China Coal Energy said to offer A shares in Dec

China Coal Energy Company Limited, China's second largest coal producer, is expected to launch an initial public offering of A shares this December to raise around CNY 32 billion, said source familiar with the situation.

The source was quoted that the company has submitted A- share IPO application to China Securities Regulatory Commission and employed China International Capital Corporation Limited as the lead underwriter.

China Coal Energy, with shares floating on the Stock Exchange of Hong Kong, plans to sell no more than 1.525 billion yuan-denominated A shares, which will account for 11.51 percent of its enlarged capital stock. The issue was approved by the annual general meeting held on 15 June 2007.

Its H shares closed up 4.07 percent at HKD 23 apiece on Thursday. Based on the price, the coal producer would raise up to CNY 35 billion proceeds from the A-share issue, the sixth- largest IPO in mainland China.

The company plans to invest the net proceeds in Erdos project and ancillary engineering facilities with an annual production capacity of 25 million tons of coal; Heilongjiang project with an annual production capacity of 10 million tons of coal; phase II of China Coal and Coke Xuyang Limited Engineering project with a total annual capacity of 2 million tons of coke; Shanxi Lingshi project with an annual capacity of 0.3 million tons of methanol produced from coke oven gas; and China Coal Shuozhou Great Power project with a capacity of 2,135 MW of coal gangue generated electricity.

China Coal Energy's A-share public offering is believed to channel massive capital from the mainland stock market, which is in great volatility in recent sessions.

Compared with China Shenhua Energy Co., Ltd., the largest coal producer in China, China Coal Energy has bigger growth potential, said analysts. So this may trigger a reduction in investors' holdings of China Shenhua shares in the future.

Industry data show China Coal Energy's coal reserves are the fifth largest among the global listed coal companies and the second largest in China. It is now the biggest manufacturer of coal mining machinery and one of the biggest coke refiners in China.

In the first half of 2007, the company reaped net profit of CNY 2.65 billion, an increase of 99 percent than the same period of 2006.