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Fig. 1. Trade delegation from North Rhine-Westphalia visits Chinese coal mines. Bild 1. Besuch der NRW-Wirtschaftsdelegation im chinesischen Steinkohlenbergbau. Photo/Foto: EnergieAgentur NRW

China: Coal Production falls by approximately 2.5% in 2014 compared with 2013

Coal production in China, the world‘s largest producer and consumer of fossil fuels, fell by approximately 2.5 % in 2014 compared with the previous year; the first year to experience an actual decline in production since 2000. The information comes from Jiang Zhimin, Vice Director of the China National Coal Association (CNCA) and was disclosed to EnergieAgentur.NRW at a meeting following the most recent delegation visit to China from 18th to 26th April 2015 in Beijing. China‘s total production volume for 2014 has not yet been published. The CNCA data shows, however, that in the first 11 months of the past year China‘s coal production had reached 3.52 billion tonnes; 2.1 % lower than in the same period of the previous year.

The decline in production can primarily be traced back to a combination of sluggish domestic demand and large quantities of coal imports. This situation, the economic growth worldwide and excess capacities in mainland China led to a slump in coal prices. In 2014, China‘s large mining corporations, such as Shenhua, China Coal, Datong Coal, Shandong Energy-Xinwen, etc., had promised the central government to cut back production in order to avoid a surplus, and to stop stockpiling coal. Inner Mongolia – one of the leading coal provinces – recorded a decline in 2014 production of 11.9 % to 908.08 million tonnes, whereas Shanxi and Shaanxi, the other two large provinces, disclosed a 1.5 % and 3.6 % increase, to 976.7 million and 510.9 million tonnes respectively. Shenhua Energy, the country‘s largest coal producer, registered a decline in its coal production by 3.6 % to 306.6 million tonnes, whilst China‘s second-largest producer, China Coal Energy, produced 114.4 million tonnes, equivalent to a decline of 3.6 %. In spite of somewhat more positive changes in the final quarter of 2014 – not least as a result of government measures to support the cut back – the coal mining industry as a whole still faces some serious challenges.

At the end of 2014, production companies had stockpiled 87 million tonnes, a surplus of 2.6 % compared with the start of the year. The stockpiles at the largest power stations stood at 94.55 million tonnes, a surplus of 17.1 % compared with the start of the year. Estimates collectively place total stockpile quantities at approximately 250 million tonnes.

In the first 11 months of 2014, the large coal companies recorded profits of around 110.5 billion yuan (approximately € 18 billion), 44.4 % lower than in the same period of 2013. More than 70 % of all coal companies suffered losses. Some corporations lowered wages as a result, while others were unable to pay their employees on time.
It is now expected that the situation will begin to improve from the end of 2015. At the same time, it has been suggested that the surplus must be reduced again and that companies still have a difficult time ahead.

Since the Chinese economy is entering a phase of 6 to 7 % gradual growth per year, coal mining needs to be adapted accordingly. In addition to this, stricter environmental regu­lations are also leading – at least temporarily – to a critical phase of transformation and structural adaptation. China‘s coal production capacity now lies at over 4 billion tonnes per year and more than 1 billion tonnes of new capacity are currently under development.

In 2015, the central government, along with provincial governments and reform commissions will work towards helping the industry out of its present difficulties. Strict controls on illegal and dangerous production and the prevention of surplus production are on the agenda. The sale and importation of substandard coal with a high sulphur content will be reduced or prohibited. More specifically, an additional 100 mines have been blacklisted for producing a total capacity of 200 to 250 million tonnes a year by illegal means and earmarked for closure.
(EnergieAgentur NRW/Si)