BEIJING/SINGAPORE (Oct 8): North China's Inner Mongolia region, China's second-largest coal producer, has told 72 mines to boost annual output capacity by nearly 100 million tonnes, said a government official and coal traders with direct knowledge of the matter.
In an urgent notice dated Oct 7, Inner Mongolia's energy department asked cities of Wuhai, Ordos and Hulunbuir, as well as Xilingol League, to immediately notify the miners they may operate at stipulated higher capacities straightaway, provided they ensure safe production.
An official with the energy bureau confirmed the notice but declined to say how long this production boost would be allowed to last.
The move is the latest attempt by authorities in China to boost coal supply amid record-high prices and shortages of electricity that have led to power rationing across the country.
"This demonstrates the government is serious about raising local coal production to ease the shortage," said a Beijing-based trader, who estimated the production boost may take up to two to three months to materialise.
At 100 million tonnes, the proposed increase in output would make up nearly 3% of China't total thermal coal consumption.
The 72 mines listed by the Inner Mongolia energy bureau, most of which are open pits, previously had authorised annual capacity of 178.45 million tonnes.
The notice proposed they increase their production capacity by 98.35 million tonnes combined, according to Reuters calculations, lifting their total authorised annual capacity up to 276.8 million tonnes.
China's Zhengzhou thermal coal futures last traded down 4.2% at 1,274 yuan ($197.50) per tonne around 0220GMT, after opening up nearly 3% on Friday. ($1 = 6.4507 Chinese yuan)