China confirms it will build extra coal mine capacity this year

Coal mine in Hailar, Inner Mongolia, China. (Reference image by Herry Lawford, Wikimedia Commons)

China’s cabinet has confirmed that the addition of an extra 300 million tons of coal mining capacity will happen this year, a blow to shippers already contending with weaker Chinese imports.

The authorities hadn’t previously given a timeline for the ramp up, which threatens to upend the global market for the dirtiest fossil fuel. China’s year-to-date imports are already running almost a quarter below the pace set in 2021 due to record domestic production, and price controls that disfavor its main suppliers in Indonesia, Russia and Mongolia. 

China is by far the world’s biggest consumer and producer of coal, mining over 4 billion tons last year. The extra capacity looks calibrated to cover a typical year’s imports, although with Chinese demand set to grow until at least the middle of the decade — and the market still prone to shortages — overseas purchases are unlikely to be cut out of the equation entirely. 

Still, Citigroup Inc. has called China’s willingness to walk away from overseas supplies a potential “game changer” for the world market, which poses “major downside risks to global fossil-fuel prices over the next few years.”

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