Chinese officials have ordered more than 70 mines in Inner Mongolia to increase coal production by nearly 100 million tonnes as the country battles the worst power outage and coal shortage this year.
- 72 Iminers in Inner Mongolia have been told that they can operate at greater capacity immediately, provided they remain safe
- The region accounts for more than a quarter of China’s total coal production
- Coal stocks at major Chinese ports were 52.34 million tonnes at the end of September, down 18 percent from the same period last year
Record high prices and shortages of electricity have led to rationing of electricity throughout the country and destroyed industrial production.
The proposed increase accounts for nearly 3 percent of China’s total consumption of thermal coal.
In an urgent statement on 7 October, the Inner Mongolia’s Inner Energy Department asked the cities of Wuhai, Ordos and Hulunbuir, as well as the Xilingol League or Prefecture, to notify 72 mines that they could operate at higher capacity immediately, provided they ensured safe production. .
An official with the region’s energy bureau confirmed the announcement, but declined to say how long the increase in production would be allowed to last.
The State Inner Mongolia Daily reported that the announcement followed a meeting the same day in which regional authorities mapped out measures for winter energy supplies in response to mandates from China’s cabinet or cabinet.
“That [government’s] “The coal task force must encourage miners to increase production without compromise, while the power task team must have the guarantee of the production companies to meet the winter demand for electricity and heat,” the newspaper said.
“This shows that the government is serious about increasing local coal production to alleviate the shortage,” said a Beijing trader, who estimated that the increase in production would take two to three months to realize.
The 72 mines identified by the Inner Mongolia Energy Authority, most of which are open pit mines, previously had a permitted annual capacity of 178.45 million tonnes.
The announcement suggested that they increase their production capacity by 98.35 million tons in total, according to Reuters calculations.
“It will help alleviate the coal shortage, but cannot eliminate the problem,” said IHS Markit CEO Lara Dong.
China’s thermocouple futures in Zhengzhou fell briefly 6 percent on Friday morning after opening up nearly 3 percent. The contract fell 3.2 percent to 1,287 yuan ($ 274) per share. Ton.
Authorities are increasing imports
Inner Mongolia is China’s second largest coal-producing region, dumping just over 1 billion tonnes by 2020 and accounting for more than a quarter of the national total, official data show.
But this production fell by 8 per cent. In 2020 and fell every month from April to July this year, partly due to an anti-corruption probe launched last year by Beijing against the coal sector, which led to lower production as miners were banned from producing more than allowed.
The nearby Shanxi province, China’s largest coal region, had to close 27 coal mines this week due to flooding.
Coal stocks at major Chinese ports stood at 52.34 million tonnes at the end of September before a week-long national holiday that began on October 1, which is 18 percent lower than in the same period last year, according to data compiled by China Coal Transportation and Distribution Association.
Meanwhile, coal consumption is rising as northeastern China enters the winter heating season, where large power plants have stocks for about 10 days of use, down from more than 20 days last year.
To ensure power and heat supply to private users, China has reopened dozens of other mines and approved several new ones.
The government had also called for “appropriate” to raise coal imports to level with last year, analysts said, after imports fell nearly 10 percent in the first eight months.
It has even released Australian coal from bottom stock despite an almost year-long unofficial import ban on coal imports from the country, and utilities have exploited rare sources of supply such as Kazakhstan and the United States.