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Shanxi works hard on coal supply-side structural reform

( chinadaily.com.cn )

Updated: 2016-06-16

North China's Shanxi province, one of the major coal producers in China for the past decade, has issued implementation guidance and some detailed regulations to advance its coal supply-side structural reform.

A package of reform measures will be carried out to ensure a fundamental change in the province's coal industry that helped the local economy boom over the years but is now in tremendous difficulties.

Data from the Shanxi Statistics Bureau show that the province produced 944 million tons of raw coal in 2015 but lost up to 9.42 billion yuan ($1.43 billion) in the coal industry. This means the province, with the coal industry the pillar of its economy, lost 10 yuan for each ton of coal it sold.

By the end of 2015, the debt ration of Shanxi's five major coal producers had risen by up to 81.79 percent.

The severe situation has exerted great pressure on Shanxi's economy and desperately calls for a structural reform of the coal supply.

"Overcapacity is the key and the biggest problem that must be dealt with," said Li Xiaopeng, governor of the province.

There are 50.76 million tons of coals in stock, three times more than that held by the end of 2011, Li said at the 2016 national two sessions. So a combined measure of limiting coal production increases and reducing inventory is the only option for Shanxi's coal industry to stop loss and ensure transformation.

Shanxi will work hard to reduce coal overcapacity by 100 million tons by 2020, said Niu Jianming, vice-director of the province's coal industry department. This amount is expected to be larger than the total sum of overcapacity reduction of the Inner Mongolia autonomous region and Shaanxi province.

In addition to great efforts in reducing capacity, the reform also emphasizes the cleaning, low-carbon, and efficient use of coal. Shanxi plans to build coal power bases and develop the coal chemical industry to realize industrial transformation.

The reform also includes technological innovation and increases in production efficiency to ensure the sustainable transform of the coal industry.

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