Shaanxi Coal Industry plans an initial public offering in Shanghai to raise as much as 17.3 billion yuan ($2.7 billion) in what could be mainland China's biggest IPO this year.

A successful IPO would make the company the country's third-largest publicly traded coal miner by output after China Shenhua Energy Co Ltd and China Coal Energy Co Ltd , Shaanxi Coal said.

Shaanxi Coal could be the biggest IPO in the mainland market this year if it ends up raising more money than Sinohydro Group, the builder of the Three Gorges dam that also plans to list this year.

Investors will be excited about the Shaanxi Coal IPO since coal prices are expected to stay firm in the next two years, said Liu Yuanrui, an analyst with Changjiang Securities in Shanghai.

A weak stock market this year has prompted issuers to tone down pricing expectations for their IPOs.

The benchmark Shanghai composite index has fallen around 7 percent since the start of the year amid growing worries over a hard-landing in China and debt troubles in the United States and Europe.

The China Securities Regulatory Commission (CSRC) said late on Thursday that it would review Shaanxi Coal's IPO application on Aug. 29.

Shaanxi Coal will issue up to 2 billion shares in the offering, according to a draft prospectus posted on the CSRC website.

The proceeds would fund mining activity and replenish working capital, it said.

COAL HOT

Strong demand from China and India has sparked a revival of the global coal industry, prompting international thermal coal prices to rally in recent years, and has ignited a raft of mine expansions and takeovers.

Sinohydro obtained approval from CSRC for its IPO in July, but has not launched the deal yet. Both Shaanxi Coal and Sinohydro said their IPOs aim to raise money to fund projects and other items worth about 17.3 billion yuan each.

The final size of their IPOs will depend on market demand and the pricing of the deals.

China's IPO market has slowed by a fifth in the first half, lacking the big deals of the year before, with fundraising dominated by smaller companies.

In the first six months, only about a tenth of the companies seeking listings chose to do so on the Shanghai Stock Exchange, with the rest going to the smaller Shenzhen bourse, which houses the Nasdaq-style ChiNext market, Thomson Reuters data showed.

State-owned Shaanxi Coal and Chemical Industry Group Co Ltd owns 71 percent of Shaanxi Coal.

China is the world's biggest coal-producing country, with output at 3 billion tonnes in 2009, accounting for about 46 percent of total global production that year.

Shaanxi Coal is headquartered in Xi'an, in the northern Chinese province of Shaanxi, which had known coal reserves of about 170 billion tonnes, the company said.

CICC, BOC International (China) Ltd and Citic Securities are joint underwriters of the IPO. ($1 = 6.390 yuan)

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