By Lee Chyen Yee, Meg Shen and David Goodman

March 23, 2017 - China Coal Energy Co., the country’s second-largest producer of the commodity, returned to profitability in 2016, helped by a rally in coal prices after a multi-year slump. The company made a net profit of 1.72 billion yuan ($249.75 million) in 2016, against a net loss of 3.3 billion yuan the previous year, it said in a filing to the Hong Kong stock exchange on Wednesday.

Capital expenditure will rise by 9.7 percent to 15.22 billion yuan in 2017, it said in a separate statement on the Shanghai stock exchange, citing project upgrades and potential acquisitions. The recovery in coal prices has come as China has sought to clamp down on overcapacity in its overcrowded coal sector, with Chinese coal prices rebounding from a multi-year low of 260 yuan a tonne from the start of 2016 to 600 yuan around the end of the year.

The government’s moves to cut excess capacity and promote clean and efficient coal usage are expected to help with a sector-wide recovery, China Coal said. “Coal prices are expected to remain in a reasonable range in 2017,” the Beijing-based producer said.

China Coal’s results came days after the country’s largest producer China Shenhua Energy Co Ltd posted a 41 percent rise in full-year net profit to 24.9 billion yuan, its first profit growth in four years. Smaller rival China Coal Xinji Energy Co also swung back to black in 2016, while Huolinhe Opencut Coal Industry Corp of Inner Mongolia reported a 54 percent jump in preliminary net profit last year.