July 12, 2001	atimes.com

China Coal fires still burning BEIJING - Coal will continue to be the major source of energy for China's industries in the next five years, the State Economic and Trade Commission said in its recently-published 10th five-year plan (2001-05) for the coal industry. During the next five years, China's coal demands are expected to increase by 20 million tons annually to 80 million tons while the government plans a 7 percent yearly economic growth in the same period. Coal currently accounts for about two-thirds of ChinaÕs energy consumption mix. A five-year plan report from the State Economic and Trade Commission said China is expected to "establish one or two coal companies with annual production of over 100 million tons each, and five or six with production capacity exceeding 50 million tons each by encouraging mergers or acquisition among coal companies". Industry sources say this may be more difficult to execute than expected. China is the world's largest coal producer and accounts for one-third of the world's total coal production. Its exports make up 11 percent of the world's total. An official from the commission, one of the drafters, said the move is expected to collect the assets of 340,000 small coal companies to raise the industry's production efficiency, and to handle challenges after China's entry into the World Trade Organization. To ease overproduction in the domestic market, some 430,000 small coalmines, with annual production around 10,000 tons each, have been closed down since 1998, diminishing coal production to 950 million tons from the peak of 1.3 billion tons in 1997. And for the month of May, coal production growth dropped 3.9 percent from the previous month, to 6.9 percent from 10.8 percent in April, according to the National Bureau of Statistics. The report said the establishment of major coal companies should see the top eight coal producers in China grabbing more than 35 percent of the nation's total output by 2005, up from its current 13 percent. Big coal companies are urged to restructure themselves by getting listed on stock markets or establishing joint ventures with foreign companies. Five coal companies are currently listed on stock markets at home and abroad, while over 60 percent of Chinese coal companies are state-owned enterprises. At present, the average annual production of a coalmine is around 30,000 tons. The production of China's top four coal firms only accounts for 9 percent of the national total. Meanwhile, inefficient production has put two-thirds of domestic coal enterprises in the red. China is taking measures to promote energy conservation technologies to meet a tremendous demand for high-quality energy. China's annual consumption of coal, which accounts for 76 percent of the country's total energy resources for commercial use, is expected to triple by 2020, along with a rapid increase in the use of petroleum products. (Asia Pulse)

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