US-based L&L Energy has signed letters of intent for the acquisition of 14 operating coal mines in the Guizhou Province of China.

The mines, which produce primarily coking coal, have been collectively approved for three million tons of annual coal capacity and could yield about $500m in revenue.

The Guizhou Province has planned to reduce its 1,600 locally owned mines to some 40 holding companies in order to increase mine size and improve production efficiency.

According to the company, the government also mandates that total coal production in the province be increased by a 40%, equating to 300 million tons per year by 2015.

L&L Energy chairman and CEO Dickson Lee said Guizhou’s accelerated consolidation plan provides an enormous profit opportunity.

"With our deep relationships in the region and our success of bringing US operating standards to China, I am confident in our position moving forward," Lee said.