China addresses coal overcapacity

The Chinese government is pursuing policies that will provide relief to struggling coal producers as a result of cheap imports and domestic overproduction.

The government will raise its threshold for high quality coal imports, discourage low quality imports, halt approval of new mines with capacity under 300,000 tonnes, increase punishments for firms that proceed with production before receiving appropriate approvals, and phase out mines producing less than 90,000 tonnes per year.

“Perhaps they recognise that China faces overcapacity of coal supply,” said Serene Lim, an analyst at Standard Chartered Bank in Singapore.

While the policies will help many domestic producers, it will also consolidate the domestic industry, potentially leading to less coal pollution in China.

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