China's Shanxi Province, the country's top coal producer, expects its coal output to rise by up to 30 percent to 700 million to 800 million tonnes in 2010, the province's Party secretary Zhang Baoshun said on Mar 6.

The coal-rich province presently have received coal orders of over 700 million tonnes,  Zhang said.

The figure is higher than an earlier estimate of 600-700 million tonnes. Shanxi produced 615 million tonnes of coal in 2009, about 20 percent of China's total, the Xinhua News Agency said earlier.

This year China is targeting national coal output of 3.15 billion tonnes, a 3.3 percent increase, the country's economic planning ministry, the National Development and Reform Commission, said in its annual economic plan .

That growth rate is slower than most analysts' demand forecasts and the NDRC's expectation that electricity output, most of which is coalpowered, will rise 6.6 percent this year.

Shanxi launched a consolidation push in the coal industry last year during the economic slowdown, causing its annual coal output to fall about 5 percent.

The Shanxi consolidation drive, which aimed to close small, dangerous and inefficient mines, was a major factor in turning China into a net importer of coal last year, with a tripling of import volumes, mostly from Australia, Indonesia and Vietnam.

China is heavily dependent on coal for power generation, but the government wants to cut back on the dirty fuel, with hydropower, wind, nuclear and gas playing larger roles. Those energy sources, costlier than coal, could make quicker strides if consolidation pushes up coal prices by cutting supply or raising safety standards and production costs.

The head of one of China's top five power firms, China Power Investment Corp, said Friday he wanted a hike in electricity prices to reflect the rising cost of coal.
 
CONSOLIDATION DRIVE
Other provinces are also consolidating their coal mining sectors. Henan announced a year-long push for more consolidation last week. [ID:nTOE62206L] Shandong and Inner Mongolia are expected to do so soon, Xinhua reported.

Shanxi's consolidation drive is almost complete. More than 99 percent of merger and acquisition contracts between small mines and bigger mining companies have been signed, a government document showed.

"Reconstruction of and upgrading (coal mines) is the main task this year," said Shanxi governor Wang Jun at a provincial delegation meeting.

Datong Coal Mine Group, which is one of the country's top coal producers and is based in the province, expects its output to grow more than 20 percent this year to about 150 million tonnes, Wu Yongping, the group's chairman, told Reuters.

"The growth in output is partly due to the consolidation. In addition, we have many large shafts which are expected to complete construction this year," said Wu on the sidelines of the meeting.

Datong Coal Mine Group is the parent of Shanghai-listed Datong Coal Industry Co.