Shanxi provincial government has suspended charges levied on coal mining companies for environmental restoration, a move that Shanghai-listed Datong Coal Industry Co said will add 202 million yuan ($32.97 million) to its profits this year.

Following the announcement by the State-owned coal mining enterprise, its share price soared, and many investors became bullish toward the coal mining sector.

However, this will not reverse the overall decline that has been seen in the coal mining industry.

Although the suspension of these charges will give the companies a one-time boost and a good balance sheet, it will not improve their underlying profitability. 

The move is not a long-term factor, and as such investors should not consider it when they make their decisions.

The author is Duan Yu, a senior investment adviser from Minsheng Securities.

cnr.cn