The Chinese government plans to encourage companies to explore for coal offshore, while at the same time capping domestic coal production below 3.9 billion metric tons by the end of 2015. China Daily says the nation’s coal industry is expected to be capable of producing 4.1 billion metric tons by the end of 2015. However, Wu Yin, deputy director of China’s National Energy Administration (NEA), told China Daily that plans call for keeping coal output within 3.9 billion metric tons to control energy use and reduce carbon emissions.
Wu said China will form 10 large coal companies capable of producing 100 million metric tons of coal a year and another 10 companies that are capable of producing 50 million metric tons a year. These 20 companies will be responsible for 60% of China’s total coal production. “China will continue to promote mergers and acquisitions in the coal industry,” Wu said. “We will work to develop large coal companies and shut down coal mines to eliminate outdated operations.”
The NEA will try to “rationally control” the scale of coal production by slowing construction in central China regions and placing more emphasis on west China. New projects in the Inner Mongolia, Ningxia and Xinjiang autonomous regions, along with the provinces of Shaanxi, Shanxi and Gansu, will account for 87% of China’s new coal projects, according to the NEA.
Dain Bing, senior analyst at coal.com.cn, a Chinese coal trading website said the government is likely to meet its goal of controlling coal production. “The main reason is that the mergers and acquisitions in the industry will help form larger coal producers that own ger production operations. The increasing capacity to produce coal will help the country establish an emergency storage system for coal, a goal also listed in the plan.”
Meanwhile, analysts have predicted that coal for Asia’s coal-powered plants is headed for the worst slump in three years as slowing economic growth reduces demands and U.S. coal imports threaten to flood coal markets. “We are in a buyer’s market,” said one. “There’s a lot more supply in the market than demand.”
China’s customs data showed that the country only imported 20.6 million metric tons of coal in February, 7.2% less than the record low set in November. The figure includes thermal and steelmaking coal grades. Observers predict China will probably have an oversupply of coal after being in balance last year. Meanwhile production capacity will increase by 400 million metric tons this year, while consumption will expand about 150 million tons.
(From an article by Dorothy Kosich posted at Mineweb.com.)