* Beijing approves 15 new large coal mining projects over
* Total new capacity, including small mines, likely to be
* Capacity to increase by 860 mln T over 2011-2015 period
By David Stanway
BEIJING, Jan 8 China approved the construction
of more than 100 million tonnes of new coal production capacity
in 2013 - six times more than a year earlier and equal to 10
percent of U.S. annual usage - flying in the face of plans to
tackle choking air pollution.
The scale of the increase, which only includes major mines,
reflects Beijing's aim to put 860 million tonnes of new coal
production capacity into operation over the five years to 2015,
more than the entire annual output of India.
While efforts to curb pollution mean coal's share of the
country's energy mix is set to dip, the total amount of the
cheap and plentiful fuel burned will still rise.
According to data compiled by Reuters, the National
Development and Reform Commission (NDRC), China's top planning
authority, approved the construction of 15 new large-scale coal
mines with 101.3 million tonnes of annual capacity in 2013.
"Given that China's total energy consumption is still
growing along with the economy, then coal production will
continue to grow," said Helen Lau, senior commodities analyst
with UOB Kay Hian in Hong Kong.
"While China is trying to foster consumption from other
sources like hydro and nuclear, we expect actual coal production
to grow 2-3 percent a year in the next five years."
Chinese coal production of 3.66 billion tonnes at the end of
2012 already accounts for nearly half the global total,
according to official data. The figure dwarves production rates
of just over 1 billion tonnes each in Europe and the United
Much of China's new capacity is in regions like Inner
Mongolia and Shaanxi, reflecting a strategy to close small mines
in marginal locations like Beijing and consolidate output in a
series of huge "coal industry bases" that will deliver thermal
power to markets via the grid.
While expanding output at such bases, China has shut more
than 300 million tonnes of old capacity in the last decade, but
critics say new mines are rapidly outpacing closures and the
policy merely shifts China's environmental problems elsewhere.
"Despite the climate change pressure, water resource
scarcity and other environmental problems, the coal industry is
still expanding fast in northwest China," said Deng Ping, a
campaigner with environmental group Greenpeace in Beijing.
"The scale of these coal bases has been rarely seen in other
places in the world, with open-cast coal mines, coal power
plants, and coal chemical plants all combined together."
The new projects involved a total investment of 54.1 billion
yuan ($8.9 billion). In 2012, the administration approved just
four coal projects with 16.6 million tonnes of annual capacity
and a total investment of 7.8 billion yuan.
The list of approvals does not cover all mines launched in
2013, with many smaller projects under the purview of local
authorities and not the central government. According to rules
issued in December, coal mines producing more than 1.2 million
tonnes per year need Beijing's go-ahead, while local governments
can approve the rest.
It takes the NDRC months to announce new mine approvals, so
other projects may have been passed in the fourth quarter. One
46 million-tonne mine was approved in December but the NDRC has
yet to publish details.
An NDRC spokesman was not available to comment.
With major cities hit by smog last year, the government has
promised to ease its dependence on coal, a major source of air,
soil and water pollution as well as climate-warming emissions.
It has issued guidelines to restrict mining in residential
areas, improve quality and reduce overcapacity.
But coal is cheaper than all the alternatives and China is
the world's biggest producer as well consumer. It is also far
more reliable than intermittant energy sources like hydropower
The 2011-2015 plan said around 860 million tonnes of new
coal production capacity will be brought into operation, as well
as 300 more gigawatts of coal-fired power, twice the total
generation capacity of Germany.
While Beijing said in September that it would cut the share
of coal in its primary energy mix to "less than 65 percent" by
2017, down from 66.8 percent in 2012, consumption will still
rise in absolute terms, with total energy demand set to grow 4.3
percent a year over the 2011-2015 period.
"The replacement of coal hasn't been as fast as expected,
and other sources of energy are not only expensive but also face
a lot of technical and environmental problems," said UOB's Lau.
The government's 2011-2015 energy plan put coal production
capacity at 4.1 billion tonnes by 2015, but Lau said it may be
"We estimate China's total coal production capacity will be
4.7 billion tonnes by 2015 - I think the government figure is a
($1 = 6.0506 Chinese yuan)
(Reporting by David Stanway; Editing by Richard Pullin)