The Chinese province of Shanxi will close all its small coal mines with an annual capacity of less than 600 kt/year. The province also plans to make all remaining mining facilities larger than 3 Mt/year. Open-pit mines will be required to have an annual capacity of at least 5 Mt/year and must comply with harsher rules on environmental protection. Coal mining companies in Shanxi will be encouraged to merge with nearby mining players or other ones located in other regions.
This announcement comes after the Chinese National Development and Reform Commission (NDRC) unveiled a plan to reorganize the coal mining sector by 2020 and build up large coal mining companies with an annual capacity of more than 100 Mt/year through mergers. The announced Shenhua-Guodian merger aimed at creating the world's largest utility in 2017 is in line with this strategy. The rationale behind the NDRC strategy would be to apply the same strategy for the coal mining industry. The planned mergers would also help China meet its target to eliminate nearly 800 Mt of outdated capacity and add around 500 Mt of advanced production. China expects coal production to average 3.9 Gt/year by 2020.
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