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More Global Energy Firms Covet China Coal Industry

Dec 11, 2007 - SinoCast

More international energy companies expect to build a presence in China's fast-growing coal industry in line with the nation's related policies in the near future.

Till now, Asian American Gas, Inc. (AAGI) has been th only one among them that has successfully marched into the domestic coal sector. Several companies have been forced to shift their focus and start making investments in the downstream coal sector and coal machinery field, while more ones still expect the upcoming change.

"From 2005 to 2030, the world's total coal demand is predicted to surge 70%," said a famed energy expert. "Both China and India will turn into the two main consumers worldwide at that time."

Meanwhile, the expert suggested that China should open its arms to more international energy investors, chiefly because the nation is lacking in advanced technologies in its coal sector now.

The nation is forecasted to see the peak coal output of 4 billion tons by the end of 2030, making up 50% of the world's total figure. In addition, it is likely to need a total investment of about USD 1 trillion in the coal industry.

Therefore, Peabody Energy (NYSE: BTU), Anglo Coal, and other global energy tycoons all have great interests to invest in China's upstream coal businesses, said people close to the matter.

As one of the largest private coal companies in the US, Peabody Energy has exploited coal deposits in Australia as well as Venezuela, besides owning several large-scale open-pit coalmines around its homeland.

Recently, the US-based company set up the representative office in Beijing. "We expect to become one of the important producers in the Chinese coal field on the strength of our abundant capital advantage and mature sales network," Tayeb Tahir, president of Peabody Energy China, said frankly.

Currently, China is actively promoting the integration of highly-fragmented coal industry, in an effort to create thirteen coal production bases across the country. Each of them is estimated to achieve an annual output of more than 100 million tons.

As a matter of fact, it is indeed a lucrative opportunity for foreign investors, by reason that these bases above need to upgrade the production capacity via introducing advanced technologies from the overseas market.

This year, with regulatory approvals from Chinese aughorities, AAGI started exploiting Daning Coalmine in Shanxi, a coal-rich province in north China, in cooperation with a local company.

It grew into the first foreign energy company making performance in the Chinese coal exploitation field.