Chinese coal producer Shenhua Group Corp is seeking a merger with State-owned China General Nuclear Power Corp, people with knowledge of the matter said, a deal that would create a utility giant with about $204 billion of assets.

Shenhua has submitted a proposal to government regulators about a possible merger, the people said, asking not to be identified as the information is private. The government is still considering the proposal, and there's no certainty it will result in a tie-up.

Any deal would combine China's largest coal producer with its biggest generator of atomic power, giving Shenhua the ability to generate energy from cleaner sources as the nation seeks to reduce its dependency on coal and cut carbon emissions.