Six Chinese state-owned energy companies will form a joint venture to trade coal and electricity and invest in an electric transmission system to better connect Shanxi and Jiangsu provinces.
The announcement follows the Chinese government’s plans to streamline its state-owned coal industry by consolidating coal miners and encouraging coal companies to undertake more tie-ups with electricity, shipping and iron and steel firms.
China Coal Pingshuo Coal Co Ltd, Datong Coal Mine Group, Datang International Power Generation Co Ltd, Jinneng Group Co, Jiangsu Guoxin Investment Group Ltd and Shanxi Shentou Power Corp will invest a total of 6 billion yuan ($956.16 million) to form the joint venture named Sujin Energy Holding, Jiangsu Guoxin said in a statement on Tuesday.
The joint venture will invest in the operation of the Shanxi-Jiangsu ultra-high voltage electricity transmission project and trade in electricity, coal and natural gas, according to the statement.
Shanxi is China’s second-biggest coal mining province with output of 854 million tonnes in 2017, while the eastern province Jiangsu is the second-biggest electricity consuming region and imports nearly one-fifth of its power from other regions.
China has been promoting cross-region power transmission and power trade by improving transmission capacity from northwestern and southwestern China to crowded eastern regions, an effort to ease electricity pressure during peak periods and to alleviate wasted renewable energy output.
“The joint venture will be a new starting point to encourage other provinces to extend equity cooperation into all sectors, such as coal, coke, steel and aluminum, in Shanxi,” said Wang Yixin, a vice governor in Shanxi province, according to the statement.
Heavy snowfall in China this winter has blocked shipments of coal on railroads and by truck. The country is also concerned with providing enough power for heating after a government effort to reduce coal-fired heating in order to reduce air pollution.