Changing economy to lower China’s coal demand over next 5 years

Coal demand in the world’s second-largest economy will increase, but slowly in the five years from 2016 due to an energy revolution and economic transformation, Xinhua quoted an official of the China National Coal Association (CNCA).

However, coal will still dominate China’s energy structure despite the service sector set to take the lion’s share of the economy and increased focus on non-fossil fuel, as the country’s energy demand is expected to continue growing along with the its industrialisation, urbaniaation and agricultural modernisation, said Jiang Zhimin, vice head of CNCA said.

The mode and fields for coal utilization are also expected to evolve with the development of science and technology, as coal will be used as raw material as well fuel, he said, adding that for the five years the coal industry will prioritise restructuring and upgrades, which means cutting overcapacity and more mergers and acquisitions.

Jiang’s remarks came days after the State Council announced plans to slash overcapacity in the coal industry and stop approving any new coal mines before the end of 2019.

The country will shut down 500 million tonnes of capacity and consolidate another 500 million tonnes into the hands of fewer but more efficient mine operators in the next three to five years, according to a guideline issued by the State Council.

Cutting overcapacity in sectors including coal and steel is part of the country’s supply-side structural reform and high on the government agenda.

In the past five years, China eliminated about 560 million tonnes of coal production capacity and closed 7,250 coal mines.

The country had about 11,000 coal mines at the end of 2015 with a total capacity of 5.7 billion tonnes.

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