BEIJING (TheStreet) -- Struggling coal companies in China may be preparing for large-scale layoffs and other cost-saving moves now that banks have reportedly stopped extending credit to a state-owned mining giant.
News that lenders may force major downsizing at domestic mines -- including the powerful Longmay Mining Group, which employs about 250,000 people in northeastern China -- pushed coal company stock prices higher Monday on mainland and Hong Kong stock markets.
Gaining 10% each on the Shanghai Stock Exchange were shares in affiliated but separately listed, state-owned miners Shanxi Coal International and Shanxi Coal, which respectively closed at 4.31 yuan and 4.48 yuan. Meanwhile, Yanzhou Coal (YZC) rose 10% in Shanghai to close at 7.22 yuan, while its Hong Kong-listed shares climbed 4.5% to close at HK$6.03.
Hong Kong shares in the Canadian and Toronto-listed miner South Gobi, which extracts coal in Mongolia and sells it to China, rose 2.5% to end at HK$4.76.Shares in China's largest coal concern, Shenhua Group (CUAEF), gained 4.6% to close at 14.78 yuan on the Shanghai exchange. The company's Hong Kong-listed shares ended the day 2.8% higher at HK$21.65. Also on the Shanghai market, Datong Mining, the country's third-largest coal concern, rose 9.9% to 6.20 yuan, while second-largest China Coal Energy (CCOZY) jumped 7.8% to close at 4.51 yuan. In December Shenhua signed an agreement with America's Peabody Energy (BTU) to streamline Chinese imports of foreign-mined coal, which is one reason why domestic miners are under pressure to downsize.
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