BEIJING - China will step up efforts on forming large-scale coal production bases, aiming at increasing the production capacity to 90 percent by the end of the 12th Five-Year Plan (2011-2015), according to the National Energy Administration (NEA).

The agency will continue the construction of the 14th large-scale coal production base to consolidate the industry and increase efficiency over the next five years.

Zhang Guobao, who recently stepped down as the director of the NEA, said the Xinjiang Uygur autonomous region, which has huge coal reserves, will become the 14th large-scale coal production base in the next five years.

It has coal reserves of up to 2,190 billion tons, accounting for 40 percent of the country's estimated overall reserve volume. The country's largest coal miners, Shenhua Group Corp Ltd, China Huaneng Group and China Huadian Corp, all have developed projects in the area.

Peabody Energy Co said on Jan 20 that it plans to work with Yankuang Group Co for a clean-coal project in Xinjiang.

The existing 13 large-scale coal production bases produced 2.8 billion tons in 2010, accounting for 87.5 percent of the country's production. The NEA said it will help to establish 20 coal companies over the next five years. Ten larger companies will have an annual production capacity of 100 million tons each and 10 smaller companies will have a capacity of 50 million tons each.

Analysts said the merger and acquisition of coal companies will be accelerated despite the limitations caused by differences of locations, industries and ownerships. The government will work on mineral rights integration in provinces including Shanxi, Shaanxi, Qinghai, Gansu, Guizhou and the autonomous regions including Inner Mongolia, and Xinjiang.

During the 11th Five-Year Plan (2006-2010), the country closed down 9,000 small mines and eliminated 450 million tons of production on average annually. At the same time, 50 large coal companies, each with a capacity of more than 10 million tons, produced 1.73 billion tons in the period, accounting for 58 percent of the country's total production.

The concentration of the coal mining industry has increased pace. The Inner Mongolia and Ningxia Hui autonomous regions have set up a national-level energy and chemical engineering project together in the towns of Ningdong and Shanghaimiao.

Shanxi province contributes the largest proportion towards the country's coal production and is also the first province to start the consolidation of mines.

During the past five years, the local government reduced the number of mines to 1,053, of which 70 percent had a production capacity of approximately 900,000 tons a year. Small mines with a capacity of less than 300,000 tons a year have been closed. Five coal companies reached 100 million ton production capacity in the past five years, four of which are in Shanxi province.

China Daily

(China Daily 01/26/2011 page14)