China’s major coal-producing regions have pledged to boost output to help alleviate an ongoing power crunch that threatens the recovery of the world’s second-largest economy. Since mid-September, power blackouts have plagued several provinces, including economic and industrial hubs of Guangdong, Jiangsu, and Zhejiang, forcing factories to slash or even suspend operations.
Shanxi, China’s largest coal-producing province, has ordered 98 mines to boost their annual output capacity by 55.3 million tons through the rest of the year, Reuters reported, citing an official with the provincial government. The province will also allow 51 mines to continue production through December, although they have reached their maximum yearly production levels. Previously, Shanxi also signed medium and long-term deals to supply coal to 14 other regions in the fourth quarter.
Meanwhile, 72 Inner Mongolian coal miners had been notified that they can immediately operate at higher capacities, provided they ensure production safety. These mines had an authorised capacity of 178.45 million tons/year, but the notice asked them to increase that by around 98.35 million tons, equal to about 3% of China’s annual thermal coal demand. Inner Mongolia is China’s second-biggest coal-producing region.
The severe power crunch has led to expectations that China’s economy will expand more slowly than anticipated in 2021. Goldman Sachs lowered its China GDP growth forecast from 8.2% to 7.8% for this year. Adding to the woes, prices of other power-generating fuels such as fuel oil, methanol, and LPG have climbed at least 10% in the past month.
Some countries across the world also suffer energy shortages. More than 50% of coal-fueled power plants in India have less than three days of coal inventories due to supply tightness. Bangladesh is considering leasing old oil-fired power plants due to high gas prices. In Europe, Hungarian Prime Minister Viktor Orban blamed the EU’s ambitious climate plan and high carbon tax for pushing electricity costs to record levels.
