SHANGHAI (Reuters) - China’s top coal producing region of Inner Mongolia will cut administrative fees and transport charges for local miners as they battle with weak prices and sluggish demand, the official Xinhua news agency said.
The move follows similar steps in Shanxi province, the country’s second-largest coal production base, as a persistent price slump forces many firms into losses.
The cut in fees in the Inner Mongolia autonomous region will be a boon to companies with major mines in the area such as Inner Mongolia Yitai Coal Group (900948.SS), Shandong Energy SDONGK.UL and Shenhua Group SHGRP.UL.
Levies for coal will be reduced by between 4 yuan and 20 yuan ($3.27) a tonne between Sept 1 and Dec 31, while the local government will also suspend the collection of environmental protection fees and miscellaneous rail transport charges, Xinhua reported.
Other medium term measures include increasing financial support for coal miners, lowering borrowing costs, encouraging the development of coal processing industries and further eliminating illegal fees, Xinhua said on its website, citing a government circular.
Coal miners are also being encouraged to sign long-term contracts with key users from the power, metallurgy and coking sectors, establish strategic partnerships and work on a stable pricing system.
Steam coal prices in China, the world’s top buyer, have been steadily falling since December, dropping about 15 percent this year.
Miners in Inner Mongolia, far from the main consumption centres along the coast, have been the worst hit because the low calorific content of the coal they produce has slashed their margins. Long transport distances, where many smaller miners have to rely on expensive trucking, have also made their coal uncompetitive.
Coal production in Inner Mongolia fell 12.4 percent from year ago to 453.12 million tonnes in the first half of 2013, as weak demand forced miners to cut output.
Reporting by Fayen Wong; Editing by Michael Urquhart and Joseph Radford