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China's largest coal-producing province, Shanxi, plans to steady its fossil fuel output this year. However, officials have ignored production targets after raising expectations in the previous two years due to energy security concerns. The province accounted for nearly a third of production last year when overall national output hit a record high.
During China's annual parliamentary assembly, Shanxi Vice Governor Wu Wei assured a provincial delegation that the province will "make every effort to stabilise coal production and supply". On the fringes of last week's provincial meeting, Zhang Linshan, the delegate from Shanxi, informed reporters that this year's discussions differed from the previous one when the province declared a 60 million metric tonne annual increase.
Shanxi targeted nearly 1.37 billion metric tons for 2023 versus 2022 production of 1.31 billion tons. The change in approach is in line with a regulatory notice issued last month exhorting mines to curb overproduction, in part to prevent accidents. Shanxi Coking Coal Group Chairman Zhao Jianze was quoted in local media last week recommending that the industry consolidate production and bring small, smaller mines under the purview of larger, state-owned miners, such as Shanxi Coking Coal.
Lower coal prices last year weighed on the budget of resource-dependent Shanxi, one of China's "rust belt" provinces. "Since last year, Shanxi's fiscal growth has slowed down significantly due to factors such as the fall in coal prices and the decline in industrial enterprises' profits," Wu said. Last year, the finance ministry issued "coal economic constraint subsidy funds" worth 3.92 billion yuan ($545.25 million) to Shanxi. He urged the central government to make such subsidies a "long-term policy."
National coal output reached 4.66 billion tons last year amid a push to ensure energy security. Around 1.36 billion tons, or 29%, was from Shanxi, statistics bureau data showed. China has increasingly built renewable power plants in recent years, with wind and solar capacity forecast to exceed coal by year-end.
Still, power sent to the grid is still mostly generated by coal, and concern over energy security has led provinces to increase output following a crippling domestic coal and power shortage in 2021.
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