China’s Shenhua becomes net exporter of coal
China’s largest coal miner, Shenhua, saw coal production fall 8.4% in 2015, according to its latest operational data released to the Hong Kong Stock Exchange. Coal sales fell by 17.9%, while coal imports collapsed by 97.1% to just 200 000 t – and nothing in December 2015.
As a result, with 1.2 million t of coal exports (down 25% on 2014), the company became net exporter of coal for the first time – a fact the IEEFA picked up in its analysis of Shenhua’s results.
“With Shenhua owning its own dedicated in-house rail and coal port infrastructure (in fact, the largest coal port in the world) and with the company reporting a significant net cash profit margin on its in-house coal production, there is scope now for an acceleration of coal exports from China in the face of continued declines in domestic demand,” wrote the IEEFA’s Tim Buckley.
Shenhua’s Huanghua Port handled 111.6 million t in 2015 – down 15.2% on 2014, while its coal dock at Tianjin handled 40.3 million t of coal (up 10.1%).
Its move away from coal imports also asks questions of its investment in the US$1 billion Watermark coal project in the Liverpool Plains region of New South Wales, Australia. That project includes the construction of a 10 million tpa opencast mine to be connected by rail to the coal export port at Newcastle.
“The company is still holding (for now) to its public commitment to […] the Watermark project,” said Buckley, “but it seems an empty pledge […] Shenhua is simply a company that no longer relies on imported coal. It doesn’t need a big new mine in Australia.”
In its explanation of its falling sales, the company blamed “the adjustment of energy structure in China” – as well as the weather, noting a falling demand growth for power, faster growth in non-fossil-fuel energy sources and the fall in utilisation levels at thermal power plants due to a rapid increase in capacity.
Edited by Jonathan Rowland.