Looking to reduce its use of coal in its overall energy mix while also cutting smog and greenhouse gas emissions, China will China will allocate 30 billion yuan ($4.56 billion) in funds over the next three years to support the closure of small and inefficient coal mines and redeploy around 1 million workers, state media reported.
Reuters reported that China’s plan, which comes on the heels of an announcement that it would not approve new coal mines until at least 2019, is also looking to secure a soft landing for a sector that employs around 6 million people.
Total raw coal output in China fell 3.5 percent to 3.68 Gt last year, according to official data, the second annual decline in a row. Prices fell by about a third during the year, causing heavy losses in the industry.
The Economic Information Daily, a newspaper run by official news agency Xinhua, said that the National Development and Reform Commission, China’s state planning agency, is currently soliciting opinions from the industry ahead of the release of a plan to tackle chronic overcapacity in the coal sector.
It said China will aim to close 4,300 mines and cut annual production capacity by 700 million tonnes over the next three years.
The central government will also ban new mine approvals for the next three years, but the move is unlikely to make much of a dent in a production capacity surplus said to amount to more than 2 billion tonnes a year, over half the country's total output.
Despite the cuts, China still has about 11,000 coal mines in operation at the end of 2015 with a total capacity of 5.7 billion tonnes.
According to the National Energy Administration, coal consumption amounted to 64.4 percent of China's total energy mix in 2015, down 1.7 percentage points compared to the previous year. China aims to cut the rate to 62.6 percent this year.