China to control coal production

China will consolidate coal mines and boost output of good quality coal while controlling overall production, the country's planning agency says in a five-year blueprint for the industry.

Total production will be capped at 2.6 billion tons annually by 2010, the National Development and Reform Commission said in a report posted on its Web site.

China is the world's biggest producer and consumer of coal, with output last year at 2.33 billion tons compared with demand of 2.25 billion tons. The country exports some of its low grade coal and imports high grade coking coal to meet the needs of its steel industry.

Coal, which now fuels about 70 percent of China's power output, will remain the country's main energy source, the report said. It largely confirms industry guidelines announced earlier.

"The key mission during the period is to control output, form big players, consolidate small and medium-size suppliers and eliminate those with low recovery rates and poor safety," the commission said.

China's coal mining industry is highly fragmented, with tens of thousands of small mine operators. In recent days state media reported that the government also plans to consolidate the industry by requiring that operations in any single coal field be controlled by only one company, to help improve technology and safety in the notoriously perilous industry.

In 2005, small mines accounted for just over 1 billion of China's total coal output. By 2010, planners expect small mines to provide only 700 million tons of total supply, the report said.

With demand for coal driving up prices, the industry is booming. But mines are unlicensed and ignore safety and labor rules.

At least 4,746 people were killed in floods, fires, explosions and other mishaps at mines last year, making China's mining industry the world's deadliest by far, although the total official figure was a decrease from the average fatality rate of 6,000 a year in recent years.