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Profits of China coal producers surge on capacity cuts

Source: www.chinamining.org Citation: Xinhua Date: July 21, 2017

Chinese coal producers that for years struggled to keep afloat are bouncing back with substantial profit growth as the industry`s ongoing downsizing has helped prop up prices and regain a supply-demand balance. 

Combined profits of large coal enterprises with annual turnover of at least 20 million yuan (nearly 3 million US dollars) came at 123.34 billion yuan in the first five months, nearly 90 times that of the same period a year ago, according to statistics released at a national coal trade fair Thursday. 

"The sector`s performance is improving steadily," said Wang Xianzheng, president of the China National Coal Association, at the event. 

Thanks to measures to tackle over-production, China`s coal industry is gradually back on track. As of the end of May, around 97 million tonnes of coal capacity had been cut, accounting for 65 percent of the annual goal. 

Wang said a balance had been basically reached, citing stable increases in coal output, imports and consumption. 

The Bohai-Rim Steam-Coal Price Index, China`s benchmark coal price, rose for the sixth straight week to 582 yuan per tonne on Wednesday, 38 percent higher than a year ago. 

But Wang cautioned against over-optimism, saying more time was needed to embrace a comprehensive recovery as the bouncing-back was still short and entrenched problems remain unsolved. 

"Despite the rising profit margin, a majority of coal firms are still in hardship due to lingering pressures from keeping operation and stability in mining areas," Wang said. 

Profits were highly concentrated, with five industry giants, including Shenhua Group and Shandong Energy Group, raking in nearly two-thirds of the total in the January-May period. 

Risks for coal companies will be on the rise because of more capacity being phased out, an increasing number of those laid-off in need of re-employment and rising debt burdens, Wang said. 

As part of the effort to overhaul the economy, the Chinese government will keep its firm stance on excess capacity cuts with plans to eliminate 150 million tonnes of coal capacity this year.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin in September 23-25, 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.

Sino-Mexican consortium wins oilfield exploration contract in Mexico

Source: www.chinamining.org Citation: Xinhua Date: July 14, 2017

MEXICO CITY — A consortium of one Chinese and two Mexican companies on Wednesday won a contract to explore and extract hydrocarbons from a field in eastern Mexico. 

The consortium, which consists of three companies - China`s Shandong Kerui, and Mexico`s Sicoval MX and Nuevas Soluciones - obtained the contract for Area Six, a field of 193 square kilometers in the Veracruz oil belt, which has potential to provide liquefied gas. 

The award was a close-run affair after the consortium presented a proposal which was equal to two other bids in terms of investment. 

However, the Sino-Mexican consortium offered to pay $2.179 million in cash for the contract, a superior sum to its competitors, Mexican firm Carso Oil and Gas and a consortium of four American and Mexican companies.

According to Mexico`s National Commission of Hydrocarbons, the Chinese firm is a subsidiary of the Kerui oil firm, dedicated to oil and gas exploration and production.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin in September 23-25, 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.

China pushes to launch crude oil futures this year

Source: www.chinamining.org         Citation: Reuters         Date: July 12, 2017

China has opened more than 6,000 trading accounts for its long-awaited crude futures contract - with three-quarters coming from individual traders - as it pushes ahead with plans to compete with global pricing benchmarks.

China`s oil majors and about 150 brokerages have also registered, but the strong interest by "mom-and-pop" investors looks set to mark out China`s crude futures from Western counterparts, which are dominated by institutional investors. 

Shanghai International Energy Exchange (INE), which will run China`s contract, says it is finalizing technical issues. The contract has faced years of delays and there is still no set date, but INE and also trading participants now say a launch this year is almost certain. 

"The INE is striving to launch the crude oil futures this year," a spokeswoman said, adding that the exchange has conducted four trials to ensure it is technically ready.

Oil futures trading volume is small during Asian hours despite the region`s role as the world`s top consumer. 

Shanghai`s crude futures are aimed at giving China more clout in pricing crude in Asia and a share of the trillions of dollars in oil futures trade. 

The INE hopes to attract foreign investors, and locally registered entities of JPMorgan and UBS are among those registered, although international players have raised concerns, including over trading being denominated in yuan, which may dampen early take-up. 

Most oil trades are priced off two crude derivatives, US West Texas Intermediate and London`s Brent, traded on the Intercontinental Exchange and the New York Mercantile Exchange owned by CME Group.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin in September 23-25, 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.

