The cold wave of the coal industry revisited the merger and reorganization of coal companies

**** Yang Dongliang, director of the General Administration of Supervision and Administration, said on the 31st that it is necessary to seize the favorable opportunity for the current coal market oversupply and to close at least 625 small coal mines by the end of the year.

“We must seize the favorable opportunity of the current coal market oversupply, further deepen the work of rectifying and closing small coal mines, and accelerate the elimination of outdated coal production capacity. By the end of the year, at least 625 smaller coal mines will be closed in the country.” He said that he also actively promotes the merger and reorganization of coal enterprises. Accelerate the formation of a new pattern focusing on large bases, large groups, and large coal mines, and improve the overall safety and security capabilities of coal mines.

The collapse of coal prices and the sluggish demand from the downstream industries have led to the supply of coal from the previous years, which has become a "high inventory" product. Coal mines have stopped production, companies have laid off their employees, and how to cope with this cold wave is a difficult problem between companies and governments.

Behind the high coal price is the full manifestation of its high inventory. According to the calculation of the China Coal Transportation and Marketing Association, the total coal consumption in the first half of the country was about 1.97 billion tons, an increase of 2.8% from the same period of last year, which was a decrease of 6.6 percentage points over the same period of last year. Com saved a percentage point, of which the power industry as a large coal consumer consumed 990 million tons of coal, an increase of 2.7% over the same period of last year, and an increase of 9.4 percentage points. Demand for coal fell back, resulting in an increase in stock prices and a drop in coal prices. Destocking is the most important issue to be solved today. Therefore, it is undoubtedly a good opportunity to re-provision and eliminate outdated coal mines and speed up industry mergers and acquisitions.

The Security Bureau decided to close 625 small coal mines on the 31st, which is an effective response from the government to the downturn in the coal industry. In fact, the closure of small coal mines is not a temporary move. During the "12th Five-Year Plan" period, China will clearly promote the merger and reorganization of coal mining companies, and will form one afterwards. Com energy conservation and environmental protection The approval of large-scale coal mining enterprises with an annual output of over 50 million tons will increase the average annual coal mine production capacity to over 800,000 tons. The number of coal mines in the country will be reduced to less than 10,000.

The integration of the coal industry has increased the degree of concentration of the coal industry, enabled the effective utilization of resource advantages, improved the utilization efficiency, and combined with modern coal mining technologies, it is believed that the coal industry can be made more sustainable development.

There are tens of thousands of coal mines in China. After shutting down these 625 small coal mines, it is impossible to know how much production capacity will be affected and what substantive assistance will be given to the current depressed market environment. What is certain, however, is that this move has at least brought a bright light to the slightly dimmed market.