Profit From China's Exploding Resource Blitz

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After a rather unusual four-day halt, shares of Chinese coal miner Yanzhou Coal Mining (NYSE: YZC  ) finally resumed trading Friday morning. China's insatiable thirst for resources and related investments, meanwhile, has taken no such pause.

The long-awaited acquisition by Yanzhou of Australian coal miner Felix Resources matured into a $2.9 billion cash bid Thursday, boosted by unanimous support from Felix's board. The addition of Felix's thermal and coking coal assets in eastern Australia, along with a 15.4% stake in one of the world's largest coal export terminals at the Port of Newcastle, is nothing less than a strategic development both for Yanzhou and for China at large.

For Yanzhou, geographic diversification of the company's coal portfolio not only positions the miner to participate in China's transformation into a net importer of coal, but also builds timely exposure to critical pan-Asian coal markets from Korea to India. In a single bound, Yanzhou joins Asia-ready miners like Peabody Energy (NYSE: BTU  ) and Rio Tinto (NYSE: RTP  ) , though on a smaller scale. With steelmaker POSCO (NYSE: PKX  ) and equipment maker Joy Global (Nasdaq: JOYG  ) joining a chorus of bellwethers confirming Asia as the nexus of relative strength within a crisis-stricken world, Yanzhou is growing in all the right places.

For China, Yanzhou's overseas acquisition represents one of the largest outright foreign purchases yet, and helps to cement access to precious coal resources to fuel the nation's growth. In addition, the purchase marks another notch in China's exploding tally of resource-oriented deals that are strongly encouraged as official strategic economic policy. In July, premier Wen Jiabao issued a directive for Chinese companies to execute a strategic "going out" policy by accelerating overseas expansion with the full support of China's foreign reserves.

Reflecting that explicit initiative, China has been on a tear lately:

If all the deals go through, recent resource-related investments by Chinese entities overseas are approaching the $40 billion mark, without even counting the stockpiling of physical resources like oil, copper, and iron ore.

By gobbling up strategic resources while the world reels from financial upheaval, Yanzhou Coal Mining not only supports an explicit directive from the Chinese state, but also builds one of the more compelling coal mining companies available to Western investors.

The "Coal" tag within the Motley Fool CAPS community lists 23 coal companies. Find out what other investors are saying about the stocks you're watching, or share your Foolish thoughts with us. CAPS is free and fun!

Petroleo Brasileiro and POSCO are Motley Fool Income Investor selections. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Christopher Barker wishes he could squeeze coal into diamonds. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Peabody Energy. The Motley Fool scrubs its disclosure policy before releasing it into the atmosphere.


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