Big oil and gas discoveries

Source: www.chinamining.org         Citation: Global Times         Date: July 12, 2017

Almost half a trillion cubic meters of natural gas was found in the central and western parts of China in 2016, marking it a very successful year in oil and gas exploration, media reported on Tuesday. 

A total of 311 billion cubic meters of natural gas was discovered in the Erdos Basin in North China`s Inner Mongolia Autonomous Region, and about 152.8 billion cubic meters? of natural gas was found in the Sichuan Basin of Southwest China`s Sichuan Province, according to CCTV. Two oil fields with 100 million tons were found in the eastern part of Northwest China`s Gansu Province, said the report, which did not specify the exact measurements of the reserves.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin in September 23-25, 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.

Experts say black gold prices will fall on supply boost

Source: www.chinamining.org         Citation: China Daily         Date: July 10, 2017

Coal prices are predicted to fall slightly in the second half of this year, thanks to government efforts to ensure adequate supplies, industry insiders said. 

The Bohai-Rim Steam-Coal Price Index or BSPI, which tracks domestic thermal coal spot prices at six major ports in northern China, hit 580 yuan ($85.26) per ton on Tuesday, up from 577 yuan a week ago. 

The high coal prices are the result of a successful capacity reduction as part of the country`s supply-side structural reform. 

In addition, the surge in steel production last year also drove up coal prices, said Mi Pengqi, an analyst at JLC Network Technology Co. 

The latest coal price uptrend may end because of the fall in daily coal consumption of thermal power plants. 

Also, consumers also intend to scale down their purchases, according to a report in China Securities Journal that quoted market insiders. 

"The central government has eased the policy on (coal) capacity reduction due to the troubled situation related to coal and electricity," said Zhang Min, an analyst from Sublime China Information Group. 

He was referring to the continuous rise in thermal coal prices, which in turn were inflating costs, and squeezing profits, of the already troubled thermal power plants since April last year. 

About 65 percent of electricity in China is generated by thermal power plants. 

According to National Bureau of Statistics, China`s coal output rose 12 percent to 300 million tons in May, almost 10 percent in April and nearly 2 percent in March. 

That is a reversal of the trend last year when the country`s coal output fell 7.9 percent, the biggest annual drop since 1981, according to BP Statistical Review of World Energy 2017. 

China eliminated more than 65 million tons of steel production capacity and over 290 million tons of coal capacity last year, beating annual government targets. 

Environment and safety inspections led to the closure of many small coal mines. The new regulation, lowering work days in a year to 276, also reduced the production of large coal mining companies, said Mi. 

However, the old rule allowing 330 work days in a year has been restored by many provinces like Shanxi and Shaanxi since April, leading to a rise in output. 

Also, the National Development and Reform Commission, the country`s top economic planner, said in late April it would allow coal output to increase to make the fuel cheaper, in order to help struggling power plants. 

If Chinese coal prices stay high, however, importers in other countries may look for alternative suppliers as oversupply marks the current global coal market, Mi said. "That will also help lower coal prices." 

Since the end of last month, the daily coal consumption of thermal power plants has declined a bit. The year-on-year growth rate has also slowed significantly, the China Securities Journal reported. 

Any slight decline in coal prices would squeeze profits of Chinese coal companies but won`t cause huge losses, Zhang said. 

Although coal prices were volatile in the first half of the year, they were still high, ensuring profits of most coal companies stayed at high levels.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin in September 23-25, 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.

Petrobras, China`s CNPC to jointly exploit energy resources

Source: www.chinamining.org     Citation: Xinhua           Date: July 06, 2017

Brazil`s state-run oil giant Petrobras announced on Tuesday that it signed a memorandum of understanding with the China National Petroleum Corporation (CNPC) to exploit energy resources in Brazil and abroad. 

In the statement, Petrobras said that the deal will allow the two state oil companies to benefit from each other`s capacity and experience in oil and gas production. 

The MOU was signed by Petrobras President Pedro Parente and the vice president of CNPC and president of PetroChina, Wang Dongjin. PetroChina is a listed arm of CNPC. 

Since 2013, Petrobras and CNPC have partnered to explore the Libra offshore oilfield in southeast Brazil, which is considered potentially the most valuable oilfield in Brazil by its government. 

The agreement is key to establishing an arrangement in which both companies are expected to share risks and jointly contribute to investment. 

Brazil and China bolstered ties this year with a joint launch of a 20-billion-U.S.-dollar fund on May 30 to finance development projects in the South American country, especially in infrastructure building.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin in September 23-25, 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.

