China gives new incentives to drive quality coal

Updated 2018-02-12 11:18:03

Firms will be allowed to boost capacity if they close old mines: NDRC

China plans to increase high-quality coal supply by allowing mines to boost capacity if they shut outdated production processes, the latest effort by authorities to further streamline the industry and stabilize coal prices.

Coal companies will be encouraged to close inefficient and polluting mines and replace them with larger ones if they meet certain standards, the National Development and Reform Commission (NDRC) said in a statement on Friday.

Companies that agree to sign long-term contracts with power plants or to set up joint ventures with power companies will be allowed to expand their capacity by 130 percent to 300 percent.

The NDRC would give those allowed to boost capacity less than a year to shut outdated production, the statement said.

The incentives are the latest of several measures taken by China to foster closer ties among coal mines, coal-related businesses and power utilities as it looks to stabilize coal prices.

Last year, China's top coal miner Shenhua Group Corp took over China Guodian Group Corp in a move creating the world's largest power utility.

In late January, four of the country's major utilities warned of tight coal supplies after thermal coal prices on the Zhengzhou Commodity Exchange hit a record of 679.8 yuan (7.53) a ton. Spot coal prices at ports have been above 750 yuan a ton in recent weeks.

To halt the price surge and ensure coal supplies to utilities amid frigid weather, the NDRC earlier this week ordered the major coal port of Qinhuangdao, in Northeast China's Liaoning Province, to cap FOB thermal coal prices at 750 yuan a ton from February 5.

The power industry had borne the brunt of the price spike, coming under severe pressure from late November, when coal climbed above 640 yuan a ton, the approximate level at which utilities can break even.

With electricity prices fixed in China, utilities are unable to pass on their high feedstock costs to customers.

Among other incentives, firms with mines in nature reserves or regions with a high risk of natural disasters will be allowed to double capacity if they re-locate, the NDRC said.

China aims to eliminate all coal mines with a capacity of less than 90,000 tons this year. Industry experts say that more than 1,000 mines with a combined capacity of around 150 million tons of coal capacity are expected to shut in 2018.

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58December 17 2018 01:35:24

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16December 17 2018 01:35:24

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18December 17 2018 01:35:24

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

China World Business Sports Showbiz Audio
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
China World Fun Travel Entertainment Sports
Beijing Shanghai Guangzhou
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords