In order to reduce overcapacities in the mining industry the production of coal will be reduced by 500 million tons during the next three to five years.
The recently announced closure of more than 1000 coal mines with a production capacity of 60 million tons are part of a long-term strategy of the National Energy Administration and the State Council. It serves to reduce existing overcapacities and to account for the shrinking share of coal in China’s total energy consumption. Furthermore, the downturn of the entire sector with roughly 6 million employees should be softened.
According to Reuters the Chinese government will therefore use up to RMB 30 billion (€ 4.17 billion) to close down small and inefficient coal mines. By the end of 2015, the Chinese National Coal Association counted approximately 11000 active mines with a production capacity of 5.7 billion tons.