China's Shenhua suspends two coal mines, Mongolia set to benefit

Mongolian Mining

04/08/2017 10:51

ULAANBAATAR, Aug 4 (Reuters) - China Shenhua Energy Co. Ltd 
 601088.SS  has suspended operations at two large open-pit coal 
mines in northern China, it said late on Thursday, a move that 
could benefit producers across the border in Mongolia. 
    Shenhua Energy, the listed unit of the state-owned Shenhua 
Group, China's biggest coal producer, announced on Thursday that 
the Ha'erwusu and Baorixile mines in Inner Mongolia had been 
temporarily suspended as a result of "land requisition" delays.  
    The two mines produced more than 50 million tonnes of coal 
in 2016 and over 30 million tonnes from January to July this 
year, the firm said.   
    Although the suspensions were unlikely to cause Shenhua to 
miss targets for 2017, the company's volume of "self-produced 
coal" was expected to take a hit, it said, and profits were 
likely to fall by around 3.1 billion yuan ($461.44 million) for 
the whole of 2017. Shenhua's first-half 2017 profit was 24.7 
billion yuan.   
    The restrictions will cut into production in Inner Mongolia, 
and the region many need to turn to neighbouring Mongolia to 
ease shortages. 
    "It is bullish for Mongolian coal producers," said Harris 
Kupperman, chief executive officer of the Mongolia Growth Group 
 YAK.V , an investor in the Hong Kong-listed Mongolian Mining 
Corp  0975.HK .  
    Mongolian Mining did not immediately respond to requests for 
comment on Friday.  
    A supply crunch in China could also enable Mongolia to 
negotiate better prices, said Kupperman. Mongolian producers 
have traditionally earned less than other suppliers to China, 
mostly because of transportation constraints.    
    Coal is Mongolia's biggest export product. The country's 
total coal earnings rose fourfold to $1.28 billion over the 
first half of 2017 because of China's ban on North Korean 
imports and port restrictions.  urn:newsml:reuters.com:*:nL4N1KM2Y7 
    Mongolia's largest coal producer, the state-owned Erdenes 
Tavan Tolgoi, said in a statement on Friday that it produced 5.9 
million tonnes in the first seven months of the year, or 4.6 
times more than the same period of 2016.  
    Spot coal prices in Inner Mongolia  SH-IMN-TRMCOAL  stood at 
545 yuan per tonne on Friday, compared to 615 yuan in the major 
coal port of Qinhuangdao  SH-QHA-TRMCOAL . 
 
($1 = 6.7181 yuan) 
 
 (Reporting by Terrence Edwards; Editing by Christian 
Schmollinger) 
 ((david.stanway@thomsonreuters.com; +86 21 6104 1799; Reuters 
Messaging: david.stanway.thomsonreuters.com@reuters.net)) 
 
Keywords: MONGOLIA COAL/