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Coal mining curbs reversed as winter approaches, concern about supply deepens

(Reuters)
Updated: 2016-11-18 10:21
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   China adopted new rules on Thursday to stimulate coal production as it moved to counter surging prices and after Premier Li Keqiang said the country had to balance demand for heating with efforts to tackle pollution.

    Li's comments came after the National Development and Reform Commission (NDRC) ruled that all coal mines that abide by production safety rules can operate 330 days a year rather than 276 days previously.

    Analysts and traders said the new limit marked a major step from the Chinese central government to help boost coal supplies. The NDRC capped domestic mining earlier this year in a campaign to reduce excess capacity but this triggered a surge in the price of coal.

    Li told a meeting of the National Energy Commission that reports directly to the cabinet that China must increase the clean and efficient use of coal, according to state radio.

    Higher coal prices have been hurting consumers in China and concerns about supply have growing ahead of expected strong demand during winter.

    "This is the biggest policy adjustment to lift coal production so far," Huaan Futures coal analyst Wang Fei said.

    The new limit will be effective until the end of the winter heating season, NDRC said.

    The country faces uncertainty over the weather outlook in the northern regions, it said, which is contributing to coal supply difficulties.

    Also, some producers have not ramped up production as fast as expected as winter approached, the State planner said.

 

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