* Sets 2015 output target of 3.9 bln tonnes
* To boost coal rail capacity to 3 bln tonnes by 2015
* To encourage imports, support overseas M&A
* To improve pricing system, studying coal futures trading
(Updates throughout, adds analyst comment)
By Jim Bai and Fayen Wong
BEIJING/SHANGHAI, March 22 China plans to slow
annual growth in coal output to about 2 percent over the next
four years from around 10 percent to conserve resources and
protect the environment, but analysts said rising demand will
make reaching that target difficult.
The government has set targets of overall production
capacity of 4.1 billion tonnes and annual output of 3.9 billion
tonnes by 2015, up 11 percent from the 3.52 billion tonnes dug
last year, according to a plan issued by the National
Development and Reform Commission (NDRC).
Major coal exporters Australia and Indonesia are set to
benefit if the plan leads to rising imports and as Beijing
scours the world for more coal assets and mulls a special fund
to help its firms secure production overseas.
As China's coal grades decline and if its economic growth
speeds up, Beijing will struggle to stick to its goals and also
meet rising demand without a run-up in coal prices, analysts
"Coal output grew by 0.3 billion tonnes between 2010-2011
alone, so it's hard to see how it can rise by only 400 million
tonnes over four years without binding targets," said Helen Lau,
a resource analyst at UOB-Kay Hian in Hong Kong.
"These are guidance and not binding targets. There's a lot
of room for coal consumption and imports to grow," she said.
The forecasts are probably based on the government's latest
economic growth target of 7.5 percent per annum, "but China's
GDP has always exceeded government targets", she added.
The plan, released by NDRC and compiled by the National
Energy Administration (NEA), did not give estimates for coal
imports but said China would encourage more overseas shipments
and support local firms in the acquisition of foreign coal
assets, possibly through a special fund.
"It's difficult to set a target on coal imports in 2015.
That will be mainly decided by prices," said Fang Junshi, head
of the NEA's coal department.
After decades of heavy investments in coal mining to feed
blistering growth in demand, many Chinese provinces along the
coast no longer have enough supplies for their power plants. The
government has been moving production bases further west to
areas such as Inner Mongolia and Xinjiang.
But the heating value of coal in these areas is low and
reserves are located deep underground, which means power plants
need to burn more of this coal to produce the same amount of
electricity and that mining costs are rising.
The NDRC said domestic coal transportation via rail is seen
reaching 2.6 billion tonnes by 2015 and it would increase rail
capacity ti 3 billion tonnes to prevent transport bottlenecks.
The plan also said China needs to improve its energy
efficiency and curb coal consumption in an attempt to reduce
pollution, which is among the worst in the world.
But it stopped short of setting a hard target and said only
that "it would be appropriate" to cap coal consumption at 3.9
billion tonnes by 2015.
Meanwhile, China's demand for imports, up 10.6 percent last
year to 182.4 million tonnes, is likely to continue growing,
benefiting coal suppliers Australia, Indonesia and even South
Energy trader Noble Group said last year that
China's thermal coal imports alone could top 200 million tonnes
by 2015, and other industry estimates range between 180 million
to 300 million tonnes.
Top coal exporter Australia currently has about $14 billion
worth of new projects and expansions under construction or
committed through 2014, which will eventually produce an
additional 80 million tonnes of thermal and coking coal.
It also has projects for another roughly 420 million tonnes
on the drawing board.
(Additional reporting by Rebekah Kebede from PERTH, editing by