China to Secure Coal Supply, Steady Prices With Output Reserve System
Tang Shihua
DATE:  Apr 12 2024
/ SOURCE:  Yicai
China to Secure Coal Supply, Steady Prices With Output Reserve System China to Secure Coal Supply, Steady Prices With Output Reserve System

(Yicai) April 12 -- China will set up a coal production reserve system by 2027 to safeguard supplies of the fuel to power plants and stabilize thermal coal prices.

The goal is to reach an annual production reserve of 300 million tons of coal by 2030, according to a document jointly released today by the National Development and Reform Commission and the National Energy Administration.

China mined a record 4.7 billion tons of coal last year, a 3.4 percent increase on the prior 12 months, the China National Coal Association said a report last month. But net coal imports surged 63 percent to 470 million tons.

Candidates for the system are mainly big open-pit mines or underground mines with high safety provisions that are still under construction or in the planning stage. The government will choose from among the applicants.

Once the system is up and running, 70 percent to 80 percent of the new mines will operate normally, with their own managers making decisions, while the rest will be idled until the government identifies a need for additional output. The coal extracted from them will be sold under government guidance.

Mines in the system will need to have plans in place for a smooth transition when called upon, make a reasonable number of employees available, and be prepared for potential emergency starts.

To encourage involvement, the government has prepared a series of favorable policies, which include partially or fully exempting participants from their obligations under a capacity reduction mandate that formed part of a 2018 policy.

Given the quick rise in coal production that year, the government required coal producers opening new mines to shut some old production capacity to promote high-quality development and head off overcapacity.

Editor: Futura Costaglione

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Keywords:   Reserve Capacity Scheme,Coal Production,New Government Policy,Flexible Supply System,National Development and Reform Commission,National Energy Administration