China seeks inputs before cutting back on coal overcapacity

China’s economic planner and other relevant departments have been soliciting suggestions before formally introducing drastic measures to cut back on coal overcapacity, Chinese media reported.

The measures include a pause in new coal mine projects, closing of outdated production facilities, directing “zombie” companies to close and expediting coal-electricity integration, according to the latest Economic Information Daily, XInhua said.

In the coming three years, China plans to close 4,300 coal mines, remove outdated production capacity of 700 million tonnes and relocate 1 million employees. The central government has earmarked 30 billion yuan ($4.57 billion) to support the relocation, it quoted the report as saying.

Domestic coal demand shrank 2.9 percent year on year in 2014 and is expected to have dropped 4 percent in 2015, as demand dwindles due to the economic slowdown, restructuring and environmental protection, said Jiang Zhimin, deputy head of the China National Coal Association.

In the past five years, China has eliminated about 560 million tonnes of coal production capacity and closed 7,250 coal mines, according to Chen Yangcai, head of statistics and information with the association.

China had about 11,000 coal mines at the end of 2015 with a total capacity of 5.7 billion tonnes. Among these, some 1,000 had annual capacity above 1.2 million tonnes, about 400 more than in 2010.

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