Companies encouraged to explore overseas markets for energy supply

China's coal production will stay below 3.9 billion metric tons by the end of 2015 if it can keep its annual economic growth rate at 7 percent on average through that year.

At the same time, the government plans to encourage companies to explore resources abroad to ensure the country has a sound energy supply during the 12th Five-Year-Plan period (2011-15), senior officials said on Thursday.

China's coal industry is expected to be capable of producing 4.1 billion tons of coal by the end of 2015. Plans, though, call for keeping the output within 3.9 billion tons to control energy use and reduce carbon emissions, said Wu Yin, deputy director of the National Energy Administration.

He said China will form 10 large coal companies that are capable of producing 100 million tons of coal a year and another 10 companies that are capable of producing 50 million tons a year. These 20 companies will be responsible for 60 percent of the country's output of coal.

"China will continue to promote mergers and acquisitions in the coal industry," Wu said. "We will work to develop large coal companies and shut down small coal mines to eliminate outdated operations.

"In fact, the growth in the demand for coal is beginning to slow down," said Dai Bing, senior analyst at coal.com.cn, a coal-trading website. "Some industries, such as the steel and cement industries, are shrinking, which will lead to a slower growth rate for coal demand."

And more coal substitutes will be produced, which will add more renewable energy to the country's energy sources. Dai said the government is likely to meet its goal of controlling coal output during the current Five-Year-Plan period.

He also said it is possible the country will be able to produce more than 4.1 billion tons of coal by the end of 2015.

"The main reason is that the mergers and acquisitions in the industry will help form larger coal producers that own bigger production operations," he said. "The increasing capacity to produce coal will help the country establish an emergency storage system for coal, a goal also listed in the plan."

Fang Junshi, director general of the energy administration's coal industry department, said China will move quickly to establish such a storage system in places near rivers and the sea.

He said the first part of the system will include a reserve containing 5 million tons of coal and the second will be developed in Southwest China.

The government is meanwhile encouraging domestic companies to go overseas to invest in and explore resources.

"We imported 10 million tons of coal from Russia in 2011 and we have coal trading and mining in Australia, Mongolia, Indonesia and other countries," Wu said. "Meanwhile, the companies will work during production on improving local economies and protecting local environments."

dujuan@chinadaily.com.cn

(China Daily 03/23/2012 page13)