China Coal Energy, the country's second-largest coal producer, is seeking investment opportunities in Australia and Indonesia as demand for energy back home on the mainland continues to grow.

Second only to Shenhua Energy among the country's coal producers, China Coal aims to export 18.9 million tons of coal in 2008, the same as last year. That goal, company executives say, comes despite government limitations on coal exports, as well as the appreciating yuan.

The coal producer secured an initial quota this year to ship 13.15 million tons of coal abroad.

Mainland coal exporters have been permitted, so far, to sell 31.8 million tons of coal.

Further exporting approval may be issued later. China Coal Energy Chairman Jing Tianliang said: "We are always seeking investment opportunities overseas, and we are now doing feasibility studies".

At a press conference yesterday, Jing said the company is targeting Australia and Indonesia, among other countries. He also noted that the goal is to repeat last year's export total.

Peter Batchelor, minister for energy and resources for the Australian government, said during his recent visit to Beijing that there is great potential for China and Australia to cooperate in energy technology.

Yang Lieke, executive director of China Coal Energy, said yesterday that the firm intends to set aside 16.16 billion yuan to build up its core coal and coal-chemical business this year.

The coal company recorded net profits of 6.02 billion yuan last year, a 90 percent increase, year-on-year.

Goldman Sachs maintained its "neutral" rating on China Coal Energy, with a target price of HK$15, after the company's 2007 results met expectations.

Goldman Sachs added that the company's sales volume of 69 million tons of self-produced coal, up 21 percent year-on-year, was also in line with its expectations.

However, the investment bank warned of risks on the demand side.

It said aggregate growth of mainland coal exports is slowing - from 19 percent in 2007 to 12 percent this year - as foreign demand weakens and the yuan appreciates.

Dick Lee, corporate finance officer at Phillip Securities, said it will be difficult for the company to record a large growth in 2008, as the business environment isn't as favorable.

(HK Edition 04/11/2008 page2)