Yanzhou had previously set a sales target of 38 million tonnes for 2005 but delays in moving villages located over underground reserves meant coal production for the first six months only hit 18.4Mt. Sales volumes also decreased by 12.6% to 16.64Mt.

Yanzhou director Wu Yuxiang said production was expected to fall further in the second half but did not disclose by how much. Shenzhen Daily reported investment bank Goldman Sach had revised its sales forecast for Yanzhou to 35Mt, 8% below the company’s original target.

Yanzhou’s costs also blew out in the first half, with the company having to pay an additional $US25 million in relocation costs after villages in two communities requested higher compensation than Yanzhou’s originally offered. Unit production costs surged 42% year-on-year.

The company expected the relocation of another three villages to cost around $US37 million, with completion expected early-2006.

Yanzhou reported first-half net profit at 1.88 billion yuan ($US232 million), up from 1.22 billion yuan in 2004.