Henan province's coalmine consolidation moves ahead

Central China's Henan province will consolidate most of its small coalmines to update the scattered industry base and eliminate outdated capacity.

Among 466 small coalmines with an annual output capacity below 300,000 tons, 456 have already agreed to be merged with six leading coal companies in the province, local media said on Wednesday.

Henan Coal Chemical Industry Group, Zhong Ping Energy Chemical Group, Yima Coal Industry Group, Zhengzhou Coal Industry Group, Henan Shenhuo Coal & Power Co and Henan Provincial Coal Seam Gas Development and Utilization Co will lead the consolidation to snap up these small coal mines with a controlling stake of no less than 51 percent, said Chen Dangyi, vice-director of Henan Provincial Industry and Information Bureau.

Some 800 coalmines are scattered across Henan province, with small mines accounting for 85 percent.

After the consolidation, the province will form three large coal enterprises, each with 50 million tons of annual production capacity, and the six leading coal companies will account for 75 percent of overall capacity in the region.

Henan announced in February that it plans to consolidate small coalmines with output capacity below 300,000 tons per year and will only approve new mines with production capacity of at least 450,000 tons per year.

The plan is part of China's effort to consolidate its coal industry, improve production efficiency and reduce coalmining accidents.

Henan's consolidation follows a similar reshuffle in Shanxi province for the coal industry last year.

Shanxi, China's key coal production region, produces one-fourth of the country's coal. The province reduced coalmine numbers from 2,600 to 1,053 after merging all of its coalmines with an annual capacity less than 300,000 tons.

The central government issued a document in April to close outdated production capacity in sectors including power, coal, steel and ferroalloys to save energy and cut emissions.

Enterprises flocking to industries such as coal have been common in recent years, with the government then stepping in to correct potential overcapacity and eliminate obsolete production capacity.

The central government aims to seal off 8,000 small coalmines this year. China's National Energy Administration predicted that the plan to acquire small coalmines will help slow down the growth rate of domestic coal production to 5 percent this year, from 12.7 percent in 2009.

Henan's coal output last year was estimated at 180 million tons, or 6 percent of China's output of 2.96 billion tons.

Source: China Daily