China going big - while still going small

China going big - while still going small

30th November 2007

In part response to the vast and unacceptable death rates among coal mine workers, the Chinese regime recently annouced it would ban small-scale mines. (This is despite the fact that the worst disasters have tended to afflict large, state-owned, operations.)

Now, the government is going back even on this small step forward

Small-scale coalmines to remain despite new coal industry policy - industry insider

Interfax Mining and Metals

30th November 2007

Local demands will fuel the development of small-scale mines in coal-poor regions despite the release of the National Development and Reform Commission's national coal industry policy Thursday, an industry insider told Interfax.

The new policy, which represents the first mid to long-term blueprint for the country's coal industry, raises entry requirements for coalmine and coal-bed methane (CBM) exploration and exploitation, and reaffirms the suspension of approvals for small-scale coal projects.

The NDRC said in the policy that all coalmine operators and coal resource explorers are now required to hold government granted licenses, and that no coal production project with an annual production capacity of less than 300,000 tons will be approved for development before 2010. The move supports wider efforts by the government to phase out and discourage inefficient small coalmines.

"However, when local supplies fall short of demand, coalmines with annual capacities of less than 300,000 tons will go into production, despite the policy," an official with Chinacoal South (Group) Co., surnamed Zhang, told Interfax.

With a view to the long term, region-specific minimum annual production benchmarks that take into account regional coal reserves were also set out in the policy. For example, coalmines proposed for development in the coal-abundant provinces of Shanxi and Shaanxi as well as the Inner Mongolia Autonomous Region will need a production capacity of over 1.2 million tons in order to be approved.

However, some regions have been set minimum annual production benchmarks that are lower than the national 300,000-ton benchmark, though in these cases the higher figure will be enforced until 2010. Sichuan, Guizhou and Yunnan provinces and Chongqing Municipality have a minimum annual production benchmark of 150,000 tons, while Fujian, Jiangxu, Hubei, Hunan provinces and the Guangxi Zhuang Autonomous Region have theirs set at 90,000 tons.

"This 300,000-ton requirement means that hardly any projects outside of Shanxi, Shaanxi and Inner Mongolia will be approved before the end of the decade. The region-specific benchmarks are also likely to need adjustments after 2010, due to changes in proven coal reserves and transportation capacity," Zhang said.

The policy also encourages large-scale state-owned coal companies to grow into conglomerates by tapping into different regions and various industries. "The new policy is definitely a boon for all the large coal companies, as it helps to close down and limit the numbers of the small independent coalmines and thus increase the leverage of larger firms," Zhang said.

The NDRC said it aims to build 13 large coal producing bases, mostly located in coal-rich Shanxi, Shaanxi, Henan and Inner Mongolia.

The policy also prohibited the development of coal chemical projects in regions with limited water resources.