China on path to consolidate coal industry to eight mega miners by 2010

China looks set to further consolidate its coal mining industry and form up to eight mega coal mining companies by the end of 2010, industry sources told Platts in early August.

According to a Beijing-based analyst, the National Development and Reform Commission recently issued a notice to provincial authorities with a view to speeding up consolidation in the coal mining industry.

In the notice, the NDRC directed that six to eight mega coal mines, each with a design coal mining capacity of at least 100 million mt/year, will be formed by the end of 2010. Currently China has only three such mega coal mining companies, namely Shenhua, China Coal, and Datong Coal. The number of large coal mining companies, each with a design mining capacity of at least 50 million mt/year, will reach eight to 10 by the end of 2010. Meanwhile, the combined coal output of all large coal mines with a respective design mining capacity of at least 50 million mt/year will represent over 50% of the national total.

Additionally, the total number of coal mining companies will be reduced to 3,000 by the end of 2010, down from the current number of 13,859. The average coal mining capacity of the remaining 3,000 coal mining companies will reach 1 million mt/year, up from 0.16 million mt/year in 2007.

Further consolidation will help the central government to better regulate the coal industry which has yet a long way to go before it becomes really market-oriented, a Shanghai-based analyst noted to Platts. The recent notice by the NDRC is actually an update to the national coal industry development policy which was released in November 2007, the analyst added.

According to the national coal industry development policy, coal resources in the thirteen coal mining bases will be further tapped. For a sound and market-oriented coal industry, the policy also directed that national and regional coal trading centers and electronic trading platforms will be set up with a view to helping coal suppliers, coal transporters, and coal consumers to establish long-term cooperative relations.

Created: August 13, 2008

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