Yanzhou Coal Mining Co., China`s third-largest coal producer, is scanning the market for additional coal acquisitions in overseas markets after becoming the new owner of Australia`s Felix Resources Ltd, the China Daily reported Friday.

Coal reserves in Shandong, where Yanzhou is based, are not as abundant as those in Shanxi province or Inner Mongolia autonomous region, where most Chinese coal firms are based, said the newspaper.

Yanzhou had completed the legal footwork to take over Felix by the end of last year at a price of about 3 billion U.S. dollars, and ranking it China`s biggest takeover of an Australian firm.

Annual production capacity of Felix is slated to exceed 20 million tons when it hits full capacity in the next three years. Felix Resources is expected to generate an annual net profit of 4 billion yuan (588.24 million U.S. dollars) within three years, according to the newspaper.

Expanded production capacity is key for the company to compete with its peers as coal companies in Shanxi are growing in size following recent industry consolidation, the newspaper quoted LianWei, an analyst at First Capital Securities as saying.

Even with the extra cost of freight from Australia, prices of the imported coal will be competitive in China, the newspaper quoted Lian as saying.

The price of imported thermal coal from Australia was about 85 U.S. dollars or 578 yuan per ton, while the price of similar quality domestic coal sold at around 800 yuan per ton in China, said the newspaper.

Editor: Li Jing

Source: Xinhua