Coal news and updates

Beijing stops issuing permits for coal production

The Chinese government has stopped issuing permits for coal production and operations, considered a positive measure for the sector as coals firms are now allowed to operate freely without having to pay for other licensed coal companies.

Some experts said that having to obtain a permit for coal production and operations of a business were obstacles in the way of the development of the sector.

In addition, they suggested that the government cancel the qualification of companies that held the rights to operate the railway but were earning a profit by charging higher fees from other railway users. Thus, limited railway resources could effectively serve coal-related firms.

According to the Chinese-language Securities Daily, coal companies and other relevant firms have been complaining about insufficient railway network capacity, which has led to high fees charged by railway operators. The fee governs the money that subsidiaries of China Railway Corporation charge from coal companies. These subsidiaries have the right to operate the railway and charge a high fee from companies which need to use the railway but do not possess such a right.

Some rail sections are operated by two different subsidiaries, which doubles the amount coal firms have to pay the fee to both subsidiaries. A coal firm sometimes has to pay up to 50 yuan to 60 yuan (US$8-$9.60) for each ton of coal shipped by train.

The owner of one of such subsidiaries earned 4.8 million yuan (US$772,600) in half a month from charging the rail use fee, according to a person working in the coal industry in Ordos.

In addition, the fee might be raised if coal is sold at better prices in the market. In 2006 and 2008, the fee had touched 120 yuan (US$19.30) per ton of coal.

However, a majority of coal companies reported a deficit or are on the verge of incurring losses because they still have to pay five to 10 yuan (US$0.80-$1.60) a fee for every ton of coal shipped despite the falling coal prices.

Source: Want ChinaTimes