China Coal Energy Co Ltd, the nation's second-largest coal producer by sales, plans to make an A-share offering in Shanghai, the latest among overseas-listed companies to return to the mainland.

 

The company plans to sell up to 1.5 billion yuan-denominated shares, China Coal said in a statement to the Hong Kong stock exchange.

 

It will use the proceeds to fund coal, coke, chemical and power projects in provinces including Heilongjiang, Hebei and Shanxi, said the statement.

 

"This month the nation's two-largest coal companies announced they will make A-share offerings that will allow investors from the mainland to have more opportunities in the booming energy industry," said Wang Ye, a veteran analyst with CITIC Securities.

 

Earlier this month the nation's largest coal producer China Shenhua Energy Co said it will issue up to 1.8 billion yuan-denominated shares in Shanghai, raising as much as 51 billion yuan.

 

"The nation's two leading coal companies have both eyed the capital market for further business expansion, and China's coal industry is to see more consolidation in the next few years," Wang added.

 

China Coal's share sale would raise around 22 billion yuan, based on the company's Hong Kong share price of HK$14.98 yesterday.

 

Shareholders of the company will vote on the share sale at a meeting on September 7. The offering is also subject to regulator approval, China Coal said in the statement.

 

The company made an initial public offering (IPO) on the Hong Kong stock exchange last December, raising as much as US$1.7 billion. It is the mainland's third coal producer to be listing in Hong Kong, after Shenhua Energy and Yanzhou Coal Mining.

 

The stock of China Coal rose 2.74 percent to HK$14.98 yesterday on the Hong Kong stock exchange.

 

China is the world's largest producer and consumer of coal. In June the nation produced 201.3 million tons of coal, an increase of 7 percent compared with a year before, according to the National Development and Reform Commission (NDRC).

 

In the first six months of 2007, China produced 1.1 billion tons of coal, an increase of 7.1 percent, said the NDRC.

 

Coal accounts for about 70 percent of the primary energy consumption in China. Coal prices will keep climbing thanks to double-digit economic growth, analysts say.

 

China, the world's second-largest energy consumer, is encouraging mainland firms listed overseas to list in the A-share market to stabilize mainland bourses. In June PetroChina, the country's largest oil and gas company, said it will make a long-awaited A-share offering in Shanghai, which could raise as much as 47 billion yuan.

 

(China Daily July 17, 2007)