October 12, 2020 - At 114 billion tons, China has the third largest coal reserves in the world. The U.S. has the most reserves at 237 billion. Russia is second (RSX) at 157 billion tons. Northern and northwestern China, especially the Shanxi and Inner Mongolia provinces, hold most of China’s coal reserves that are easily recovered.
In 2013, China produced 3.7 billion tons of coal. This was almost four times larger than the total production in the U.S. State-owned enterprises—like Shenhua Group and ChinaCoal—make up a significant part of China’s total coal production. The VanEck Vectors Coal ETF (KOL) invested 7.9% and 5.1% of its total assets in Shenhua Group and ChinaCoal, respectively. The exchange-traded fund (or ETF) also has holdings in Peabody Energy (BTU) and Alliance Resource Partners LP (ARLP).
Unlike neighboring India, China’s coal industry isn’t controlled by a single company or group. The industry is divided between key state-owned enterprises (or KSOEs), local groups, and private players.
Shenhua Group is a KSOE. It’s the largest coal miner in China. It’s the second largest in the world by volume—after Coal India Limited. Shenhua Group is the most valued coal producer in the world. It has a market cap of $51 billion. The company produced 318 million tons of coal in 2013. Apart from producing coal, the group’s commercial interests include power generation, coal transportation, railways, ports, and shipping. The company also sells coal that’s produced by other companies. In 2013, the company sold 514 million tons of coal. The company is a part of the iShares China Large-Cap (FXI) and the VanEck Vectors Coal ETFs.
Other major KSOEs include ChinaCoal—China National Coal Group Corporation, Datong Group, Shanxi Coking Coal, Luán Group, and Jincheng Group.
Major local groups include Shanxi Coal Transportation and Distribution Company. Other major producers in China include Yanzhou Coal Company and Yang Quan Coal Industry.
In the next part of the series, we’ll discuss coal production trends in China.