Shenhua still soaring

CHINA Shenhua Energy lifted its total September quarter coal production 11% year-on-year while China’s GDP increased 8.9%, with the major producer expecting more favourable domestic coal demand.
Shenhua still soaring Shenhua still soaring Shenhua still soaring Shenhua still soaring Shenhua still soaring

Image courtesy of Shenhua

Blair Price

While its commercial coal production reached 53 million tonnes, Shenhua made 66.5Mt of coal sales, a 17.5% increase year-on-year.

But exports accounted for a mere 3.8Mt in the September quarter, down 20.8% from the corresponding period in 2008.

Shenhua said the weighted average price for domestic sales was 387.5 yuan per tonne ($US56.73/t) for the nine months to the end of September while exports in the same period were up 10% to 578.7 yuan/t ($84.72/t), largely due to carryover of 2008 contract prices.

However, operating costs have risen for Shenhua in 2009 with production for the first nine months increasing 16.6% year-on-year to 89.8 yuan/t ($13.14/t).

Shenhua said fuel and power costs had risen, which was mainly triggered by additional production from its high-cost mines, such as Ha’erwusu, Jinjie and Bu’ertai.

The company had also expanded thin seam mining and top coal caving at its Shendong mines, leading to higher consumables expenditure.

Shenhua, which is listed on the Hong Kong and Shanghai stock exchanges, said its Wanli mines had higher engineering expenses due to complicated geological conditions and its Ha’erwusu mine increased the stripping of overburden.

Higher resource compensation fees, two jumps in national power tariffs, environmental expenses and coal selection fees were other factors.

Looking at China’s coal industry, Shenhua said national raw coal output for the first nine months of 2009 had reached 2.14 billion tonnes, up 10.3% year-on-year.

The producer said national coal export volumes were down 52.8% year-on-year to 16.85Mt.

With China importing an unprecedented level of coal this year, Shenhua said the national import volume for the first nine months reached 86.48Mt, a jump of 167.2% year-on-year.

Subtracting the country’s exports, the national net coal imports reached 69.63Mt.

Shenhua said China’s coal inventory was 187.6Mt by the end of September and was remaining stable compared to the start of 2009.

The producer was encouraged by China’s economic performance, especially as GDP in the September quarter grew by 8.9% year-on-year and was 1% higher than the growth in the June quarter.

“The continuous good performance of the macro economy is favourable for the coal demand,” Shenhua said.

The company had net profit of 26.03 billion yuan ($3.81 billion) for the first nine months of 2009, a gain of 14.6% from the same period last year.

Shenhua ended September with a cash position of 39.44 billion yuan ($5.77 billion).

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