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UPDATE 3-Shenhua will keep supplies to long-term clients after Guodian deal
October 20, 2017 / 1:51 PM / a month ago

UPDATE 3-Shenhua will keep supplies to long-term clients after Guodian deal

* Exec comment will allay concerns about impact of state merger

* Shenhua and Guodian are merging to create global powerhouse

* Government intervention in coal market unlikely - exec (Adding detail throughout)

By Chen Aizhu and Meng Meng

BEIJING, Oct 20 (Reuters) - Shenhua Group Corp Ltd , China’s biggest coal producer, will maintain supplies to existing long-term clients after its merger with state power company China Guodian Group Corp, a senior executive said on Friday.

Speaking at a briefing at the twice-a-decade Communist Party Congress, the comment from general manager Ling Wen will ease concerns that the state-orchestrated merger could restrict thermal coal to other utilities, potentially prolonging a year-long rally in prices that has hurt power companies’ profits.

The deal, matching the coal miner with one of the country’s biggest utilities, was announced in late August and will create a global powerhouse worth $280 billion.

The company will also guarantee coal supplies to Guodian, Ling said, to which Shenhua currently sells 25 million tonnes of coal a year.

He played down the chances of a repeat of last year’s market chaos, when Beijing had to intervene to avoid a winter fuel crisis after government-enforced coal mining cuts squeezed supplies of the nation’s favourite fuel.

“This year the market has improved. I don’t think the government will use aggressive measures,” Ling told Reuters.

Touting the company’s clean credentials, he said 70 percent of its thermal coal-fired power plants have ultra-low emissions.

Ling also said Shenhua plans to build a fourth-generation “travelling wave” nuclear reactor (TWR) in Cangzhou, Hebei province, by 2030 as part of its tie-up with the China National Nuclear Corp (CNNC) announced late last month.

TWR technology uses depleted uranium and is more fuel-efficient and cheaper to run than conventional reactors. (Reporting by Chen Aizhu and Beijing news monitoring; Writing by Josephine Mason; Editing by David Evans and David Holmes)

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