Coal hub eyes re­struc­tur­ing as its only hope

China Daily (Canada) - - BUSINESS - By LI JIABAO and SUN RUISHENG li­ji­abao@chi­nadaily.com.cn

The coal hub of North China’s Shanxi prov­ince is striv­ing to re­struc­ture its eco­nomic growth model amid de­clin­ing coal prices and in­creas­ing eco­log­i­cal costs, se­nior of­fi­cials said.

“The past year was a most dif­fi­cult year for us. Pres­sure from the price de­cline was as bad as in fi­nan­cial cri­sishit 2009,” provin­cial Party Chief Yuan Chun­qing said at a news brief­ing of the 12th Na­tional People’s Congress on Thurs­day.

Shanxi is China’s en­ergy base, with coal re­serves and out­put both ac­count­ing for one-fourth of the na­tion’s to­tal. Coal out­put in 2013 reached 960 mil­lion tons, of which more than 64 per­cent, or 620 mil­lion tons, was trans­ported and con­sumed out­side the prov­ince. Shanxi also was China’s sec­ond­largest power sup­plier

Yuan noted that coal and coal-re­lated in­dus­tries, such as coke and smelt­ing, ac­counted for about 80 per­cent of the prov­ince’s in­dus­trial added value. Coal price de­clines since mid-2011 re­duced Shanxi’s rev­enue by 200 bil­lion yuan, which dented coal businesses in the prov­ince and also the prov­ince’s eco­nomic growth.

“The golden decade of the coal in­dus­try is gone and prob­a­bly will not come back,” said Zhu Xiaoming, di­rec­tor of the prov­ince’s State-owned As­sets Su­per­vi­sion and Ad­min­is­tra­tion Com­mis­sion. “Eco­nomic growth slowed down, and the huge coal ca­pac­ity is now a headache. The only way out is re­struc­tur­ing and mod­ern­iz­ing the coal in­dus­try.”

Vice-pre­mier Ma Kai said on Wed­nes­day that the coun­try is now at a stage where only re­struc­tur­ing can boost eco­nomic growth and that re­bal­anc­ing the eco­nomic growth pat­tern in the en­ergy-rich prov­ince will pro­vide “re­pro­ducible so­lu­tions” for other re­source-in­ten­sive re­gions.

“Coal re­mains the fun­da­men­tal in­dus­try for the prov­ince in terms of China’s

But the so­lu­tion is not to ex­pand min­ing ca­pac­ity, which will fur­ther drive down coal prices, but in ex­tend­ing the in­dus­trial chains, such as coal-elec­tric­ity in­te­gra­tion and coal cok­ing busi­ness, as well as en­hanc­ing ef­fi­ciency through pro­mot­ing clean tech­nol­ogy.” MA KAI VICE-PRE­MIER

en­ergy port­fo­lio,” Ma said. “But the so­lu­tion is not to ex­pand min­ing ca­pac­ity, which will fur­ther drive down coal prices, but in ex­tend­ing the in­dus­trial chains, such as coal-elec­tric­ity in­te­gra­tion and coal cok­ing busi­ness, as well as en­hanc­ing ef­fi­ciency through pro­mot­ing clean tech­nol­ogy.”

Liu Jianzhong, chair­man of the Shanxi Coal Trans­porta­tion and Sales Group Co Ltd, said that the re­struc­tur­ing of the coal in­dus­try means greater busi­ness op­por­tu­ni­ties in coal-elec­tric­ity in­te­gra­tion as well as the uti­liza­tion of waste, such as fly ash, a residue of coal com­bus­tion.

In­dus­trial waste, such as fly ash and coal gangue, takes up a lot of space and pol­lutes ground­wa­ter as well as the air. Over­stock­ing of such waste, which is com­mon across the coun­try, also brings safety risks, said Shen Ruitao, deputy di­rec­tor of the prov­ince’s Eco­nomic and In­for­ma­tion Tech­nol­ogy Com­mit­tee.

“The cen­tral govern­ment should in­tro­duce more in­cen­tives for the use of the waste, in­clud­ing in­creas­ing the value added tax ex­emp­tion for businesses in coal gangue power gen­er­a­tion and coalbed meth­ane power gen­er­a­tion. The thresh­old of the tax pref­er­ence should be low­ered, while the cov­er­age should be ex­panded,” Shen said.

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