Coal ca­pac­ity tar­gets well on track

China Daily (Hong Kong) - - BUSINESS - By CHINA DAILY

China is on track to meet its tar­get to cut coal pro­duc­tion ca­pac­ity this year — and would likely top the goal — with fur­ther re­duc­tions ex­pected in the sec­ond half, ac­cord­ing to a lead­ing ex­pert on the sec­tor.

“By the end of April, China had cut its coal ca­pac­ity by 68.97 mil­lion met­ric tons, meet­ing 46 per­cent of this year’s tar­get,” said Wu Lixin, deputy di­rec­tor of the strate­gic plan­ning re­search depart­ment at the China Coal Re­search In­sti­tute.

Speak­ing at a work­shop hosted by the in­sti­tute on coal in­dus­try re­form in Beijing on Wed­nes­day, Wu said that cut­ting over­ca­pac­ity re­mained one of the core is­sues for the in­dus­try, as well as the in­creas­ing debt of coal en­ter­prises, high tax and trans­porta­tion costs, and the lack of a sci­en­tific man­age­ment sys­tem to an­a­lyze and syn­the­size work­flows to im­prove eco­nomic ef­fi­ciency.

She sug­gested that the coal in­dus­try should fo­cus on clos­ing mines with an­nual pro­duc­tion ca­pac­ity be­low 300,000 tons to re­duce ac­ci­dents due to un­safe work con­di­tions, elim­i­nate out­dated tech­nol­ogy and equip­ment, and pre­vent re­source de­ple­tion and non-com­pli­ance with in­dus­try poli­cies.

Early this year, de­tailed plans were re­leased by Sta­te­owned cen­tral en­ter­prises to cut coal over­ca­pac­ity by 24.73 mil­lion tons.

China Hua­neng Group pledged to cut 9.14 mil­lion tons of coal pro­duc­tion ca­pac­ity an­nu­ally by the end of 2018, while deal­ing with 16 of its “zom­bie com­pa­nies” — com­mer­cially un­vi­able busi­nesses that only sur­vive be­cause of fi­nanc­ing from the gov­ern­ment and banks.

China PolyGroup Corp, a State-run con­glom­er­ate, has also promised to close in­ef­fi­cient coal mines and re­or­ga­nize 39 of its zom­bie

com­pa­nies to im­prove prof­its in three years.

“While phas­ing out back­ward coal ca­pac­ity, it is also im­por­tant to pro­mote high­qual­ity coal pro­duc­tion ca­pac­ity”, said Wu, who de­fined this as safe, high-ef­fi­ciency and green coal ca­pac­ity.

“China needs high-qual­ity coal for its eco­nomic growth and the com­ing elec­tric­ity peak sea­son in the sum­mer,” Wu said.

Green coal ca­pac­ity co­op­er­a­tion with economies par­tic­i­pat­ing in the Belt and Road Ini­tia­tive has also been high­lighted in the in­dus­try’s re­form plans.

A green coal ca­pac­ity co­op­er­a­tion in­dex was pro­posed at the work­shop, which in­cluded subindices on re­source sav­ing,

en­ergy con­ser­va­tion, pro­duc­tion safety, en­vi­ron­men­tal pro­tec­tion, and eco­log­i­cal restora­tion and treat­ment.

Wu said this in­dex sys­tem would be trans­par­ent and dy­namic and economies in­volved in the Belt and Road could make ad­just­ments based on their na­tional con­di­tions and re­source con­di­tions.

Guo Zhonghua, vice-di­rec­tor of the Pol­icy Stud­ies Depart­ment of the China Na­tional Coal As­so­ci­a­tion, said it is the first quan­ti­ta­tive in­dex sys­tem on green coal ca­pac­ity co­op­er­a­tion put for­ward by China.

“We should ac­cel­er­ate its im­ple­men­ta­tion in China and make it an in­ter­na­tional stan­dard through the Belt and Road Ini­tia­tive,” Guo added.

Ex­tent of cuts in China’s coal ca­pac­ity by April-end Tar­get for coal ca­pac­ity cuts in State-owned cen­tral en­ter­prises

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