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Govt considers coal sector restructuring

By Yu Tianyu (China Daily)
Updated: 2008-08-09 09:13

The National Energy Administration is planning to promote more mergers and acquisitions in the country's coal industry in an effort to intensify the government's macroeconomic control and deal with overexploitation and over competition in the industry.

"Guidance of mergers and acquisitions in the coal industry has been submitted to the State Council and we're waiting for the approval," an official from the National Energy Administration said.

Industry insiders regarded it as a signal for a new round of reshuffling in China's coal sector.

Kang Rong, an official with the China National Coal Association told China Daily the government has been considering regrouping the industry for a while, but was yet to take efficient action.

As early as 2005, the State Council issued the advice on improving the healthy development of China's coal industry, vowing to construct large coal mining bases and form large coal enterprise groups.

The government was alerted when it ran into difficulties in allocating coal to support regions struck by the blizzard early this year, Kang said.

State-owned coal firms aside, many others put their own interests ahead of the county's urgent demands, he added.

According to the State Electricity Regulatory Commission, the coal reserve in the country's big power plants was 43.81 million tons, merely enough to support 11 days of normal operations.

Facing such a severe coal shortage, the country urgently needs to improve its unitization rate of coal. While, the large coal enterprises are much more efficient in mining than small ones, as more than 80 percent of their mines have been fully exploited, compared to 10 to 15 percent for small coal producers which led to serious wastes, he said.

As for construction, large coal mines have always been well equipped. They have advanced mining technologies, transportation and other supporting facilities, he said.

He also said that large coal mines have reclamation plans after mining, and they pay considerable attention to environmental protection issues such as appropriate utilization of underground water.

He suggested the government should start with the consolidation of coal reserves in a bid to make rational exploitation plans and put them into use.