China makes plans to limit mining of coking coals
Reports from China indicate that the country's National Energy Administration will soon limit the amount of coal mining that can take place, specifically mentioning coking coal to be used for steelmaking, Bloomberg reports.
According to the news source, coal mines will be forced to boost their mining productivity and efficiency, and companies that wish to receive government approval for new mines will confront more stringent criteria.
The nation is imposing the new regulations in a recent effort to conserve its natural resources, to buckle down on illegal mining and to curb commodity exports. The demand for coking coal, which is a critical component in the steelmaking process, skyrocketed within the country in the last decade, which led to domestic prices of the mineral more than doubling in six years, the news provider stated.
"Surging prices have spurred investors to pursue coal assets in Inner Mongolia and other regions," Zhang Weifang, a Shanghai-based analyst told Bloomberg. "The new rules will probably aim to curb these activities, rather than limit output that will cause prices to rise further."
Reuters reports that news of the new regulations, which was published in the China Securities Journal on Friday, September 30, did not give details on how the country planned to improve its mineral recovery rates, and also did not specify any annual production or consumption quotas.
In addition to coking coal and anthracite, the Chinese government is also likely to impose regulations on bituminous coal and gas coal. If these measures are adopted, China's demand for coal imports from the U.S. and Canada would see a major boost, the media outlet stated.
According to Bloomberg, hard coking coal prices sold by Shanxi Coking Coal Group rose to a record $298 per metric ton on June 30. By the end of August, they were down to $293.35 per ton.
As global prices for coal have increased, many coal producers have been encouraged to increase their exports despite China's domestic shortfalls. The country increased its imports from South Korea, North Korea, and Taiwan five-fold in August.
Other factors have played into China's regulations. Electricity shortages have led the government to discuss banning the use of coking coal as power plant fuel, which it is used in about 70 percent of the country's plants, while deliveries of stockpiles have slowed due to the repairs being made on the Daqin Railway, according to the news provider.