China orders coalmines to raise production to address power crunch

Chinese officials have ordered more than 70 mines in Inner Mongolia to increase coal production by almost 100m tonnes, with the country battling its worst power crunch and coal shortages in years.

The move is the latest attempt by Chinese authorities to boost coal supply amid record high prices and shortages of electricity that have led to power rationing across the country, crippling industrial output.

The proposed increase would make up almost 3% of China’s total thermal coal consumption. In an urgent notice dated 7 10月, the Inner Mongolia regional energy department asked the cities of Wuhai, Ordos and Hulunbuir, as well as Xilingol League, to notify 72 mines that they may operate at stipulated higher capacities immediately, provided they ensure safe production.

An official with the region’s energy bureau confirmed the notice but declined to say how long the production boost would be allowed to last.

The notice came after a meeting on the same day during which the regional authorities mapped out measures for winter energy supplies in response to mandates from China’s state council, or cabinet, the state-run Inner Mongolia Daily reported.

「 (government’s) coal taskforce shall urge miners to raise output with no compromise, while the power task team shall have the generating firms guarantee meeting the winter electricity and heating demand,” the newspaper said.

A Beijing-based trader, who estimated the production boost may take up to two to three months to materialise, 前記: “This demonstrates the government is serious about raising local coal production to ease the shortage.”

ザ・ 72 mines listed by the Inner Mongolia energy bureau, most of which are open pits, had previously authorised annual capacity of 178.45m tonnes. The notice proposed they increase their production capacity by 98.35m tonnes combined, according to Reuters calculations.

“It will help alleviate the coal shortage but cannot eliminate the issue,” said Lara Dong, a senior director with IHS Markit. “The government will still need to apply power rationing to ensure the balancing of the coal and power markets over the winter," 彼女は言いました.

Inner Mongolia is China’s second biggest coal-producing region, churning out just over 1bn tonnes in 2020 and accounting for more than a quarter of the national total, official data shows.

しかしながら, that output was down 8% に 2020 and was falling every month from April through July this year, partly because of an anti-corruption investigation initiated last year by Beijing targeting the coal sector, which led to lower production as miners were banned from producing above approved capacity.

The neighbouring Shanxi province, China’s biggest coal region, had to close 27 coalmines this week because of flooding.

Coal inventories at major Chinese ports were at 52.34m tonnes in late September before a week-long national holiday that started on 1 10月, ダウン 18% from the same period last year, data compiled by the China Coal Transportation and Distribution Association showed.

その間, coal consumption is climbing as north-eastern China has kicked off the winter heating season, with major power plants having stockpiles for about 10 days of use, down from more than 20 days last year.

To ensure power and heating supply to residential users, China has reopened dozens of other mines and approved several new ones.

The government has also called for “appropriately” raising coal imports to levels on a par with last year, analysts said, after imports fell almost 10% in the first eight months.

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