Yankuang to con­tinue to shut coal mines de­spite short-term price hike

China Daily (Hong Kong) - - BUSINESS - By YANG ZIMAN yangz­i­man@chi­nadaily.com.cn

Yankuang Group, Shan­dong prov­ince’s largest State-owned coal com­pany, will con­tinue to shut down out­dated ca­pac­ity and de­velop clean coal tech­nolo­gies to cope with a fluc­tu­at­ing mar­ket, according to its top ex­ec­u­tive.

“Though coal prices have risen in the past few months, the gen­eral trend of down­siz­ing ca­pac­ity, es­pe­cially out­dated ca­pac­ity, is not go­ing to change,” said Li Xiy­ong, chair­man of Yankuang Group.

The price of power-coal at Qin­huang­dao Port rose from 370 yuan ($53) per met­ric ton at the be­gin­ning of the year to 550 yuan per ton in Septem­ber. Yankuang is con­cerned that the ris­ing prices could tempt the slashed ca­pac­ity to re­sume pro­duc­tion, al­beit se­cretly, against the cen­tral gov­ern­ment’s pol­icy to cut ca­pac­ity.

Yankuang’s coalmines in Shan­dong prov­ince have seen ca­pac­ity re­duc­tion of 6.5 mil­lion tons per year re­cently.

Beisu, one of Yankuang’s coalmines in Shan­dong prov­ince, is go­ing to be com­pletely tons shut down in March next year, re­duc­ing over­all ca­pac­ity by 1 mil­lion tons per year. Beisu went into pro­duc­tion in De­cem­ber 1972, and has so far mined 28 mil­lion tons of coal.

The shutdown of Beisu coal mine has been re­warded with an in­cen­tive of 149 mil­lion yuan by the cen­tral gov­ern­ment.

According to the sta­tis­tics of the China Na­tional Coal As­so­ci­a­tion, the num­ber of coal mines in pro­duc­tion and in con­struc­tion stands at around 11,000. Yet, there are only 1,020 large coalmines with an­nual ca­pac­ity of above 1.2 mil­lion tons.

There are nearly 8,000 mines with an­nual ca­pac­ity be­low 300,000 tons and 6,500 mines with an­nual ca­pac­ity be­low 90,000 tons.

Yankuang has also shut down its elec­trolytic alu­minum fac­tory, which went into op­er­a­tion in 2003 and has so far pro­duced 1.55 mil­lion tons of alu­minum in­gots and alu­minum melt.

The mines shut so far have been turned into ser­vice and clean en­ergy com­pa­nies.

“Our goal is to turn the com­pany into a first-rate high-ef­fi­ciency clean en­ergy sup­plier. Coal re­mains the most im­por­tant en­ergy re­source in China. The clean tech­nolo­gies will help the in­dus­try to achieve sus­tain­able de­vel­op­ment,” said Li.

Last year, more than 95 per­cent of coal com­pa­nies in China re­ported losses. Yankuang Group earned a profit of 1.2 bil­lion yuan, down 45 per­cent year-on-year.

The group has in­de­pen­dently de­vel­oped a com­pound ad­di­tive to be mixed with bulk coal to re­duce pollution. Such pro­cessed coal can re­duce soot by 95 per­cent and saves 15-30 per­cent en­ergy com­pared with raw coal. The ef­fi­ciency is max­i­mum when the coal is burned in the spe­cial oven de­signed by Yankuang.

“Yankuang’s high-ef­fi­ciency clean coal has high heat value, easy to burn, and the fire is easy to con­trol. More­over, it is not ex­pen­sive as it has gov­ern­ment sub­si­dies. Over time, the clean coal will grad­u­ally be in­tro­duced to other re­gions in China,” said the lead re­searcher of the high-ef­fi­ciency clean bulk coal tech­nol­ogy de­vel­oped by Yankuang, who sought anonymity.

In China, cheap and highly pol­lut­ing bulk coal con­sump­tion is 600 to 700 mil­lion tons ev­ery year. In Shan­dong alone, 40 mil­lion tons are used per year.

Yankuang’s 35,000-ton-peryear fac­tory for high-ef­fi­ciency clean coal started pro­duc­tion in July. It is ex­pected to sup­ply 8,500 tons of clean coal for res­i­dents in Jin­ing of Shan­dong.

Our goal is to turn the com­pany into a first-rate high­ef­fi­ciency clean en­ergy sup­plier.” Li Xiy­ong, chair­man of Yankuang Group an­nual ca­pac­ity re­duc­tion of Yankuang Group in re­cent years

PRO­VIDED TO CHINA DAILY

An out­let of BNP Paribas in Paris, France.

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