By Saurabh Chaturvedi

October 8, 2020 - China's biggest coal-producing province Shanxi is merging some of its largest state-controlled coal companies to consolidate operations and boost efficiency.

The province will combine around half a dozen local producers, including Datong Coal, Jinmei, Jinneng and Lu'an, to create Jinneng Holding. Coal marketplace the China (Taiyuan) Coal Trading Centre will also be merged with the holding entity.

The merger is in line with consolidation efforts pursued by the government for some years as it seeks to modernise and restructure coal production.

The decision is aimed at giving Jinneng Holding a full play in the coal sector, the provincial government said. It did not elaborate on the cumulative coal production capacity of the new entity.

Shanxi emerged as China's largest coal-producing province a few months ago, replacing Inner Mongolia, which underwent mine closures and is still undergoing a lengthy corruption probe.

The new consolidation in China's coal sector comes after state-controlled Yankuang and Shandong Energy agreed in August to merge to form Shandong Energy.

The latest merger announcement was short on detail, with China out for the golden week holiday from October 1-8. China's state-owned assets supervision and administration commission (Sasac) flagged in early 2018 that a large merger was planned in Shanxi province for businesses ranging from coal mining to power generation. But some of the company names mentioned at the time do not appear on the latest list.

Sasac said in 2018 that the consolidation was necessary to maintain global competitiveness. Shanxi's state-companies coal companies accounted for 61pc of the province's total production in 2017 when output was around 534mn t, according to data from Sasac at the time.