SHANGHAI Jan 5 Coal industry consolidation in
China's Shanxi Province, the country's top coal producing region,
is on track but may not lead to a boost in output any time soon.
Ninety-eight percent of merger and acquisition contracts have
been signed between small mines and bigger mining companies, and
more than 80 percent of mining licences have changed ownership, a
statement on the website of the National Development and Reform
Commission said on Tuesday (www.ndrc.gov.cn).
The number of coal mine shafts has been cut down to 1,053
from 2,600 and more than 70 percent of the shafts have annual
production capacity over 900,000 tonnes, the statement said.
Small mines with annual capacity lower than 300,000 tonnes
have all been phased out, it said.
Shanxi aims to cut down the number of mines to 1,000 by end
of 2010 and to 800 by 2015. It also plans to increase annual
production capacity of individual shafts to 900,000 tonnes by
2010, and to 1.2 million tonnes by 2015.
For a factbox on Shanxi's plan for its coal industry, click
Analysts said completing the task of merging the mines does
not necessarily mean Shanxi's coal production will jump soon.
"Once the contracts are signed, mines still need to go
through technical upgrading in order to return to production. In
some cases, it probably only takes 2 to 3 months. In others, it
may take up to a year and a half," said Wang Ye, an analyst at
Some analysts expected Shanxi's coal production not to fully
return until next year.
"Not even half of the small mines have started negotiations
with their buyers on details of the deals yet," said an analyst
with a large fund house, who declined to be named citing company
"But they are done deals -- small mines have few options.
It's just going to take some time for buyers and small mines to
close the deals and eventually start producing coal again, which
might be as late as end of 2011."
Shanxi produced 656 million tonnes of coal in 2008, and was
expected to produce about 620 million tonnes in 2009, down 5
percent on year. [ID:nSHA43759]
(Reporting by Rujun Shen and Jacqueline Wong)