China Shenhua Energy asks its coal mining units to cut production costs
Nation's largest coal producer is seeking a 5pc drop in production outlay per tonne as part of a series of measures to deal with weak demand
China Shenhua Energy has asked its coal mining units to cut their production costs for each tonne of coal by 5 per cent, in the face of tough market conditions.
The listed unit of the nation's largest coal producer, Shenhua Group, has adopted a series of measures to reduce costs amid weak demand, said vice-president Zhai Guiwu.
"In the face of this market condition … we have asked our operating units to cut production costs by 5 per cent from their budget," he said on the sidelines of the Coaltrans conference in Beijing.
He would not specify the original cost target, saying it varied widely between different projects. But he said as mines were dug deeper, operating costs increased. Government levies were also a burden, he said.
China Shenhua chairman Zhang Xiwu said late last month that it was aiming to contain this year's unit production costs to within 10 per cent after a 9.7 per cent rise last year.
Sales this year are expected to be flat from last year's 464.6 million tonnes.
Smaller rival Yanzhou Coal Mining, the listed unit of the nation's fourth-largest coal miner Yankuang Group, is expecting flatter production costs this year at its main production base in Shandong. Its total sales target is 89.9 million tones, 4.6 per cent lower than last year.
