China's decision to stop approving new coal mines for three years has been applauded by green groups, but the move is likely to make barely a dent on the world's biggest coal industry given its vast existing production capacity.

Some estimates suggest China's surplus capacity could be as high as 2 billion tons of coal a year - more than 50 percent of 2015 output.

The government wants to cut the share of coal in its energy mix to contain pollution and meet climate change goals, while it is also trying to manage the fortunes of a struggling sector that employs nearly 6 million people.

And so far efforts to rein in production appear to have had limited market impact with Chinese coal prices losing a third last year.

"The ban on new approvals will have little impact because capacity is already too much," said Wang Zhixuan, head of the China Electricity Council, on the sidelines of a coal industry meeting last week.

The ban was described by environmental group Greenpeace as "a nail in the coffin for king coal," but still leaves huge production capacity.

China is estimated to have produced around 3.7 billion tons of coal in 2015 and Jiang Zhimin, vice-secretary of the China National Coal Association, said there were enough mines in operation to produce as much as 5.7 billion tons, meaning that many collieries are working well below capacity.

China shut around 1,000 pits with a total capacity of 70 million tons in 2015 and plans to close a similar amount in 2016, the country's National Energy Administration said on its website.

Local governments can, in theory, make their own decisions on smaller mines. Some provinces, including Shanxi, have banned new projects.

The move to curb new approvals has so far had little impact on prices. China's biggest miner, the Shenhua Group, was forced to slash January contract prices by 13-20 yuan ($1.97-$3.04) per ton to secure sales.

The coal association said that more than 80 percent of coal companies made a loss last year and urged the government to introduce a minimum price to support firms.

But opponents said this would merely prolong overcapacity. Wang of the China Electricity Council described the plan as "impossible and irrational."