In the face of supply-over-demand problems in China's coal industry, 14 ministries in China jointly issued a document to enforce the industry's consolidation in late August 2009.
Chin's coal production capacity will reach 31 trillion tons by 2010 at an annual growth rate of 1.15 trillion tons per year. The demand for coal in 2008 was 27 trillion tons, showing an increased surplus of supply.
In terms of the industry structure, there are still a large number of small players with annual production below 300,000 tons in spite of the government's effort of shutting down more than 12,000 of them since 2005. The government aims at capping such small players to fewer than 10,000 nation-wide.
The document encourages large coal enterprises to merge and acquire smaller coal mines to integrate them into the production-transportation-supply chain for optimized utilization of resources.
shan'xi Province, known for its richest reserves of coal in China, targets to reduce the number of coal manufacturers from its current 2200 to 100, forming 2-3 coal groups with annual production capacity of trillion tons, 3-5 groups with annual capacity of over 50 million tons.
Coal remains the cheapest energy source in China by a wide margin. China has the world’s third-largest coal reserves, after the United States and Russia. 80% of electricity is supplied by coal, though China is moving aggressively into wind power and nuclear power. On a pace of one plan each month on average China is building coal-fired power plants.
