The mainland's largest coal producer, China Shenhua Energy (1088), is set to sign a project contract with Russia next month, expecting higher demand from earthquake-stricken Japan.
"Coal prices, specially that of steam coal, will be beefed up, due to thermal power generation during Japan reconstruction," chairman and executive director Zhang Xiwu said.
He said the company is building coal reserves in Zhuhai, Zhenjiang and Guangzhou to lower shortfall risks. Zhang expects to sell up to 370 million tonnes of coal this year, beating a previous forecast of 350 million tonnes. But the firm's gross profit margin for 2011 is likely to fall, due to weak profitability of traded coal and higher costs.
Shares of China Henshua close 0.43 percent higher at HK$34.95.
Meanwhile, fellow mainland coal producer, Yanzhou Coal (1171) plans to hike capex to 5.1 billion yuan (HK6.06 billion), Chairman Li Weimin said.
Talks are on to buy assets in Australia, Indonesia, Canada and Mongolia, chief financial officer Wu Yuxiang said, with the company planning to triple coal output to 150 million tonnes in the next five years. Yanzhou shares closed 1.58 percent higher at HK$25.65.
Meanwhile, CITIC Resources (1205) raised its capex target to US$380 million (HK$2.96 billion) this year from US$239 million in 2010, mainly for overseas asset acquisitions. The stock dropped 1.18 percent to HK$1.68 yesterday.
NATALLIE CAI
the standard dotcom