Coal news and updates

Australian coal companies are set to be beneficiaries of China government reforms aimed at shutting down larger polluting coal mines as well as larger unprofitable mines.

 

The government said it will curb “disorderly” coal output growth and encourage high-quality coal imports.

 

China will tighten approvals of new coal mines and ban imports of low quality coal in order to curb the growth of "disorderly" coal production and promote sustainable development of the coal industry.

 

New coal mines with annual output of below 300,000 tonnes will no longer gain approval.

 

The use of low-quality coal is seen as a major reason for air pollution in China's northern regions, including Beijing and neighboring Tianjin.

 

Last year, China imported 289 million tonnes of coal, of which low-quality coal accounted for more than 25%.

 

Existing coal mines with an output of less than 90,000 tonnes will be gradually eliminated from the industry, and coal mines that fail to meet safety standards will be shut down.

 

The reduction of mines with the edict from Beijing would reduce the coal supply which would boost coal prices.  

 

The total number of mines has already been reduced to 14,000 by end of 2012 from 24,800 in 2005.

 

Recent share price gains by China coal companies listed on the Shanghai Composite Index gives further credence to the growing evidence and wave of consolidation continuing in the China coal sector.

 

Shenhua, the largest coal producer and Yanzhou Coal have been strong share market performers of late.

 

 

China coal consumption forecast to rise

 

China's coal consumption is forecast to rise by 37.1% by 2020, according to the China National Coal Association in a report.

 

Now while there have been many who have questioned king coal's future given environment challenges in China, the forecast underlines there are few viable alternatives to provide energy as well as fuel China's economic growth.

 

Coal consumption in China amounted to 3.52 billion tonnes in 2012, the Coal Association expects this to rise to 4.8 billion tonnes by 2020.

 

Coal Association vice president Liang Jiakun said that far from being in decline, coal still has a dominant role to play and even has growth potential as coal remains China's major energy source as well as .

 

Coal currently accounts for more than 60% of the country's primary energy resources.

 

 

 

Source: www.proactiveinvestors.com.au