January 21, 2019 / 5:30 AM / a month ago

China's coal output hits highest in over 3 years as mines start up

BEIJING (Reuters) - China’s December coal output climbed 2.1 percent from the year before, government data showed, hitting the highest level in over three years as major miners ramped up production amid robust winter demand and after the country started up new mines.

Cranes unload coal from a cargo ship at a port in Lianyungang, Jiangsu province, China December 8, 2018. Picture taken December 8, 2018. REUTERS/Stringer

Miners produced 320.38 million tonnes of coal in December, according to data released on Monday by the National Bureau of Statistics. That is the largest volume since June, 2015.

China approved more than 45 billion yuan’s ($6.64 billion)worth of new coal mining projects last year, much more than 2017, official documents show.

That came after the country closed old and more-polluting coal mines as part of its battle to clean up the environment.

“Coal mining capacity coming online will lead to another increase in output this year after boosting December output to a more than three-year high,” said a Beijing-based coal analyst with a major broker. He declined to be identified as he was not authorised by his company to speak to media on the matter.

The new projects stoked overall coal output last year, with annual production rising 5.2 percent to the highest since 2015 at 3.55 billion tonnes.

However, some miners and traders expect supplies to fall sharply in January following a crackdown on coal mines after a major accident on Jan. 13 in the northwestern province of Shaanxi, potentially dragging on output through the year.

“It is now possible that Shaanxi will implement the strictest-ever regulations on illegal production, which would significantly reduce output in the province for the year,” Zhai Yu, senior consultant at analysts Wood Mackenzie said in a note published last week.

“If stricter checks are extended to other provinces, domestic supply could tighten from its currently relaxed situation, helping coal imports as a result,” Zhai wrote.

Shaanxi accounts for about 20 percent of China’s annual coal production.

(This story has been corrected in paragraph 5 to show that analyst declined to be identified as he was not authorised by his company to speak to media on the matter, not because of lack of regulatory approval or due to stock exchange rules)

Reporting by Meng Meng and Dominique Patton; Editing by Joseph Radford

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