China setting up its first coal exchange

Mumbai: China, the world''s largest producer and consumer of coal, will set up its first coal exchange in the northern Shanxi province.

China''s state council, or the cabinet gave its nod for establishment of Taiyuan Coal Exchange in Taiyuan, capital of the coal-rich province. The first stage of the project will need an investment of one billion yuan ($130 million).

The Chinese authorities plan to expand the existing Taiyuan Coal Trading Market for creating the new exchange. This would facilitate trading of around 500 million tonnes of coal annually in the initial stage, a local coal official said.

China exports 80 million tonnes of coal annually, ranking third in the world, while its coke exports account for 57 per cent of the global trade volume.

A modern market-based coal trading system would also allow marco-economic control of the market in the next three to five years.

The center would help form an integrated national coal market and build a national pricing system -- the "China price", which is likely to impact the pricing of the world coal market in the future, reports quoting Ouyang Yexin, general manager of the Taiyuan Coal Business Center, said.

The coal business center will sell 800 billion yuan ($104.4 billion) of coal per year, and the centre is expected to become one of the most important exchange markets in the world, on par with New York and London oil markets

According to the plan of Shanxi government, China Shanxi Coal Business Center will complete its development planning before June, and construction is expected to start in late September.

The new center will have an internet system to support online business and e-banking, providing a convenient way for clients to do business transactions, an official said.