China to cut coal production by 150m metric tons

China is committed to the goal of cutting 150 million metric tons of coal production capacity and will deepen supply-side reform with a focus on "zombie enterprise" withdrawal in 2018, according to the National Energy Administration.

China will continue to cut outdated and ineffective capacity and withdraw coal exploration in national nature reserves, scenic spots and protection areas for sources of drinking water, said Ren Yuzhi, vice-director of the coal department of the National Energy Administration.

A batch of coal mines with an annual capacity of less than 300,000 tons will be guided to exit the industry this year in an orderly manner, Ren said at a news conference on energy production in the first quarter.

Development of high-quality and advanced coal production capacity is encouraged by market-oriented methods and legalization of advanced coal production projects will also be supported, according to Ren.

The coal department of the National Energy Administration pledged to continue to improve the long-term mechanisms of coal dynamic balance by insisting on coal production announcement systems to timely reflect the dynamic changes in coal production.

Improvements in the midterm and long-term contract systems will be speed up and the signing of direct sales contracts between supply and demand sides is also encouraged, Ren said.

The government will monitor the implementation of midterm and long-term contracts by relevant companies, rewarding honest enterprises and punishing dishonest ones.

The government will also promote the establishment of a minimum and maximum inventory system for coal, support the building of coal storage and transportation facilities, and improve coal storage capacity in society, especially in power plants.

Since 2016, China has launched a series of measures to cut overcapacity of coal production and improve the quality and efficiency of coal industry development. About 290 million and 250 million tons of coal overcapacity were cut in 2016 and 2017 respectively, surpassing the annual goals for two consecutive years.