NDRC announces coal production targets

The country's coal production capacity target has been set at 4.1 billion tons by 2015, with total output of no more than 3.9 billion tons, in a bid to curb coal use to protect the environment, the country's top economic planner said in its 12th five-year plan for the sector on Thursday.

Analysts said challenges remain in accomplishing the target set by the National Development and Reform Commission (NDRC), as the country's demand for thermal power is still huge.

"The actual speed of growth of coal use in the first year of the 12th Five-Year Plan (2011-15) has already far exceeded expectations," Zhang Zhibin, a coal analyst at JYD Online Co, a commodity consultancy, told the Global Times yesterday.

According to the new plan, the annual average increase in coal output should be no more than 130 million tons. However, the total output volume last year was 3.52 billion tons, 280 million tons more than the previous year, according to the National Energy Administration.

"More alternative renewable energy sources will be needed in the following years, but they will still only be able to satisfy a small proportion of the total demand," Zhang noted.

Since the majority of China's coal mines are situated in the northwestern regions, while a huge volume of power demand comes from the eastern and southern regions, the economic planner also called for improvements to coal transportation capacity in the plan.

It expects the demand for transporting coal by rail to reach 2.6 billion tons by 2015, and said the Ministry of Railways will build 3 billion tons of capacity to prevent transportation bottlenecks.

Poor coal transportation capacity has always been a major constraint of the sector, said Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University. "But if more participants like large companies were authorized to build railways, rather than the Ministry of Railways fully monopolizing the sector, the issue could be eased," Lin noted.

The plan also outlined that smaller coal operations will be merged into large ones in an attempt to improve efficiency.

The plan limits the total number of coal enterprises to below 4,000, and aims for 10 large enterprises with annual production capacity of no less than 100 million tons each to be set up by 2015.

"Mergers and acquisitions in the sector have already made obvious progress during the 11th five-year plan, so the target can be achieved more easily in the new plan period," said Lin.