China to build strategic coal reserves: report

Nov. 17, 2009 (China Knowledge) - China is planning to create a strategic coal reserve as China's fuel imports have been increasing due to its continuous and heavy investment in infrastructure and industrial output, Japan's Nikkei business daily reported.

China, which expects to keep the equivalent of about 10% of domestic consumption in reserve, may launch the plan as early as 2010, as coal imports may exceed exports for the first time ever on an annual basis. Currently, 70% of the country's energy comes from coal.

The Chinese government recently ordered China Shenhua Energy Co Ltd<601088><1088>, the largest coal producer in the country, to establish a network of ten reserve sites which can reserve between 100 million and 200 million tons of coal.

China Shenhua Energy predicted that its net profit will grow by 18% year on year in 2009 due to increasing coal demand amid macroeconomic recovery. Revenue will increase an estimated 14% year on year to an estimated RMB 160 billion this year, China Knowledge reported earlier.

China produced and consumed 2.7 billion tons of coal in 2008, accounting for 40% of the world's total, sources said.