Shrinking coal profitability hits Shanxi

The profitability of the coal industry continues to drop in Shanxi province because of lukewarm demand, according to the Shanxi Bureau of Statistics.

In the first quarter, among the top five coal corporations in the province, three suffered net losses — the Datong Mine Group, Jincheng Anthracite Mining Group and Shanxi Coking Coal Group — while the other two, Yangquan Coal Group and Lu'an Group, witnessed shrinking profits.

The industrial growth in Shanxi has slowed down as demand fell in the past few years. During the first quarter, the industrial added-value was up by 10.9 percent year-on-year in the province while the industrial earnings dropped by 51.8 percent from the previous year. In March, the Shanxi industry registered a net profit of only 2 billion yuan ($326 million), significantly lower than 10 billion yuan in normal years.

Industry profits in Shanxi are driven down by the shrinking profitability of the coal industry. During the first quarter, the raw coal output in the province was 220 million tons, up 0.6 percent from the previous year. The added-value of the coal industry grew by 9.3 percent, an increase notably lower than last year. Many companies are complaining about the lack of demand and difficulties in expanding the market.

In comparison, non-coal related and some of the new industries are less affected by shrinking demand. Statistics show the total added-value of non-coal related industries accounts for more than 40 percent of the overall industrial output in Shanxi. Equipment manufacturing, medicine, building materials, steel and food have all witnessed growth in the total industrial output.