China will build more coal mines in its push for higher domestic supply and to tame price increases, according to the National Development and Reform Commission.

The world’s biggest coal producer and consumer set targets to add about 300 million tons of annual mining capacity for “emergency storage reserves” by 2030, the top economic planner said in a policy paper released on Friday. Qualified miners - preferably in the top hubs of Shanxi, Inner Mongolia, Shaanxi and Xinjiang - will be encouraged to set aside as much as 30% of the new capacity as a backup to limit price spikes, it said.

China has led a global resurgence in coal-power capacity, accounting for about two-thirds of last year’s increase, according to Global Energy Monitor. The world’s second-biggest economy is also mining a record volume of the dirtiest fossil fuel, following a three-year capacity expansion programme to ensure energy security and avoid price spikes, such as the one after Russia’s invasion of Ukraine.

As a result of the new capacity, domestic spot thermal coal prices had almost halved from their peak in October 2022 to 810 yuan (US$112 or RM533.82) a ton as of Monday. The government-set benchmark long-term contracted price is around 700 yuan a ton for this year, which is seen as a floor price. 

  - Bloomberg