BEIJING (Reuters) - China’s small coal miners are still losing money and struggling to pay off debt after being ordered to shut inefficient, outdated operations and forced to miss out on a historic price rally, a senior industry official said.
Jiang Zhimin, vice chairman of China’s Coal Industry Association, flagged the widening gap between big state-owned coal producers and the smaller private ones in the world’s top consumer of the fuel in the wake of a crackdown by Beijing on illegal mines and curbs on coal transport by trucks.
“Many producers, who were ordered to cut capacity, did not deal with their debt properly. The debt ratio for these producers rose significantly,” Jiang said in a speech published in state-run China Coal News.
In the first eight months, the country’s top five producers - Shenhua Group Corp [SHGRP.UL], Shandong Energy Group[SDONGK.UL], Shaanxi Coal and Chemical Industry Group[SHAANB.UL], Inner Mongolia Yitai Group [INMYVA.UL] and China National Coal Group - made 88 billion yuan ($13 billion) in net profit, accounting for nearly three quarters of the earnings of 90 leading coal producers, he said.
Total debt in the sector was 3.7 trillion yuan in the first eight months, up 4 percent from a year ago, while the debt-to-assets ratio for those 90 producers stood at 71 percent, he said.
China’s coal market is expected to be balanced in the fourth quarter, he said.
Reporting by Meng Meng and Josephine Mason; Editing by Christian Schmollinger and Sonali Paul