BEIJING (BLOOMBERG) – China broadened a production halt at mines and chemical factories in its top coal-producing province after a week of torrential rain that ravaged the area.
Shanxi province suspended output at 60 coal mines, 372 non-coal mines and 14 dangerous chemical factories, after heavy rainfall earlier this week led to collapses and landslides in many cities in the province, causing fatalities, the provincial government said in a statement published on its official WeChat account Saturday (Oct 9).
The latest suspension follows the Northern Chinese province’s production stoppage at 27 coal mines on Oct 4, adding fresh pressure on a nation already struggling with an energy shortage.
The power crunch across China has rippled from factory floors to homes as the nation’s coal-based electricity producers, which account for more than 70 per cent of the country’s generation, are unable to buy enough fuel.
The disaster has weighed on the country’s manufacturing sector and is crimping growth forecasts for the world’s second-largest economy.
A shortage of coal could cut industrial power use by 10 to 15 per cent in November and December, which would potentially translate into a 30 per cent slowdown in activity in the most energy-intensive sectors like steel, chemicals and cement-making, according to UBS Group.
Government officials last week pressed mines to boost output, allowing them to keep producing even after they reached annual quotas. Electricity prices will be allowed to rise by as much as 20 per cent against a benchmark, compared with a current cap of 10 per cent, according to a statement posted by the State Council, the country’s cabinet, after a meeting chaired by Premier Li Keqiang on Friday (Oct 9).
With that, costs for the most energy-intensive industries in the country could be brought in line with supply and demand without a cap, the statement said.
Meanwhile, local governments are being urged to offer power-price discounts to smaller firms, and tax deferment will be offered to coal and power companies, the State Council statement.
It urged putting curbs on the expansion of energy-intensive industries and for improvements in emission controls at the local government level. The council also suggested removing renewable energy sources from total energy consumption for a time period, without elaborating.
At the meeting, officials said China will gradually allow all coal-fired power to be traded in the market and reiterated that power demand for livelihood and winter heating shall be met.Internet Explorer Channel Network