China Coal Energy Co. posted a huge loss and shrinking revenue in 2015 as the saturated coal industry has begun to bite into corporate profitability, according to Xinhua.
The news agency said that the Shanghai-listed mining company posted losses of around $390 million last year and its total revenue dropped 16.1 percent year on year to 59.27 billion yuan for the whole year.
The state-owned coal producer suffered as domestic coal prices continued to drop last year, according to the company’s board chairman Li Yanjiang, who attributed the lackluster performance to an over-supplied market.
Responding to the situation, the company cut production at less-competitive coal mines and transferred business to the more profitable coal processing sector, the report said. Its new coal chemical plants raked in 1.5 billion yuan in profit last year, which offset the loss from leaden coal mining.
Coal mining is one of several heavy industries struggling with serious overcapacity amid the economic slowdown, which has made many coal mines redundant, with less than 80 percent of the capacity actually under operation.
The problem has become a priority, and the government has promised to slash 500 million tonnes of coal capacity in the next three to five years. By the end of 2015, China had a total coal production capacity of 5.7 billion tonnes.