November 2, 2010 / 2:01 AM / in 7 years

UPDATE 1-China to limit coal production output - media

* Next 5-year plan to limit coal output at around 3.8 bln T

* China to step up coal mines consolidation efforts

* China’s power-generating capacity seen exceeding 1.4 bln KW (Adds five-year plan on coal, details, background

SHANGHAI, Nov 2 (Reuters) - China plans to limit its coal output and step up mines consolidation in its next five-year plan though power capacity is expected to exceed 1.4 billion kilowatts by the middle of the next decade, local media reported.

China plans to limit annual coal production to between 3.6 and 3.8 billion tonnes in its next five-year development plan, compared with 3.2 billion tonnes mined in 2009, China’s Century Business Herald said on Tuesday, citing China Coal Research Institute’s director He Youguo.

He said under the blueprint, large coal miners should account for around 66 percent, or about 2.5 billion tonnes, of the targetted yearly production, while total output for mid-sized mines with a capacity of above 300,000 tonnes would be limited at 800 million tonnes.

Total output from small mines, classed as those with annual capacity of lower than 300,000 tonnes, would be limited to 500 million tonnes, the paper said.

China is the world’s largest coal producer and consumer, but its highly fragmented coal industry has long been plagued with a poor safety record as well as inefficient and polluting mining operations.

He said coal mines consolidation would remain as a key focus for the government and it plans to establish 8-10 major coal firms with annual capacity of above 100 million tonnes and another 8-10 companies with output of around 50 million tonnes.

Further consolidation efforts to cut outdated capacity and limit output would continue to boost coal import volumes, which have increased strongly since 2008 when Beijing first launched the consolidation drive.

Rapid growth in China’s power demand will also boost the country’s new-found voracious appetite for imported coal.

China’s installed power-generating capacity is expected to exceed 1.4 billion kilowatts (KW) by the end of 2015, compared with a forecast 960 million KW this year, the official China Securities Journal reported on Tuesday, citing a five-year plan being drafted by the China Electricity Council.

China’s industrialisation and urbanisation will continue to fuel energy demand during the 2011-2015 period, although the pace of growth will be curbed by government policies to encourage energy conservation, the newspaper said.

China’s existing energy consumption structure, which is dominated by coal-fired power generation, is unlikely to be changed over the next five years, although the proportion of coal consumption will be reduced by several percentage points. ($1=6.83 Yuan) (Reporting by Samuel Shen and Fayen Wong; Editing by Jacqueline Wong)

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