China Shenhua Energy Co., the nation’s biggest coal-mining company, said it’s looking to expand production through mergers and acquisitions and has been bidding to develop the Tavantolgoi deposit in Mongolia. The Hong Kong-listed company, which reported last week a record annual profit for the second year, will pursue any prospective deals in a cautious manner, President Ling Wen said at a media briefing in Hong Kong today. They must demonstrate “strong returns,” Ling said.

“Shenhua’s main focus, increasing production, will remain in China as assets there are cheaper to develop, although it’s also increasing its interest in countries like Australia and Mongolia,” said Anna Yu, an analyst at Taifook Securities Group Ltd. in Hong Kong.

China Shenhua has withdrawn from bids to develop the Tavantolgoi deposit, Mongolia’s Ardiin Erkh newspaper reported on March 2, citing unnamed officials.

“We have followed the project for seven years,” Ling said. “We have the edge and we are actively bidding for it.”