Shares of coal miners fell yesterday after China ordered the suspension of production at coal mines in the southwestern province of Sichuan following a mine explosion that killed at least 28 workers.
Investors also dumped the sector's shares after the price of coal fell and as rising labour costs squeeze profit margins.
The suspension renewed investor concern over the safety of Chinese coal mines. Coal is burned to meet nearly 80 per cent of the nation's electricity needs.
Some analysts were concerned the suspension could spread to other coal mining provinces like Shanxi, which would have an even bigger impact on major producers' earnings.
Coal producers' shares have been among the worst performers on the Hong Kong stock market this year, as slower economic growth in China affects demand for the energy source and the quarterly earnings of coal miners.
China Shenhua, the nation's biggest coal producer, was down 1.25 per cent at HK$27.70, bringing this year's loss to 18 per cent. The company runs a plant in Sichuan province that can generate 3,190 million kilowatts per hour, according to its 2012 annual report.
