Coal news and updates

China's coal companies are looking to diversify as they battle a sales slump amid ongoingsupply-side reform.

Among them is the country's biggest coal producer by volume — China Shenhua Energy CoLtd, which has vowed to focus on clean-coal production, renewable energy and nuclear powerto address the national shift of consumption-driven economy, according to its Chairman SteveZhang Yuzhuo.

The company posted a 7 percent year-on-year decline in sales volume in the first two monthsof 2016, and a 21.2 percent slump in February alone despite the cold weather.

"Renewable energy facilities we have already installed have the capacity to generate 6,200megawatts of electricity, and the company is also actively participating in nuclear power," saidZhang at the China Development Forum in Beijing on Saturday.

Shenhua revealed its interest in nuclear power for the first time in October. Ling Wen, thegeneral manager, said the blue-chip company would acquire shares of plants, while activelyapplying for a license and looking for potential plant sites.

The coal producer expects renewable energy output to account for more than 20 percent ofprofits by 2025 as it plans to become a leading clean-energy provider.

Such transformational moves come as China plans to increase the share of non-fossil energyto 15 percent by 2020 and 20 percent by 2030, as well as capping coal's contribution to totalenergy consumption at 62 percent within five years.

Coal accounted for 64 percent of energy use last year, down 4.5 percentage points from2012, when supply gluts and weak demand led to a drop in coal prices.

"As structural reform gets underway, energy companies should be prepared for a relativelylow growth in energy consumption despite an overall 6.5 percent economic growth," said LinBoqiang, president of the China Institute for Studies in Energy Policy at Xiamen University,adding "I'm pessimistic about the prospects of the coal sector."

According to a plan by the National Development and Reform Commission, the top economicplanner, the coal mining sector will slash capacity by 500 million metric tons over the next fiveyears, and the government won't approve any new coal mines before 2019.

Both hardship and the need for an urgent transformation are already being felt, as HidiliIndustry International Development Ltd, the biggest private coal mining company in Sichuanprovince, has reportedly defaulted on a 183 million yuan ($28.28 million) debt. Shenhua alsohad a 40 percent salary cut, the Securities Daily reported earlier.

"Coal will remain the country's main source of energy for some time, but its importance willdefinitely drop. It's only a matter of how fast," said Lin, adding that China's CO2 emissions areexpected to peak around 2030.

Source: Chinadaily