China has announced plans to close more than 1,000 coal mines in 2016, cutting production by 60 million tonnes. The move is part of a larger mandate to eliminate as much as 500 million tonnes of surplus production over the next five years, the government says.
When it comes to coal, China is king: it is the world's largest producer and also its largest consumer. Last year, the country's 10,760 mines produced 3.7 million tonnes of coal. Yet, it's estimated that over half (2 million tonnes) that capacity does not get used, every year. According to a Reuters report, demand has waned due to the combination of a slowing economy and government policy to curb pollution by moving away from fossil fuels.
In addition to the air pollution from burning coal that plagues Chinese cities and exacts huge costs on society, the country's coal mining over-production is a real problem. Last year the country's supply surplus drove domestic prices down by a third. Prices have dropped for five straight years thanks to a glutted market. Recognizing one of its most important economic sectors is in trouble, China hopes to stimulate the industry through consolidation. The government has plans to eventually shut down all mines that produce less than 90,000 tonnes per year. Under this policy 5,600 mines will be shuttered.
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