Measures to ensure sufficient coal for energy use pay off

China will mount an all-out effort to ensure coal production and keep coal prices at a reasonable level in 2022 after a tough year for energy production.

As measures to increase production have paid off, coal supply and demand have continued to improve, with green energy playing a big role in energy supply.

Previous efforts

The tight supply and high demand for power－a dilemma besetting China's power industry since the start of 2021－worsened in September and October due to the short supply and price hikes of coal. Multiple provinces then reported power rationing, with some regions experiencing power cuts.

Following the September power blackouts, the country stressed the importance of efforts to prioritize energy sufficiency. At an executive meeting of the State Council in late October, China ordered concerted efforts to ensure coal production and transportation, increase gas supplies and crack down on speculative activity in the market.

An improved pricing mechanism for coal-fired power was also released to deepen market-oriented pricing reform in the sector.

Since October, coal enterprises have also been promoting coal supply and stabilizing prices.

Huayang New Material Technology Group Co Ltd, a coal producer in Shanxi province－one of China's major coal-producing regions－has been improving its mining technology and operating at full capacity.

By Dec 22, 2021, Huayang had completed the shipment of 1.7 million metric tons of thermal coal to Hainan province ahead of schedule. These timely measures, at both the local and central levels, proved effective in restoring near-term coal supply and helped to gradually ease the strain on power generation, industry insiders said.

Spot prices and coal futures have fallen rapidly since mid-October as long-term supply contracts cover more coal producers while supervision was strengthened to rein in excessive speculation. By early November, power supply and demand in areas operated by the State Grid had returned to normal.

Smart mining helps

Intelligent technologies have become an important support in increasing the production and supply of coal.

Yulin－a coal-producing area in Shaanxi province－built 20 modern ultra-large coal mines with a capacity accounting for 50 percent of the city's total output.

At Shaanxi Coal Caojiatan Mining Co Ltd, an intelligent monitoring system connected to phone applications helps workers dispatch and monitor the real-time operation of equipment and the production process.

"With the help of the smart devices, the actual number of workers in a mining team has been reduced from 15 to seven. Now, just seven people can produce 3,500 tons of raw coal in two hours," said Li Peichen, a mining team Party chief with the company.

Also, a total of 154 intelligent mining areas have been built in Shanxi province, with the capacity of technologically advanced production accounting for 68 percent of the total.

Future steps

As the growth of global energy demand slows down and supply constraints ease, the mismatch between supply and demand is expected to improve this year, experts said.

Meanwhile, domestic coal supply capacity will be enhanced in 2022 as relevant government departments increase production capacity, they said.

In 2022, the medium and long-term coal contract system will be further improved.

Recently, a batch of long-term contracts was signed by coal enterprises from Shanxi, Shaanxi, Inner Mongolia and other places, together with some large domestic electricity, steel and heating enterprises, which will stabilize price expectations and promote stable energy supplies.

The country will also continue to increase the absorptive capacity of new energy, and optimize the use of coal and new energy. Large firms, especially State-owned enterprises, are working on the front lines to secure power supplies and stabilize prices.

Xinhua