China aims for coal production reserve system by 2027 to stabilise prices and supply

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6th December 2023 – (Beijing) China plans to establish a coal production reserve system by 2027, according to draft regulations released by the National Development and Reform Commission (NDRC) for public consultation on Wednesday, December 6.

While specific operational details of the proposed system were not disclosed in the draft, the target is to secure 300 million metric tons of “dispatchable” annual coal production by 2030. The term “dispatchable” refers to the ability to control or adjust the supply of coal in response to demand or market conditions.

China has previously set a target to maintain coal reserves equivalent to 15% of its annual consumption. These reserves are presently stocked in mines, ports, power plants, and some specially designated storage areas.

The NDRC’s notice further stipulated that the new system would incorporate new mining projects, each of which must have a minimum production capacity of 3 million tons annually.

These mines, which will be required to apply for government approval, must also be capable of dispatching their output in situations where the government determines that spot prices have surpassed a “reasonable” bracket or when supplies are running low.

This notification is part of China’s broader initiative to secure its energy supplies. This push comes in the wake of a severe domestic coal and power shortage that the country experienced in 2021. This internal crisis was further compounded by a European energy crisis last year, which followed Russia’s invasion of Ukraine and caused a dramatic surge in natural gas prices.