China National Coal Association (CNCA) has drafted a proposal on forming a market-exit mechanism for coalmines through market behavior in a bid to resolve the problem of overcapacity in the country's coal industry, said Wang Xiaozheng, head of CNCA.
This is believed to trigger a merger and acquisition wave in coal industry. The proposal points out that each coal production province in China would make detailed policies for coalmine exit mechanism and set de-capacity scale.
A research report on China's coal consumption cap plan suggested that China cut its coal mine enterprises from 6,390 in 2015 to less than 3,000 by the end of 2020 through mergers and acquisitions as well as outdated capacity elimination.
Currently, there are more than 7,000 small coalmines with annual capacity of less than 300,000 tonnes, said Lian Weiliang, deputy head of the National Development and Reform Commission, adding that China would have to step up shutdown of small coalmines and encourage large coalmines to merge medium and small coalmines.
China will also encourage mergers and acquisitions between coal and power companies so as to realize integrated coal-power operation, said Lian.
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