China to create 10 'mega' coal companies through M&As

BEIJING - China aims to create 10 "mega" coal producers by the end of the decade as part of its drive to consolidate the industry and tackle overcapacity, the official China Daily reported on Friday, citing an energy official.

Wang Xiaolin, deputy director of the National Energy Administration, said China was preparing guidelines to create 10 new industry giants each with annual production capacity of more than 100 million tonnes.

The report said China already has six firms with production capacity above 100 million tonnes.

According to the China Coal Trade and Distribution Association, the new guidelines will compel coal mining regions to consolidate smaller mines over the next two years, and close those that are not restructured.

The association said large-scale state miners, including the Shenhua Group, China's biggest coal producer, are also set to undergo restructuring.

China is in the middle of a programme aimed at tackling price-sapping supply gluts in the coal sector, and aims to shut at least 500 million tonnes of production capacity by the end of the decade, with smaller mines shut or consolidated.

China aims to shut at least 150 million tonnes of coal production capacity this year alone, and the campaign has helped drive up coal prices by more than a quarter since the beginning of the year. -Reuters