BEIJING, Jan 21 (Reuters) - China will allocate 30 billion yuan ($4.56 billion) in funds over the next three years to support the closure of small and inefficient coal mines and redeploy around 1 million workers, state media reported on Thursday.
The Chinese government is determined to reduce the share of coal in its overall energy mix as part of efforts to cut smog and greenhouse gas emissions, but it also looking to secure a soft landing for a sector that employs around 6 million people.
Total raw coal output fell 3.5 percent to 3.68 billion tonnes last year, according to official data, the second annual decline in a row. Prices fell by about a third during the year, causing heavy losses in the industry.
The Economic Information Daily, a newspaper run by official news agency Xinhua, said that the National Development and Reform Commission, China's state planning agency, is currently soliciting opinions from the industry ahead of the release of a plan to tackle chronic overcapacity in the coal sector.
It said China will aim to close 4,300 mines and cut annual production capacity by 700 million tonnes over the next three years.
The central government will also ban new mine approvals for the next three years, but the move is unlikely to make much of a dent in a production capacity surplus said to amount to more than 2 billion tonnes a year, over half the country's total output.
Citing the China National Coal Association, the report said China still had around 11,000 coal mines in operation by the end of 2015, with a total capacity of 5.7 billion tonnes.
Analysts at Shenwan Hongyuan Securities estimate that the funds required to tackle overcapacity in the coal and steel sectors could reach 200 billion yuan, 70 percent of which would be needed for coal.
According to the National Energy Administration, coal consumption amounted to 64.4 percent of China's total energy mix in 2015, down 1.7 percentage points compared to the previous year. China aims to cut the rate to 62.6 percent this year. ($1 = 6.5782 Chinese yuan) (Reporting by David Stanway; Editing by Christian Schmollinger)