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Authorities in Inner Mongolia, China’s second largest coal-producing province, have asked 72 mines to increase production by a total of 98.4 million metric tons, according to the Securities Times and the China Securities Journal, citing a document. of the Inner Mongolia Energy Administration. . The order, which was approved on Thursday, went into effect immediately, state media reported.
This figure is equivalent to about 30% of China’s monthly coal production, according to recent government data. Energy authorities in Inner Mongolia did not immediately respond to a request for comment from CNN Business.
Power shortages have spread to 20 provinces in recent weeks, forcing the government to ration electricity during peak hours and some factories to halt production. These disruptions led to a sharp drop in industrial production last month and weighed on the outlook for the Chinese economy.
News of the production order sparked a drop in coal prices on Friday. Thermal coal futures on the Zhengzhou Commodity Exchange fell 6.7%. Shares of major Chinese coal miners and power producers also fell. Yanzhou Coal Mine (YZCAY) fell 11% in Hong Kong. The power of Chinese resources (CRPJY) slipped 12%.
The order comes just days after China’s leading economic planning agency asked the country’s three largest coal-producing provinces – Inner Mongolia, Shanxi and Shaanxi – to deliver 145 million tonnes of coal to the fourth quarter, so that “the use of coal for livelihoods” is not interrupted, according to separate statements from provincial authorities last week.
The measures highlight the challenges Beijing faces as it tries to balance the country’s need for power with President Xi Jinping’s push for a carbon-neutral China by 2060.
Coal is China’s main source of energy, widely used for heating, power generation, and steelmaking. Last year, it accounted for nearly 60% of the country’s energy consumption. It is a major source of the country’s carbon emissions.
Earlier this year, China closed hundreds of coal mines – or cut production of working ones – as part of a nationwide campaign to cut carbon emissions. It also imposed restrictions on imports of coal from its main Australian supplier, as political tensions between the two countries escalated.
As a result, the supply of coal fell sharply, even as demand increased due to industrial growth and extreme weather conditions. This pushed coal prices to record highs and resulted in a lack of power.
– CNN’s Beijing office contributed to this article.
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