People’s Daily published an article on the problem that China is facing with excess capacity in the coal mine industry as well as the re-settlement of 1.3 million coal mine workers. According to the article, demand for coal has slowed down since 2012. The rate of decline was 2.9 percent in 2014 and 3.7 percent in 2015. The China National Coal Association published statistics that showed that, by the end of 2015, China had been sitting on 300 tons of coal inventory for 48 consecutive months. Excess capacity and the importation of foreign coal have resulted in a sharp price drop – as much as 28.6 percent in 2015. The article reported that, in 2015, income for the major coal mine industry dropped 14.8 percent and profit dropped 65 percent compared to the same period in 2014. Over 90 percent of the industry suffered financial losses. Currently, according to the article, the supply of coal exceeds demand by 2 trillion tons. The National Energy Association stated that the plan is to close 1,000 low efficiency coal mines which is equivalent to 60 million tons of capacity in 2016. The long term plan is to reduce 500 million tons of coal production over the next three to five years through mergers and acquisitions with as few bankruptcies as possible. Meanwhile, the article said, there are 1.3 million coal miners in the work force who must be redirected and the re-settlement of these people is expected to be a challenging task.
Source: People’s Daily, March 28, 2016
http://energy.people.com.cn/n1/2016/0328/c71661-28230173.html