{"id":1201663,"date":"2020-08-14T09:33:00","date_gmt":"2020-08-14T14:33:00","guid":{"rendered":"https:\/\/www.mining.com\/?p=1032702"},"modified":"2020-08-14T09:33:00","modified_gmt":"2020-08-14T14:33:00","slug":"china-approves-merger-of-two-coal-giants","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1201663","title":{"rendered":"China approves merger of two coal giants"},"content":{"rendered":"

China has approved the merger<\/a> of two of Shandong province\u2019s top state-owned coal miners, Shandong Energy Group and Yankuang Group, a decision that effectively creates a new top company in the world\u2019s top producer and consumer of the fossil fuel.<\/p>\n

The combined company, China\u2019s second-largest coal producer after China Energy Investment Corporation (CEIC), will operate under the name Shandong Energy Group.<\/p>\n

It\u2019s expected to account for close to 7% of the country’s total coal output<\/p>\n

Gewin Ho, a Moody’s vice president and senior credit officer, said that because the combined group will derive most of its businesses from coal mining, its credit profile will remain constrained by significant carbon transition risk and by its exposure to coal-price volatility.<\/p>\n

\u201cWhile support from the Shandong Provincial Government should remain forthcoming, it will be constrained by the predominantly commercial and competitive businesses of the combined group,\u201d Ho said in a July note to investors<\/a>.<\/p>\n

The merger of Yankuang and Shandong Energy comes as China forges ahead with the reform of its stated-owned enterprises. The newly merged company will further increase its competitiveness on the market as it will have a whole industrial chain integrating coal production, coal-fired power plants and coal chemicals, International Energy Agency\u2019s analysts sai<\/a>d<\/a> in July<\/a>.<\/p>\n

Coal for years<\/strong><\/h2>\n

Other Chinese coal-producing provinces are pushing for similar consolidations to improve efficiency. The government of Shanxi, the country\u2019s second biggest coal-producing province, approved earlier this year the merger of state-controlled producers Shanxi Coal Import Export and Shanxi Coking Coal.<\/p>\n

Despite global efforts to abandon the use of coal, the most polluting fuel, China has continued to rely on the ubiquitous and low-cost commodity. This has put coal on a dominant position in the country\u2019s power sector, accounting for almost 58% of the nation\u2019s energy use last year.<\/p>\n

Coal plants, which burn\u00a0close to 54%\u00a0of all coal used in the country, provide\u00a052% of generating capacity and 66% of electricity output \u2014 down from a peak of\u00a081% in 2007<\/a>.<\/p>\n