China's Datong Coal buys two miners for $95 mln

SHANGHAI, Feb 5 (Reuters) - China's Datong Coal Industry Co (601001.SS: Quote, Profile, Research, Stock Buzz) will buy stakes in two smaller coal producers in the Chinese region of Inner Mongolia for a total of 683 million yuan ($95 million), Datong said on Tuesday.

Datong said the 80 percent stakes in privately owned Zhaofu Coal Co and Huafu Coal Co, both based in the Zhungeer area of Inner Mongolia, would help to expand its coal reserves.

The two companies have a combined 134.6 million tonnes of reserves, and each plans annual production capacity of 1.2 million tonnes. Neither has begun production, Datong added.

Datong would spend an additional sum to help develop the mines, while the two companies would need a further 443 million yuan to upgrade their technology, which they would pay for themselves.

China is facing its most severe power shortage in years after heavy snow crippled transportation of coal, which fuels 70 percent of the country's power generating capacity. ($1=7.191 Yuan) (Reporting by Rujun Shen; editing by Anne Marie Roantree)