Six major coal producers based in Shanxi Province yesterday signed long-term supply contracts with seven of the country's top electricity companies.

Six major coal producers based in Shanxi Province yesterday signed long-term supply contracts with seven of the country's top electricity companies. The contracts were signed ahead of the second China (Taiyuan) International Coal and Energy New Industry Expo, which begins today in Taiyuan and will run until next Friday.

Under the contracts, the power companies - including Huaneng, Huadian and Guodian - will receive a total of 115.8 million tons of coal from 2009 to 2013.

Li Xiaopeng, vice-governor of Shanxi province, said cooperation between the big coal and power providers would help to tackle supply shortages.

Shanxi, which produces a quarter of the nation's coal, has an annual capacity of 594 million tons.

Shanxi has fallen short by 5,000 mW of electricity this year, the highest shortfall in recent years.

The contracts were signed ahead of the second China (Taiyuan) International Coal and Energy New Industry Expo, which begins today in Taiyuan and will run until next Friday.

Li emphasized the importance of sustainable development and pledged to create a good investment climate for investors.

Three local coal companies will also sign strategic cooperation framework agreements and investment contracts with three State-owned power producers during the expo, worth about 3 billion yuan.

Wang Huisheng, president of the State Development and Investment Corp (SDIC), said in a media report that the company would invest a further 80 billion yuan in Shanxi in the next 10 years.

The SDIC aims to build a coal-water-electricity-methanol-olefin industrial chain focusing on olefin products.

The National Energy Administration said last month that it plans to push more mergers and acquisitions in the domestic coal industry.

The government plans to restructure the coal industry by forming 13 large-scale coal bases, 10 opencast mines and 10 safe and highly efficient mines with an average capacity of 10 million tons of coal per year, in line with the industry's 11th Five-Year Plan (2006-10).

Meanwhile, six to eight coal groups will be established - each with production capacity of 100 million tons - along with eight to 10 groups with a capacity of 50 million tons by 2010, through mergers and acquisitions, according to the plan.

(China Daily September 16, 2008)