Chinese authorities have ordered more than 70 mines in Inner Mongolia to increase coal production by nearly 100 million tons, as the country faces its worst coal shortage and electricity shortage in years. .
The move is the latest attempt by the Chinese authorities to boost coal supplies amid record-high prices and power shortages, which have dented industrial output.
The proposed increase would account for nearly 3% of China’s total thermal coal consumption.
In an emergency notice dated October 7, the Inner Mongolia regional energy department asked the cities of Wuhai, Ordos and Hulunbuir, as well as the Xilingol League, to notify 72 mines that they could operate at capacity. higher than specified immediately, as long as safe production is ensured.
The announcement comes after a meeting on the same day in which regional authorities outlined winter energy supply measures to meet the requirement.
72 mines are listed by the Inner Mongolia Energy Bureau, most of which are open-pit mines, which previously had an annual capacity of 178.45 million tons.
The announcement suggested they increase production capacity to 98.35 million tonnes combined, according to Reuters calculations.
“It will help alleviate the coal shortage, but it cannot eliminate the problem,” said Lara Dong, senior director of IHS Markit.
“The government will need to apply power allocation to ensure the balance of the electricity and coal markets in the winter,” she said.
China’s thermal coal price fell 6% on Friday morning (October 8), to $197.50/ton, after opening up nearly 3%.
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Inner Mongolia is China’s second-largest coal-producing region, producing more than 1 billion tons by 2020 and accounting for more than a quarter of the country’s total output.
However, that output fell 8% in 2020 and fell from April to July this year.
Neighboring Shanxi province, China’s largest coal region, had to close 27 coal mines this week due to flooding.
Coal stocks at China’s major ports stood at 52.34 million tonnes at the end of September ahead of the week-long national day holiday that began on October 1, down 18 percent year-on-year, data showed. Data provided by China Coal Transport and Distribution Association.
Meanwhile, coal consumption is on the rise as China begins 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 electricity and heating for people, China has reopened dozens of other mines and approved several new ones.
The government has also called for “appropriately” to increase coal imports to last year levels, analysts said, after imports fell by nearly 10% in the first eight months of 2021.
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