China likely to ease coal mine closures to meet rising needs

Bloomberg

China will likely ease the pressure on local governments to shut older, inefficient coal mines as it seeks to meet rising demand of the most-polluting fuel to spur its economic recovery.
Government officials are in the midst of preparing the country’s all-important five-year-plan, the guiding document for policy and industrial development from 2021 to 2025. Unlike the previous edition, when China made a major push to cut overcapacity to support prices and help miners struggling with mounting debt, the government isn’t likely to set any targets for mine closures, analysts forecast.
The country in 2016 set a target of shutting 800 million tons of annual capacity, with reductions met two years earlier than planned. To be sure, those mines would essentially be replaced by “advanced” capacity, a term Beijing uses to refer to larger, safer and more-efficient operations.
But the lack of a hard target now would underscore the continuing dependence on coal in China, which mines and burns half the world’s supply.
More flexibility for smaller mines would help expand production capacity to meet rising demand as the world’s second-biggest economy continues to dig itself out from the depths of the pandemic.
“We expect the government to continue to manage production capacity,” said Zhai Yu, a senior consultant with Wood Mackenzie Ltd. “But maybe not continue to cut capacity, as we forecast demand increasing in the next five years.”