China reverses coal mining curbs as winter approaches

BEIJING (Reuters) - China adopted new rules to stimulate coal production on Thursday to counter surging prices and Premier Li Keqiang said the country had to balance demand for heating over winter with efforts to tackle pollution.

A worker speaks as he loads coal on a truck at a depot near a coal mine from the state-owned Longmay Group on the outskirts of Jixi, in Heilongjiang province, China, October 24, 2015. REUTERS/Jason Lee/File Photo

Li’s comments came after state planner the National Development and Reform Commission (NDRC) ruled that all coal mines that abide by production safety rules can operate 330 days a year rather than 276 days previously.

Analysts and traders said the new limit marked a major step from Beijing to help boost coal supplies. The NDRC capped domestic mining earlier this year in a campaign to reduce excess capacity but this triggered a surge in the price of coal.

Li told a meeting of the National Energy Commission that reports directly to the cabinet that China must increase the clean and efficient use of coal, according to state radio.

Higher coal prices have been hurting consumers in China and concerns about supply were growing ahead of expected strong demand during winter.

“This is the biggest policy adjustment to lift coal production so far,” Huaan Futures coal analyst Wang Fei said. “We are expecting coal mines to quickly increase production as soon as early 2017.”

The new limit will be effective until the end of the winter heating season, NDRC said in a statement.

China faces uncertainty over the weather outlook in northern regions, it said, which is contributing to coal supply difficulties.

Adding to supply concerns, some producers have not ramped up production as fast as expected as winter approached, the state planner said, without naming any companies.

It also said it expected major regional producers Datong Coal Mining Group and Inner Mongolia Yitai Coal Co. Ltd to agree medium- to long-term contracts with utilities in the near term.

Reporting by Meng Meng, Beijing Monitoring Desk and Dominique Patton; editing by Kenneth Maxwell and David Clarke