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Coal demand poised to rise in central and western China

China’s central and western regions are expected to become new growth centers for coal consumption, as they would be main GDP growth drivers for the country, said Jiang Xiujie, general manager of Huazhong Energy Co., Ltd. under China National Coal Group.

New railways, the Belt and Road initiative and the Yangtze River economic zone strategy would boost coal demand in central and western provinces, as the center of energy demand moves westward, Jiang said at third Global Thermal Coal Resource &Market Summit 2015 on November 13.

China Coal Huazhong Energy, a strategic move by the nation’s No.2 coal producer, expects to realize coal sales of 6.5 million tonnes from April to the end of the year, almost doubling the initial plan of 2.51 million tonnes, according to Jiang.

The company also hopes to sell more than 10 million tonnes of coal next year and further increase sales to 30 million tonnes in three to five years.

"This is our target, no matter the Menggan railway – from western Inner Mongolia to Jiangxi province — put into use or not," Jiang said.

Central China, enjoying special development opportunities but in lack of coal resources, has seen many large Chinese coal producers setting up offices there, including Shenhua Group.

Coal consumption of the central and western regions had been relatively stable in recent years. And many steel mills were still in profit in the first half of the year.

China planned to build nine above-10GW large coal-electricity bases in the central and western regions, which could use 200-300 million tonnes of coal, according to a government energy development plan.

By the end of the “13th Five-Year Plan”, coal-to-oil, coal-to-olefin and coal-to-glycol capacity of the two regions would amount to 22-23 million, 16-18 million, 4.5-5 million tonnes, respectively; while coal-to-gas capacity would reach 30-35 billion cubic meters. These new coal chemical facilities would consume a total 300-400 million tonnes of coal, Jiang estimated.

Besides, the construction of railways in central and western China would greatly lower transport cost, thus in favor of the growth in coal demand.

The Belt and Road Initiative would help divert excess capacities in steel, cement and fertilizer industries, boost manufacture and the power sector, Jiang noted, forecasting some 1-2 billion tonnes of coal use in the next 10 years.

Sichuan province planned to invest 800 billion yuan in railways, roads, airports and other infrastructures, which will bring additional coal consumption of 20 million tonnes, Jiang added.

source: http://en.sxcoal.com