Datang International Power Generation Co., the biggest Chinese electricity producer listed in Hong Kong by market value, plans to mine enough coal to supply all of its plants by 2012, President Zhang Yi said.

Coal production capacity will rise to 140 million metric tons from 10 million tons this year, Liu Yan, head of the utility's international cooperation department, said in Hong Kong today. Mining capacity will reach 25 million tons in 2009, 50 million tons in 2010 and 80 million tons in 2011.

Chinese power companies are boosting coal output to reduce the cost of buying the fuel from other suppliers. Contracted coal prices will rise 15 percent this year, Beijing-based Datang Power said in a statement released in Hong Kong today.

``Our self-supplied coal will cut fuel purchase costs by about 60 yuan a ton, or 15 percent,'' Zhang told reporters.

Datang Power, which has dropped 52 percent in the past six months in Hong Kong trading, gained for a third day, advancing as much as 7.49 percent to HK$4.02. The stock closed at HK$3.99.

The utility's 2007 net income rose 23 percent to 3.4 billion yuan ($484 million) after it expanded output to meet rising energy demand, Datang Power said in a statement late yesterday, citing international accounting standards.

Capital Spending

Datang Power plans capital expenditure of 14.7 billion yuan in 2008, compared with 12 billion yuan last year, as it expands coal-mining and power-production capacity, Liu said today.

Annual supply contracts will account for 67 percent of Datang Power's coal needs this year, compared with about 80 percent in 2007, Liu said.

Unit fuel costs rose 13 percent last year because of higher coal prices and the company aims to restrict this year's increase to 12 percent, Zhang said.

Thermal coal prices at Australia's Newcastle port, an Asian benchmark, rose to a record $139.16 a ton on Feb. 15, according to the globalCOAL NEWC index, as rains cut deliveries in Australia's Queensland state and added to supply disruptions in China caused by snowstorms.

Datang Power has estimated coal reserves of more than 20 billion tons, with mines in the northern provinces of Inner Mongolia, Shanxi and Hebei. The utility has invested in railways and coastal shipping ventures to transport the fuel, it said.

The power producer plans to expand electricity generating capacity by 41 percent to 28,402 megawatts in 2008, it said in the statement. It aims to boost power output by 18 percent to 140 million megawatt-hours this year, figures in its annual report show.

Datang Power wants to increase the proportion of its generating capacity derived from nuclear, hydro and wind power plants to about 40 percent by as early as 2010, Zhang said.