Numis analysts said growing demand in China would stimulate further long-term coal expansions.

In the past two years, China has added 90GW of electricity generation capacity, which is estimated to require 200 million tonnes per annum of thermal coal.

While China was the largest producer of coal last year, producing 2.19 billion tonnes and exporting some, by 2010 it is expected to consume more coal than it produces.

“In the longer term if China is to come to rely on coal imports, coal exporting countries such as South Africa and Australia could see significant expansions to their coal industries,” Numis analysts said.

Despite the positive long-term outlook, there could be a hiccup in the short term, with production figures for China in the first seven months of the year showing raw coal production had sped up to reach 1.18 billion tonnes, up 90.53Mt year-on-year (8.3%), according to government statistics.

“However, inventories reached 155Mt by end of July, up 10.9% year on year, which indicates possible over supply and could threaten coal prices in the short term,” Numis analysts said.