China is to give a big push to the consolidation of its dirty, deadly and inefficient coal mining industry. For some years thousands of small, dangerous and outdated mines have been closed down. It is these that have mainly been responsible for the industry’s appalling safety record. In the latest such mine accident, five miners were killed and 17 trapped underground on Thursday after a gas explosion ripped through the Dahuang No. 2 Coal Mine, a seemingly illegally operating mine in Liaoyang City in Liaoning.
The explosion happened the same day that the new five-year plan for the coal industry was released by the National Energy Administration. This says that by 2015, 10 large coal mining companies (100 million tonnes annual capacity) and 10 medium-size ones (50 million tonnes annual capacity) will be responsible for 60% of the coal output in the world’s largest producer and consumer of coal. These companies will be created by merger and acquisition. Overall, the country’s 10,000 coal companies will be reduced in number to no more than 4,000.
Apart from improving the industry’s safety record–China’s largest coal mining companies now have safety records to compare with the best in the world–the closures and consolidation support the official drive to reduce greenhouse gas emissions by cutting the mining and use of China’s highly polluting brown coal and lignite, and to preserve fast disappearing agricultural land which mining operations make unsuitable for farming. Production is to be capped at 3.9 billion tonnes a year by 2015. That is about what the country mined last year.
Increased imports, particularly from Chinese-owned mines overseas, will make up the shortfall in demand, which is forecast to increase by 7% a year in line with GDP growth. China’s mining companies will be encouraged to increase their investments in overseas coal fields. The industry will also add domestic coal-production capacity of 750 million tons a year in the five years ending 2015, according to the plan, three quarters of it in the West, as it upgrades to more modern mines as part of the consolidation drive.