportation capacity and around 33 percent of the total rail turnover volume, the key goods transportation that the railway has to give priority to. However, due to the shortage of railway networks, inferior foundation and overloading the rail transportation capacity has been brought to a very high intensity."

(People's Daily Online)