Bloomberg reported that China Coal Energy Co, China’s second biggest producer of the fuel, will halt investment in a plant in northeastern China that may cost CNY 17 billion because of weak demand.

China Coal said in a statement the company suspended the project in Heilongjiang province because domestic and international economic conditions have significantly deteriorated. The project, which would produce 10 million tonnes of coal a year, will be less profitable in current markets.”

According to data posted on the China Coal Transportation and Distribution Association’s Web site the coal price at Qinhuangdao port, a domestic benchmark has slumped 31% from July’s record to CNY 557.5 a tonne as of March 23rd. China’s economy expanded 6.8% in the fourth quarter, the weakest pace in seven years, as factories cut output because of falling exports, curbing electricity and coal consumption.

China Coal said the company will actively seek alternative plans to deploy the funds for the project. The coal producer had spent CNY 12 million on the project so far. The rest of the funding had been expected to come from proceeds from the company’s share sale in Shanghai last year.

The company said in a separate statement recently that China Coal’s 2008 net income rose 19% to CNY 7.14 billion. That’s lower than the CNY 8.56 billion median of nine analysts’ estimates compiled by Bloomberg.

(Sourced from Bloomberg)