China Coal Energy, the listed unit of the mainland's second-largest coal producer China National Coal, has announced its third suspension in two years as a result of deadly flooding, staining its already blemished safety record.
As a result of flooding on Tuesday, four out of seven trapped workers in its subsidiary Shanghai Datun Energy Resources' Kongzhuang mine, in Jiangsu province, were found dead, China Coal said. The other three workers were rescued.
Trading of its shares was suspended yesterday before the market opened, pending the announcement.
Sanford Bernstein senior analyst Michael Parker expects the company's share price to be under pressure when trading resumes today because the accident turns the spotlight on the operating challenges China Coal faces, and on the fact that its safety record is much worse than rivals China Shenhua Energy and Yanzhou Coal.
Besides the Kongzhuang mine, Shanghai Datun also runs the Yaoqiao, Xuzhuang and Longdong mines in the Datun region in Jiangsu. Kongzhuang is undergoing a 532 million yuan (HK$652.93 million) renovation which would raise its annual output capacity to 1.8 million tonnes from 1.05 million tonnes.
Shanghai Datun's four mines had combined raw coal output of 9 million tonnes in 2011, amounting to 6.6 per cent of China Coal's target output this year.
All four mines had suspended their operations, 'in order to learn lessons from the flooding accident and take all effective measures to ... ensure safety', China Coal said.
