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Shanxi, the largest coal producing province in China, is to sell three mines with combined reserves of up to 300 million tons by June.

 

Each of the mines has reserves of between 50-100 million tons, according to an official with the trading center of Shanxi Land and Resource Bureau.

 

Two of the mines are located in the counties of Lanxian and Xiangfen. The location of the third has not been disclosed.

 

The resource-rich province will sell the mining rights through a competitive bidding process, the official said. "We have received approval from the provincial government," he added.

 

Industry regulations stipulate that coalmines with reserves of more than 100 million tons have to receive national-level approval before they can be sold.

 

Those with less than 100 million tons can be sold with approval from the provincial government.

 

The government official yesterday refused to reveal the period of time the rights would be sold for, how much they wanted for them and whether foreign investors would be permitted to become involved.

 

Huang Teng, a senior industry consultant, who previously worked with China Coal, the country's second-biggest coal producer, said government policies didn't block foreign control of coalmines except for those extracting coking coal which was in scarce supply. .

 

A researcher with the Ministry of Land and Resources, who declined to be identified, yesterday said the government was cautious about approving foreign ownership of China's fuel resources.

 

China is the world's largest coal producer and consumer. Last year the country produced 2.1 billion tons of coal which helped drive its fast-growing economy. A quarter this figure came from Shanxi Province.

 

Wu Chenghou, executive director of the China Coal Sales and Transportation Association, said earlier that coal production this year was expected to be 2.26 billion tons while demand had been estimated at 2.25 billion tons.

 

China, the world's second-largest energy user after the United States, depends on coal for about 70 percent of its needs.

 

Coal will continue to be the country's primary energy source for the coming decades, industry analysts have said.

 

Meanwhile, the Chinese government has invited bids to build three wind farms which will have a total capacity of 700 MW (megawatts) the nation's top economic planning body said.

 

The cost of wind these farms could be as high 7 billion yuan (US$863 million), an industry analyst suggested, saying costs could be up to 10,000 yuan (US$1,233) per kilowatt.

 

A wind power plant of 300 MW will be built in the Inner Mongolia Autonomous Region in north China.

 

Another with a capacity of 200 MW will be built elsewhere in the autonomous region and the third in Hebei Province, the National Development and Reform Commission (NDRC) said yesterday said on its website.

 

This is the fourth round of competitive bidding the NDRC has conducted for wind farm construction in China since 2003. By the end of last year China had built wind farms with a total capacity of 1,260 MW. This figure is scheduled to increase to 30,000 MW by 2020 the NDRC has said.

 

National wind power facility manufacturers are being encouraged to participate in this bidding process.

 

Shi Pengfei, vice president of the Chinese Wind Energy Association, said yesterday this would help increase domestic companies' involvement in the projects. The government has stated that at least 70 percent of generation facilities must be manufactured domestically.

 

And price will not be the only determining factor.

 

"Prices now count for only 30 percent towards whether a firm wins a bid compared with the previous 40 percent," Shi told China Daily yesterday.

 

The remaining 70 percent would be decided by the quality of equipment, a company's operations and management, he added.

 

(China Daily April 18, 2006)