Yanzhou Coal Mining is on track to meet its profit forecast this year as sales volume increases and product prices stabilise, executive director Luo Taiyan said yesterday. The company, listed this year, saw a 35 per cent surge in first-half profit to 372.6 million yuan (about HK$346.7 million) based on international accounting standards. In an A-share issue document from June, it forecast an after-tax profit of 894.4 million yuan on turnover of 4.75 billion yuan, using mainland accounting standards. Finance department manager Wu Yuxiang said profit growth in the second half would be achieved through cost control, increased sales and help from government policies including export tax rebate changes. The company expects to trim costs of about 20 million yuan after repaying 500 million yuan of loans in the second half. Mr Wu said a rise in the export tax rebate to 9 per cent from 3 per cent from June was expected to bring an extra 50 million yuan this year. He said it would cost about 2.7 billion yuan to buy the Jining Coal Mine III from its parent. It would be funded by internal reserves and most probably bank borrowings although bond and share issues would be considered. Mr Luo said coal prices, which fell about 10 per cent in the first half, should stabilise in the second half as there would be little room for further declines. The mainland plans to close 20,000 small coal mines, which would see a cut in annual production of about 100 million tonnes this year, with the figure reaching about 200 million tonnes in two years, Mr Luo estimated. This would alleviate pressure on prices. Price falls in key rival Australia would also be limited as the suppliers there were selling below cost. ING Barings securities senior analyst Alex Conroy said: 'The company is very defensive. China is very dependent on coal. Even if the economy is slowing down, there is [still] a strong base for coal sales. 'I think the bad news is already there.' She maintained her full year forecast of about 896 million yuan, or up about 6 per cent on last year.