China ban on new coal mines barely scratches the surface of tackling capacity – by Kathy Chen and David Stanway (Reuters U.S. – January 18, 2016)

BEIJING – Jan 18 China’s decision to stop approving new coal mines for three years has been applauded by green groups, but the move is likely to make barely a dent on the world’s biggest coal industry given its vast existing production capacity.

Some estimates suggest China’s surplus capacity could be as high as 2 billion tonnes of coal a year – more than 50 percent of 2015 output – in a country with nearly 11,000 mines.

Beijing wants to cut the share of coal in its energy mix to contain pollution and meet climate change goals, while it is also trying to manage the fortunes of a struggling sector that employs nearly 6 million people.

And so far efforts to rein in production appear to have had limited market impact with Chinese coal prices losing a third last year.

“The ban on new approvals will have little impact because capacity is already too much,” Wang Zhixuan, head of the China Electricity Council, said on the sidelines of an coal industry meeting last week.

The ban, which was announced in December, was described by environmental group Greenpeace as “a nail in the coffin for king coal”, but still leaves huge mining production capacity.

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