China's National Development and Reform Commission has set a coal output target of 3.65 billion mt for 2012, implying 3.7% year-on-year growth from 2011, state media reported Wednesday.
The growth rate is, however, significantly lower than the year-on-year growth rate achieved in H1 2012 when China mined 1.91 billion mt of coal, up 5.6% year on year.
The NDRC target is also down from the 6% growth estimate by broking house UOB Kay Hian.
The NDRC also announced 2012 production targets for provinces/regions. The targets for Inner Mongolia, Shanxi and Shaanxi are 920 million mt, 810 million mt and 400 million mt, respectively, down 6.0% year on year, 7.1% year on year, and 1.2% year on year from 2011.
According to the UOB Kay Hian report Wednesday, China's coal production cuts had already started in some coal mining provinces over June-July when coal prices were spiraling downward. As coal demand remains weak, production cuts will continue in China with or without NDRC's production guidance for 2012, the report said.
Meanwhile, NDRC will continue to favor large coal companies and encourage them to expand production through acquisitions/consolidations.
This is because the NDRC aims to form in 2012 seven coal companies each with an annual production capacity of at least 100 million mt; and 12 companies each with an annual production capacity of at least 50 million mt. These coal companies will account for 53% of China's total production capacity.
The NDRC also seeks to eliminate old/small production capacity of 23.47 million mt. Shanxi, and Inner Mongolia have no capacity to cut in this category.
