China to set minimum coal output levels to eliminate small mines

BEIJING (REUTERS) - China, the world's top coal producer, plans to phase out small mines with less than 300,000 tonnes of annual output capacity in some areas to consolidate the fragmented industry, according to a plan prepared by the National Energy Administration (NEA).

Efforts by China, the world's top coal importer, to close small coal mines in coastal regions and develop major production bases in its northern and northwestern provinces means its coastal cities will continue to rely on imported coal to help fill any supply gap.

The production capacity of coal companies in the top three coal-producing areas of Shanxi and Shaanxi provinces and the Inner Mongolia autonomous region should be no less than 3 million tonnes per year, the agency said in a statement on its website.

Mines in southern provinces, such as Fujian, Jiangxi, Hubei, and Hunan, will need to have a minimum annual output of 300,000 tonnes, while the rest need production capacity of more than 600,000 tonnes.

The government needs to grow its coal mining companies and build coal giants that can also operate in related sectors, such as power, railways and ports, the agency said.

Consolidation efforts in Shanxi province in the past few years have seen many private coal mines taken over by larger companies that are mostly state-owned.

China, which mined 3.7 billion tonnes of coal in 2012, has said it plans to shut 3,000 small coal mines with a combined annual capacity of about 100 million tonnes by 2015. It has set a non-binding coal production target of 3.9 billion tonnes in 2015.

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