CHINA Datang Corp, parent of the second-largest Chinese generator listed in Hong Kong, is in talks with Chifeng Dadi Basic Industry Co to set up a 3.5-billion-yuan (US$459 million) power plant, Bloomberg News said.

China Datang may take a 51 percent stake in the venture, while Chifeng Dadi may own 49 percent, Chifeng Dadi said in a statement to the Shenzhen Stock Exchange yesterday. The venture will upgrade Chifeng's heating supply facilities and build two generating units of 300 megawatts each, it said.

Power producers in China are expanding to benefit from demand in the world's fastest-growing major economy. The country plans to boost generation capacity by 15 percent this year, the government said in April.

The two companies may invest an initial 100 million yuan in the venture and raise spending as the project proceeds, Inner Mongolia-based Chifeng Dadi said.

"The project will take advantage of the rich coal resources in the eastern part of Inner Mongolia and aims to meet the rising energy demand in Chifeng," the company said.

China Datang is the parent company of Hong Kong-listed Datang International Power Generation Co.