Chinese authorities, firms move to guarantee coal supply ‘at all costs’
Efforts to increase output amid disruptions in Shanxi
Published: Oct 10, 2021 06:58 PM
coal power plant Photo: VCG

coal power plant Photo: VCG

Chinese authorities and companies are scrambling to take various measures to guarantee coal supply to ensure power generation, after heavy rainfall in North China's Shanxi Province, China's biggest coal production base, forced closure of dozens of coal mines, adding fresh pressure to the country's energy shortage. 

Due to severe weather conditions, Shanxi has suspended operations at 60 coal mines, 372 other mines and 14 hazardous chemical factories, according to a statement issued by the provincial government on Friday.

An employee of Qinxin Energy, a coal producer in Changzhi, Shanxi Province, told the Global Times on Sunday that the company's operations were little affected by the heavy rain. But she said that the company's logistics operations were affected due to a flood that destroyed a highway. 

"Some of our truck drivers have to choose other routes that were not damaged. but it takes more time to transport coal," the employee said.

A staffer of a coal production and washing company in Huairen, Shanxi Province surnamed Liu said the rain didn't have much impact on mining, but transportation had been affected. 

"The affected areas are mainly in the south and middle parts of Shanxi, where many highways were damaged by floods, cutting off routes for coal trucks," Liu told the Global Times on Sunday.

According to the National Bureau of Statistics, in 2020, Shanxi produced 1.06 billion tons of raw coal, overtaking Inner Mongolia as China's largest coal producing province.

With power shortages in many parts of China and the coming winter season, the situation in Shanxi is adding fresh pressure.

On Friday, Premier Li Keqiang chaired an executive meeting of the State Council, China's cabinet, where he stressed that efforts should be made to increase production and facilitate transportation, with priority on people's livelihood for power generation and heating, especially in Northeast China. 

To ensure supply, the Shanxi Emergency Management Department on Saturday ordered enterprises to make every effort to increase production and supply on the premise of safe operation.

In a meeting on Friday, Guo Jingang, chairman of Jinneng Holding Group in Shanxi, the third-largest energy enterprise in the world, which supplies coal to six Chinese provinces, autonomous regions and municipalities, asked its coal unit to strengthen special coordination to safeguard supplies "at all costs."

"We are advancing production to ensure supply of some power enterprises under the condition of ensuring safety, as required by the government. There is a lack of coal everywhere around the country. It's sold as soon as it's mined," a representative from a coal stockyard in Shanxi told the Global Times on Sunday.

The market price for thermal coal is about 1,850 yuan ($287) a ton, an increase of about 200 yuan compared with September, but experts believe the price has peaked due to stepped-up production. 

Zhao Yang, co-founder of Chinese coal market information site Meitan Jianghu, said that due to transport delays caused by floods, many coal mines had stocked up coal for several days.

"It's a short-term situation, and coal prices will not rise significantly," he told the Global Times.

According to the National Energy Administration (NEA), China has boosted output of coal mines and raised the production capacity of new coal mines by about 100 million tons a year. 

The NEA said it will urge main coal-producing areas to increase production and supply, speed up the resumption of production if conditions permit, and increase coal imports.