“The company continued to promote its internationalization process,” Shenhua said.

“In Australia, work related to Watermark project, including the exploration, feasibility study and environmental assessment has made smooth progress.

“The integrated coal and power project in South Sumatra, Indonesia, is anticipated to be put into operation in 2011.”

The dominant Chinese coal producer and significant electricity generator is in a strong position to provide insights into the country’s thermal coal demand.

As imported coal slips below domestic prices for more prolonged periods, Shenhua said China has become a net importer of coal for two consecutive years.

This trend strengthened last year with China importing 146 million tonnes, up 40.9% from 2009.

Shenhua expects coal demand to “grow steadily” but remain “relatively stable” this calendar year, while it forecasts the need for imported coal to fall as thermal coal prices remain high in the Asia Pacific.

While China’s coal production capacity was expected to grow, transportation woes and industry consolidation will still create supply constraints.

“The continuous consolidation of coal resources in various provinces and regions will restrain the growth in coal production volume,” Shenhua said.

“As major coal producing areas are moving to the western part of China gradually, it is expected that the phenomenon of slightly tight railway transportation capacity will still appear during the peak season for coal consumption in 2011.

“Meanwhile, the release of production capacity of coal mines in certain regions in Inner Mongolia, Shaanxi and Ningxia is restrained by railway transportation capacity and the situation of “production determined by transport” will still exist.”

Shenhua increased coal sales 15.1% year-on-year to 292.6Mt in 2010, with just 10.3Mt consisting of export sales.