YANZHOU Coal Mining Co said it plans to buy a 51 percent stake in an Inner Mongolia-based company for 6.649 billion yuan (US$980 million) in order to acquire more reserves of the commodity.

Buying the stake in Inner Mongolia Haosheng Coal Mining Ltd will give Yanzhou, China's fourth-largest coal producer, an additional 838.4 million tons of coal resources.

Yanzhou will buy 35.5 percent of Haosheng from two sellers for 4.63 billion yuan, and 15.5 percent from Shanghai Huayi (Group) Co in an open bidding process, the coal miner said in a stock exchange filing.

Citic Securities analyst Luo Zeting said it's hard to evaluate the impact on earnings of this acquisition now given limited information on production plan and timeframe, but it should be a long-term positive given the field's potential low production costs.

Yanzhou said that Haosheng is not expected to contribute to its profit in the near future but it "possesses the potential to create steady and large revenue in the future."

Yanzhou, which acquired Australia's Felix Resources Ltd last year, is expanding output and profit as a resurgent Chinese economy lifted coal prices.

Haosheng, incorporated in March this year, is the developer of the Shilawusu coal field in Inner Mongolia, which has coal resources of 1.644 billion tons, according to Yanzhou.

Yanzhou rose as much as 4.45 percent yesterday before closing up 1.87 percent at 19.02 yuan in Shanghai.