China to build more coal mines to feed surging power capacity
China’s National Development and Reform Commission announced plans to increase coal mining to bolster domestic supply and control price surges.
The policy paper, released last week, outlines targets to add approximately 300 million tons of annual mining capacity by 2030 for “emergency storage reserves.”
Qualified miners, particularly in key regions like Shanxi, Inner Mongolia, Shaanxi, and Xinjiang, will be encouraged to allocate up to 30% of the new capacity as backup reserves to mitigate price fluctuations.
China has been leading a global resurgence in coal-powered capacity, contributing to about two-thirds of last year’s increase. This surge in coal production follows a three-year capacity expansion initiative aimed at ensuring energy security and averting price spikes, such as those triggered by geopolitical events like Russia’s invasion of Ukraine.
As a result of the expanded capacity, domestic spot thermal coal prices have nearly halved from their peak in October 2022, currently standing at 810 yuan ($112) per ton as of Monday.
The government-set benchmark long-term contracted price for this year is around 700 yuan per ton, serving as a floor price in the market.
