China Underground > China Finance > Amid power crunch, China orders coalmines to raise production

Amid power crunch, China orders coalmines to raise production

Chinese authorities in Inner Mongolia have ordered an increase in coal production by at least 100 million tons at 70 mines to deal with the energy crisis gripping the country. The move would account for nearly 3 percent of China’s total thermal coal consumption.

Rising prices and electricity shortages have led to energy rationing across the country, crippling industrial production.

On October 7, Inner Mongolia’s regional energy department asked the cities of Ordos, Wuhai, and Hulunbuir, and the Xilingol League (a level of administrative subdivision in Inner Mongolia), to notify 72 mines that they can operate at higher capacity immediately, provided they ensure safe production.

According to some estimates, production is actually expected to increase within two to three months.

The 72 mines listed by Inner Mongolia’s Ministry of Energy have an authorized annual production of 178.45 million tons. The authorities’ note therefore proposes an increase of 98.35 million tons combined, according to calculations by the Reuters news agency.

According to some analysts, the move will ease the burden of the energy crisis, but will not solve it, forcing the Chinese government to resort to rationing to ensure an energy balance between coal and power markets during the winter.

Inner Mongolia is China’s second-largest coal producer, producing more than a billion tons in 2020, and counting for more than a quarter of national output, according to official figures.

In 2020, production dropped by 8 percent due to the anti-corruption campaign that lashed out at the coal sector. The neighboring Shanxi region, the largest coal producer in the country, has had to close 27 mines due to flooding.

As temperatures drop, to meet rising energy demand, China has ordered the reopening of dozens of mines and approved many new ones.

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