The major coal producer bucked the global downturn, increasing profit for the first half of this year to $19.15 billion yuan ($US2.86 billion).

Coal production reached 105.8 million tonnes, 17.6% higher year-on-year, but while coal sales increased 7% to 123.1Mt, exports fell 42.5% to 6.1Mt.

Looking at the domestic coal market for the first six months of 2009, Shenhua said China’s raw coal production was up 8.7% year-on-year to 1.356 billion tonnes.

But key coal-producing provinces were affected by safety-related shutdowns in the small mines sector.

Shenhua said Shanxi’s raw coal output fell 11.7% year-on-year to 264Mt, while Inner Mongolia’s production dived 34% to 285Mt and Shaanxi’s production fell 22.1% to 125Mt.

China imported 48.27Mt of coal in the first six months of 2009, up 126.3% year-on-year, while coal exports fell 54.2% to 11.67Mt.

Shenhua said the consolidation of small mines in Shanxi would partly release production capacity, while output of large new mines would also increase.

“It is expected that the coal supply will record a faster growth than that in the first half of this year,” Shenhua said.

“The significant increase in China’s coal imports in the first half of this year had boosted the increase in coal spot price and ocean freight in the Asia-Pacific market.

“With the increase in coal price and freight, the price advantage of imported coal over domestic coal will disappear.

“It is expected that the volume of China’s coal imports will decrease in the second half of this year.”

But Shenhua expects increasing demand from Japan, South Korea and Taiwan to lead to a moderate recovery in Asia-Pacific thermal coal demand in the second half of the year.

Shenhua has also forecast India’s total thermal coal imports for 2009 to exceed the planned 28.7Mt.

As part of a corporate strategy to reduce costs, Shenhua chairman Zhang Xiwu said cost controls would be implemented in major expenditure areas, such as equipment procurement, investment management and capital management.