China Coal to pay $186 mln for sister firm's mine

SHANGHAI, April 28 (Reuters) - China Coal Energy Co (1898.HK: Quote, Profile, Research, Stock Buzz)(601898.SS: Quote, Profile, Research, Stock Buzz), China's second-largest coal producer, said on Monday it plans to pay 1.3 billion yuan ($185.5 million) to buy a coal mining company owned by a subsidiary of its parent.

The company, Shanxi Dongpo Coal Industrial Co, is expected to start mining in the second half of 2008 with annual production capacity of 1.5 million tonnes, and plans to apply for approval to double its capacity.

Shanxi Dongpo Coal is owned by a unit of China National Coal Group Corp.

The purchase would help China Coal to increase its coal reserves and production, enhance its competitiveness and bolster profitability, the company said in a filing to the Shanghai Stock Exchange.

China Coal produced 90.5 million tonnes of coal in 2007, up 14.5 percent from a year earlier, according to its annual report.

China, the world's biggest coal producer and user, suffered from severe power and coal shortages in January and February, which pushed coal prices to record highs and triggered concerns about tight supplies and possible power shortages this summer.

The deal is awaiting approval from shareholders and regulators, the company said. ($1=7.009 Yuan) (Reporting by Rujun Shen; Editing by Edmund Klamann)