According to Mr Alexander Molyneux CEO of China focused coal miner SouthGobi Resources, China’s slowing growth in industrial output does not reflect softening demand for coal, who says prices have been supported by a lack of supply. But the company is prepared for a demand pullback, and has been conservative in its estimates in recent years.

Mr Molyneux told CNBC that “We actually project a roughly 7% increase in China's coking coal needs every year, which for the last decade has been running at 12%. So in our whole business model, we are considering a slower growth outlook for china and for industrial production. But they don't have enough good quality coking coal resources left to meet whatever growth they have.”

SouthGobi sells metallurgical and thermal coal to customers in China, and owns the Ovoot Tolgoi Mine and two development projects in Mongolia. The company posted a first quarter net loss of USD 46.6 million despite a 44.8% jump in revenue.

Mr Molyneux said that “The bulk of our losses comes from a technical loss. We have a convertible debenture as part of our financing structure, and every quarter we have to mark to market that under its natural accounting rules.”

He said that the company’s focus on provinces with double-digit gross domestic product growth like Jiangshu and Xinjiang, will continue to be a key driver of profits.

(Sourced from www.cnbc.com)