HONG KONG -- Major Chinese coal producers' earnings surged last year on upbeat coal prices thanks to Beijing's efforts to cut overcapacity, with analysts expecting greater consolidation among smaller companies this year.

Large state-owned players reported robust earnings as production cuts boosted coal prices. Shenhua Energy's Commercial Coal, the flagship unit under China Shenhua Group, saw its profits jump to its highest level since 2012 at 47.8 billion yuan ($7.6 billion) last year, up 91.9% from a year ago. Profits at Yanzhou Coal Mining, a Shandong-based coal producer, also rose more than fourfold to 7.36 billion yuan from a year ago.

To further bolster profitability and stabilize prices, industry players are looking to absorb resources from rivals.

Li Wei, vice-chairman at state-owned Yanzhou Coal Mining said during a press conference in Hong Kong on Monday that the company was in discussion with other energy companies for potential co-operation.

"We are actively looking for opportunities," he said, but added that nothing had been decided.

Zhao Dongchen, head of raw materials research at ICBC International Securities, said he expected more provincial coal miners to follow suit this year.

"Restructuring of SOE in energy sector has been the trend in the past four to five years," Zhao said. "It is hard to see a merger that would match the scale of China Shenhua Group and China Guodian Group," adding that acquisitions were more likely among smaller players.

Zhao said the continued consolidation in the mining sector will lend support to coal prices. About 30% of coal prices are decided by market forces and the rest determined by authorities.

Wang Jinli, senior vice president at China Shenhua expects port coal prices to drop to as low as 500 yuan per ton, compared to about 700 yuan currently, with more companies encouraged to raise output amid high coal prices.

With Beijing's drive to further cut coal capacity by around 150 million tons this year, coal miners in China -- about 80% owned by the state -- pledged to further integrate resources to fight the nation's war against smog.

This follows the landmark takeover deal between the nation's largest coal producer China Shenhua Group and major power generator China Guodian Group last year, as part of reforms to cut oversupplies in the energy sector.

Last year alone, China beat the target by slashing 250 million tons of coal. The National Development and Reform Commission, a state economic management agency, said in a work report in March that it would shutter coal-fired power generating units with capacity of less than 300,000 kilowatts that fail to meeting emission standards.