World's leading colliery firm aims to become a key industry player by investing in mines and local firms Peabody Energy, the world's largest private coal company, plans to invest in mainland mines and coal firms and establish itself as an importer and exporter in the Chinese market. 'Our initial goals are to improve our understanding of the Chinese coal and energy markets and foster better relationships with government agencies and potential business partners,' Peabody chief financial officer Richard Navarre said yesterday. 'Long term, we are looking to invest in assets, probably through joint ventures.' The St Louis, Missouri-based company is opening a representative office to try to gain a foothold in a highly regulated but potentially lucrative market at a time when the government is shutting down many of China's 28,000 coal mines. The Chinese collieries are the most dangerous in the world. The Guangdong government announced last week it would close all mines in the province following the Daxing disaster that killed 123 miners last month. Many small mines have been kept open because of nationwide brownouts and surging demand for coal-fired energy, which makes up 75 per cent of China's total electricity generation. Along with a 10 per cent increase in mainland coal production in the first half, imports continued to rise, with Australia, the world's largest coal exporter, increasing shipments by 8 per cent to keep pace with soaring Chinese demand. Richard Whiting, Peabody head of sales, marketing and trading, said Chinese coal demand should grow 70 per cent to 80 per cent in the next 15 years, while United States demand should increase about 50 per cent. Over the same period, China, India and the US would account for about 90 per cent of world growth in coal demand. 'Because of coal's abundance and low cost, global consumption has risen 25 per cent in just the last three years while natural gas and oil have not kept up,' Mr Navarre said. Most of Peabody's 9.6 billion tonnes of coal reserves are in the US, with some in Australia and Venezuela. 'We hope within five to 10 years China will be a meaningful part of our business,' Mr Navarre said. Peabody was still looking into regulatory restrictions, but the company understood it would be allowed to take minority stakes in reserves and possibly get a larger share in coal mining operations. 'Several years ago, it would have been impossible to invest in a majority stake in an operation,' he said. The company is also looking to invest in Mongolia, although underdeveloped infrastructure and the lack of clarity over ownership make that country less promising than China in the short term. The experience of Los Angeles-based oil firm Occidental Petroleum in the 1980s is a cautionary tale for Peabody. In 1985, Occidental bought a 25 per cent stake in the Shanxi-based Antaibao operation, China's largest open-cast coal mine at the time. The deal was reportedly struck personally by company patriarch Armand Hammer and Deng Xiaoping and resulted in massive losses for Occidental. The company eventually sold its share back to the Chinese government for US$145 million and left with its tail between its legs, having sustained total losses of about the same amount. But Peabody executives are unfazed by this precedent and say they are looking for opportunities to develop emission-reduction technology with Chinese companies in what is probably the most polluted country on earth.