Coal industry consolidation in Shanxi province is on track and may lead to a boost in output soon, even as the government maintained that prices of the commodity would remain stable this year.

Shanxi, which accounts for nearly one-fourth of the country's coal needs, intends to step up its output by 80 million tons this year to 700 million tons, said Wang Shouzhen, director of the Shanxi Coal Industrial Bureau.

The expanded output is expected to bring some cheer on the price front after prices of the commodity rose sharply in the past few days as demand peaked and supplies dwindled due to transportation problems.

"Coal prices should be relatively stable this year. Though some areas are facing temporary coal shortages, the government is taking steps to address the problem," said Wu Yin, deputy administrator of the National Energy Administration.

The government is also urging the industry to step up consolidation moves in other provinces and also taking adequate steps to ensure that demand is satisfied, Wu said.

Shanxi started the restructuring moves in April 2009. The central government launched a pilot project in the province to reduce the number of mines and companies.

By the end of last year, the province reduced the number of coal firms from 2,200 to 130. Of the 130 companies, 50 percent are shareholding companies while 20 percent are State-owned and the rest are private firms.

State-owned coal companies, such as Datong Coal Mine Group and Shanxi Coking Coal Group, still account for nearly 40 percent of the overall capacity in the region, said Wang.

As part of the plan, private firms were encouraged to merge or acquire smaller coal producers. The government also indicated that it would shut mines with annual production capacity of less than 300,000 tons by the end of this year.

Overseas firms from South Korea and Hong Kong have acquired stakes in local firms, said Wang without elaborating.

At the same time the government is also encouraging domestic energy firms to look out for overseas opportunities.

China will "actively take part" in the distribution and competition of global strategic resources such as oil, gas and mineral resources, said Zhang Xiaoqiang, vice-minister of the National Development and Reform Commission, in a statement posted on the commission's website yesterday.

Yanzhou Coal Mining Co Ltd has already completed all the legal proceedings for acquiring Australia's Felix Resources Ltd in December last year.