Rio coal deal cements ties with China

Source: www.chinamining.org     Citation: China Daily       Date: July 04, 2017

Workers load thermal coal at a storage base in Jiujiang, Jiangxi province. (Photo/Xinhua)

Rio Tinto has tightened ties with China after selling its Australian coal assets to State-backed Yankuang Group for $2.69 billion. 

Industry insiders stressed that last week`s announcement goes beyond this deal, and illustrates the relationship between one of the leading multinational mining groups and the world`s second biggest economy.

"Instead of a simple deal between two companies in the coal sector, it shows Rio Tinto is hoping to expand its Chinese iron ore market," said Mi Pengqi, an analyst at JLC Network Technology Co Ltd, a commodity information provider based in Beijing. 

"That makes sense as China is one of the largest iron and steel consumers in the world," he added.

The Australian acquisition certainly created a buzz in the coal sector. 

Yancoal Australia Ltd, which is part of Yankuang Group, will now take over Rio Tinto`s coal mining operations in New South Wales. 

"This is the transformative deal for Yancoal as we become the largest pure-play coal producer in Australia and a positive sign for continued investment into the local resources sector," Reinhold Schmidt, chief executive at Yancoal Australia, told the Financial Times. 

But the decision by Rio Tinto will create more than a few ripples. 

China is the Anglo-Australian group`s fastest growing market and the fourth largest in the world. 

As one of four mining giants and the second-largest iron ore supplier in the world, Rio Tinto produces a quarter of the iron ore globally. 

"Rio is very close to China and they probably don`t want to risk that relationship," Hunter Hillcoat, an analyst at Investec Plc in London, told Bloomberg. 

Since the commodity downturn of 2014, major mining companies have been cutting spending and reducing capital debt. 

In a move to slim down, Rio Tinto has decided to spin off its non-core assets to boost cash flow. "Iron ore, instead of coal, is Rio`s main business," Mi said. 

"It is in that sector that the company has a leading position and pricing power," he added. 

The deal will also increase the pricing power for Chinese coal companies in the Asia-Pacific market, according to Yin Mingde, deputy general manager of Yankuang Group. 

Yin pointed out that the acquisition would take Yancoal`s coal reserves to 5.71 billion metric tons with annual production running at 42.79 million tons. 

"The figures mean that the company will become one of Australia`s biggest `pure-play producers` of the commodity, with coal reserves and production operations in Australia just behind Glencore and Rio Tinto," Yin said. "With the expansion of production capacity, Yancoal would become an important Australian coal exporter to Japan and South Korea. 

"It is expected to participate in the negotiation on steam coal between Japan and Australia," he added. "This will enhance the pricing power of Chinese coal companies." 

The acquisition of Rio Tinto`s two open cast mines in the Hunter Valley region, which is more than two hours north of Sydney, and railway and port assets, will boost Yancoal`s presence. 

For the past three years, the company has turned a profit even during the downturn of 2015 when coal prices crashed. 

The deal is an important attempt to promote and implement the company`s international investment strategy, and to strengthen its business overseas, according to a company statement. 

"The transaction is expected to be officially complete in the third quarter of this year and it will increase Yancoal`s competition ability greatly, even in Chinese coal market," Mi said.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin in September 23-25, 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.

China`s mining of combustible ice beats expectations

Source: www.chinamining.org Citation: Xinhua Date: June 22, 2017

Photo taken on June 21, 2017 shows the trial mining site in the
Shenhu area of the South China Sea. (Xinhua/Huang Guobao)

China has extracted about 235,000 cubic meters of the combustible ice from the South China Sea, beating previous expectations for the mining operation. 

Wednesday afternoon marked six weeks of an ongoing mining operation in waters near the Pearl River estuary, without being disrupted by this year`s second typhoon Merbok, according to operators of the trial mining site in the Shenhu area of the South China Sea. 

"China has beaten expectations in completing the trial explorations of combustible ice using local innovations in technology and engineering. It marks a historic breakthrough," according to a statement released by the mining site. 

Combustible ice usually exists in seabed or tundra areas which have the strong pressure and low temperature necessary for its stability. It can be ignited like solid ethanol, which is why it is called combustible or flammable ice. 

One cubic meter of combustible ice, a kind of natural gas hydrate, is equal to 164 cubic meters of regular natural gas. 

China declared its first success in collecting samples of combustible ice in the South China Sea on May 18 after discovering the substance in the South China Sea in 2007.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin in September 23-25, 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.