Plunging profits mark the end of coal's halcyon era in China
The halcyon decade that China's coal industry has enjoyed since 2002 market reforms has reached its terminus with a major dive in first half profits this year.
The China National Coal Association (CNCA) has released data indicating that total profits for 90 major miners in the first half of 2012 have declined 8.8% year on year, for their biggest drop in a decade.
Tepid sales have also sent accounts receivable sky-rocketing, with the first half total of 186.6 billion yuan for the 90 major miners up 52.8% year on year.
China's Caixin reports that industry players do not anticipate the return of robust profits in the near-term, and that major listed coal players are in rough condition.
Yanzhou Coal Mining (NYSE:YZC) has seen its net profits plunge 43.7% compared to the same period in 2011, while state-owned giant China Coal Energy also reports troubled financial performance.
Yanzhou's Australian subsidiary Yancoal Australia also announced broad cost cutting measures last month due to rapid declines in coal prices, as well as hit up its parent company for a loan to fund current liabilties.
The Chinese coal sector's troubles been profound enough to trigger intervention efforts by the central government, with top decision-making body the National Development and Reform Commission (NDRC) sending fact-finding teams to coal regions to better surmise the situation, and CNCA expecting the introduction of support policies soon.