China’s Top Coal Firms Lean on Energy as Mining Profits Slip

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(Bloomberg) — China’s top coal producers are accelerating the move to power plants as fuel prices drop and electrification becomes central to China’s low-carbon transition.

Profits this year at miners such as China Shenhua Energy Co., the country’s biggest producer, and China Coal Energy Co., have come under pressure as the market has weakened. A national mining expansion in recent years has left a glut of coal, and prices have fallen nearly 8% this year while industry-wide mining profits have fallen 22%.

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Shenhua cut coal production in the third quarter after promising earlier this year to cut mining investments. The company added 305 megawatts of new generation capacity in September, most of it as solar panels.

Mining costs are rising due to aging deposits that require deep drilling and increased maintenance to avoid accidents, said Song Jinggang, Shenhua’s chief financial officer, at a press conference on Friday. The company is also taking a final “window of opportunity” to open new mines and thermal power plants in 2025, Chairman Lv Zhiren said, before political pressure begins to shift the nation to coal to meet President Xi Jinping’s climate goals.

Shenhua said earlier this year it would halve the budget at its coal division, and lower its annual target for this year. Although the state-owned parent company, China Energy Investment Corp., is the country’s largest thermal power company, it has diversified its portfolio in recent years to exceed its 2025 Renewables targets and become the world’s largest wind and solar plant operator. , according to on BloombergNEF.

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State-owned China Coal Energy, the country’s fourth-largest miner, has also accelerated the acquisition and construction of new thermal power plants to hedge risks in its core mining business. The company rose to become the nation’s sixth-largest investor in thermal energy last year, based on data compiled by industry news agency BJX.com.

Although more profitable than mining, the energy sector faces its own challenges. Highly competitive regional markets accept cheaper renewables, lowering the prices generators pay. In the southern manufacturing region of Guangdong, which is leading market liberalization reforms, nearly half of energy suppliers will not break even after prices drop below production costs, according to local media reports.

On the phone

China’s lawmakers are gathering in the shadow of the US election to sign off on a multi-billion yuan bailout package but it is unlikely that the market will fully relax.

Morgan Stanley has a positive outlook on China’s solar energy production value chain, citing improving visibility on price recovery and industry consolidation. The price war between solar panel manufacturers may be coming to an end, according to Bloomberg Intelligence.

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The world’s largest aluminum makers have once again stepped up to secure the raw materials needed to make one of the most valuable metals.

Weekly Diary

(Always in Beijing unless otherwise noted.)

Monday, Nov. 4:

• The Standing Committee of the National People’s Congress meets until Nov

Tuesday, Nov. 5:

• Caixin’s China services and composite PMIs, 09:45
• China International Import Expo in Shanghai, day 1
• China International Lead & Zinc Week in Changsha, Hunan, day 1

Wednesday, Nov. 6:

• CCTD weekly online forum on Chinese coal, 15:00
• Asia Tin Week in Shanghai, day 1
• China International Import Expo in Shanghai, day 2
• China International Lead & Zinc Week in Changsha, Hunan, day 2

Thursday, Nov. 7:

• Trade data for China’s first batch for Oct., including iron, steel and copper; steel, aluminum and rare earth exports; oil, gas and coal exports; imported and imported petroleum products; soybeans, edible oil, rubber and meat and offal imports ~11:00
• China reserves for October, including gold
• The ongoing mining conference in Shanghai
• Asia Tin Week in Shanghai, day 2
• China International Import Expo in Shanghai, 3rd day
• China International Lead & Zinc Week in Changsha, Hunan, 3rd day

Friday, Nov. 8:

• Weekly iron ore ports in China
• Shanghai weekly stock exchange, ~15:00
• CASDE’s monthly plant supply demand report
• Asia Tin Week in Shanghai, day 3
• China International Import Expo in Shanghai, 4th day

Saturday, Nov. 9

• China inflation data for October, 09:30
• China will issue a total of Oct. and giving money on November 15
• China International Import Expo in Shanghai, day 5

Sunday, Nov. 10

• China International Import Expo in Shanghai, on the last day

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