Coal Sector on Way up Following Recession

China's coal industry is seeing the beginning of a recovery from recession as the government's tough measures cutting down the domestic coal supply while boosting exports are starting to pay off.

According to Zhang Baoming, director of the State Administration of Coal Industry, coal production last year is expected to be down 9 per cent to 950 million tons from the level in 1999, greatly easing the coal glut in the domestic market.

Zhang said the slashed coal production was achieved through the closure of small coal mines.

Some 430,000 small coal mines have been closed down since 1998, cutting coal production by 390 million tons from the peak of 1.3 billion tons in 1997.

Thanks to the reduction in coal supply, the coal price in the domestic market has risen from 137.8 yuan (US$16.6) per ton to its current 141.47 yuan (US$17), he said.

Meanwhile, China has taken a series of measures, including tax rebates, to spur export companies to boost coal exports, Zhang said.

Coal exports are expected to double from 27 million tons in 1997 to 58 million tons in 2000, he said.

China National Coal Import and Export (Group) Corp, the nation's largest coal exporter, saw its exports surge by 25 per cent to 39 million tons last year.

The price rise in the domestic market and the strong exports have lifted State-owned coal mines from their recession. The total deficit of key State-owned coal mines has shrunk to 2 billion yuan (US$240 million), half of the level in 1999, and 30 per cent of the key State-owned coal mines recorded profits last year, 10 percentage points up year-on-year.

Analysts said the State-owned mines should continue to tap its coal export potential to better handle its enormous production this year.

China, the world's largest coal producer, accounts for one-third of the world's total production. However, it has only exported just over 30 million tons of coal annually for years, only 6 per cent of the world total.



Source: China Daily


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