China Shenhua said coal production cost rose over 20% in first half, expected to increase further

 

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China Shenhua Energy, the country’s largest coal mining company, said that the cost for coal production stood at 165 yuan per tonne, an increase of 21.4% from a year earlier, mainly driven by increase salaries and rising spending on coal mining.

As the depth of coal mining extends and labor costs and other price levels rise, the costs for coal production will likely increase further in the future, China Shenhua said at an earnings call.

In the second half of the year, China’s electricity consumption is expected to rebound as the economy recovers and coal consumption will continue to recover, with growth pace likely to accelerate from the first half of the, the company said.

Meanwhile, as quality coal production capacity continues to be released and the coverage of long-term coal supply contracts expands, China’s coal market demand and supply will maintain largely balanced and coal prices will operate within a reasonable range, it said, adding that coal supply may see temporary tightness due to short-term and structural factors.

Earlier, China Shenhua had reported first-half revenue rose 15% year over year to 165.6 billion yuan and net profit jumped 58.1% to 411.1 billion yuan, The company sold 210 million tonnes of coal in the first half, falling 12.7% from a year earlier. The average coal prices for long-term supply contracts stood at 721 yuan per tonne, rising 22.4% from a year earlier.