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China to shut down over 1,000 coal mines to pull coal industry out of glutted doldrums, curb pollution

| Feb 23, 2016 04:57 AM EST

Fushun, a prefecture level city in Liaoning province, China, is known as The Capital of Coal.

China's National Energy Administration said on Feb. 22, Monday, that the country will shut down over 1,000 coal mines, having a combined capacity of 60 million tons, with a view to slash about 500 million tons of superfluous coal production out of the market within the next five years.

Although China is the largest coal producer in the world, the demand for the fossil fuel has witnessed a sharp decline owing to a slide in the country's economic growth and also because the government has initiated a number of measures to curtail air pollution, Reuters reported.

According to an estimate prepared by China National Coal Association, of the 10,760 coal mines in the country, 5,600 would have to be closed down eventually as per a new government policy that bans coal mines whose annual production capacity is below 90,000 tons. The government has already announced that it would not approve any new coal mine project within the next three years with a view to pull out the country's coal industry from the depression owing to surplus production.

Last year, China produced 3.7 million tons of coal, while its estimated capacity is around 2 billion tons per annum. In fact, the supply of coal superseded the internal demands of the country, thereby bringing down the domestic prices by about 33 percent. However, there has been some recovery during the initial months of 2016 owing to the setting up of a thermal coal plant at Qinhuangdao, which raised the domestic prices slightly by 2.7 percent.

Meanwhile, NEA further stated that banning new coal projects would help China to consume the surplus capacity of coal-fired electricity. In addition, the Chinese authorities have stressed on better transmission of electricity generated by hydropower, wind power as well as solid power with a view to avoid waste.

However, this may not be sufficient to fulfill the targets set by the energy regulators in China, Daily Caller reported. As a result, China has decided to scrap all new coal mining projects in areas where the capacity surpluses are highest.

According to NEA, China also plans to launch a scheme that would allow coal suppliers to directly enter into power sales agreements with consumers with a view to assist its growing coal industry, and also lower energy prices in order to fuel demand for coal. In addition, the Chinese government also wants to consolidate the coal industry via mergers.

Watch the video on coal transportation from the Coal Mine Fushun in China below:

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