《Policy News》
  • China sets Merger and Expansion goals for Coal Industry
    2018-01-10 00:00:11

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Author: Century Mining Database

Last Friday, China announced that as the world's largest fossil fuel producer, She has been devoted to streamlining and decentralizing the industry, cutting back on outdated capacity, and plans to compile several mega coal enterprises before end of 2020.
 
According to the data released from National Energy Administration last November, China current has over 4000 coal mines in operation, with a total output of 3.41 Billion tons.  However, according to China Coal Industry Association, only 6 among these are capable of producing over 100 million tons per annum, including ShenHua Group, China Coal Energy group, and DaTong Coal Mine Group. Since the merger last year between SOE China National Electricity Group and ShenHua Group, the National Development and Reform Commission has proposed a plan to design the world's largest power company. It was stated in one of their announcements that before end of 2020, it is China's goal to compile a group of large scale coal enterprises with production capacity over 100 million tons per annum, in order to cope with the competition in global market place as well as modernization of the industry.
 
It has been the central government's goal to reform and merge some of their SOEs which are inefficient and debt ridden, by cutting back on the number of enterprises, create a more globally competitive industry in the field of Power, transport and Metals. At the same time, the government has also implemented stricter regulations on pollution control, pushing for cleaner energy use, and limiting the coal used for power generation.  Director of the Hengfeng Bank research institute Mr. Wu Qi has stated: in addition to eliminating excess capacity, China government is looking for ways to elevate the profitability and capability of the coal industry, and eventually expand to non coal related fields such as power generation and transportation.
 
National Development and Reform Commission announced last Friday that additional interactions between the coal, Chemical coal, transportation and steel industries are encouraged.  They also called for the continued closure of small scale, inefficient and outdated coal mines.  According to the 2020 five year plan, China promises to retire 800 million tons of outdated capacity, and introduce 500 million tons of modernized production.  Aiming to reach 3.9Billion tons annual coal production by 2020.