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A coalfield with reserves of 20.5 billion tons has been discovered in North China's Inner Mongolia Autonomous Region.

Located in Hunlunbuir, east Inner Mongolia, the coalfield will mainly produce brown coal, which can be used in thermal power stations and in coal-to-chemical products, according to the local geological & mineral prospecting & exploitation bureau.

Analysts said the coalfield would help ease the demand for energy in Northeast China.

It is expected to have a life output of more than 10 billion tons, and its annual production could be between 10 million and 20 million tons, said an official of the China National Coal Association, who declined to be named.

"The discovery will increase China's total coal reserves, but it will not have a big impact on the nation's coal industry as a whole," said Wang Ye, an analyst with CITIC Securities.

"The nation today has several coalfields that have reserves of 10 billion tons," he said.

Last year, Inner Mongolia discovered five 10-billion-ton coalfields in Xilin Gol, and a 6.4-billion-ton coalfield in Baiyanhua. The local department of land and resources said earlier it had invested 2.78 billion yuan ($21.12 million) last year in geological exploration of 170,000 sq km of land, doubling the investment between 2001 and 2005.

The region produced 260 million tons of coal in 2005 and even more last year.

China's coal output is expected to be 2.6 billion tons in 2010. It continues to be the nation's most important energy resource, according to the 11th Five-Year Plan (2006-10) for the coal industry published by the National Development and Reform Commission (NDRC).

To date, the country has 1 trillion tons in coal reserves, ranking third in the world.

Shanxi and Shaanxi provinces and the Inner Mongolia and Ningxia Hui autonomous regions are the major coal sources, accounting for 67 percent of the total reserves, the NDRC said.

China will develop 8 to 10 coal companies with an output of 50 million tons. By the end of the previous five-year plan, there were two firms with an annual output of 100 million tons and three with an output of 50 million tons.

(China Daily 06/13/2007 page4)