China state planner finalises rule to set up coal production reserve system

China's National Development and Reform Commission (NDRC), the country's top economic planning body, has finalized a regulation to establish a coal production reserve system in China by the year 2027. The primary objective of this system is to ensure the stability of coal prices and coal supply in the country.

Coal is a significant energy source in China, accounting for approximately two-thirds of the country's primary energy consumption. However, the coal market in China has been subjected to considerable volatility due to various factors such as supply disruptions, environmental regulations, and demand fluctuations. The new regulation aims to address these issues by implementing a strategic coal reserve system.

Under the new regulation, coal mines with an annual output of over 3 million tonnes will be required to participate in the coal production reserve system. These mines will be required to maintain a minimum stockpile equivalent to three months of their average annual production. The NDRC will be responsible for monitoring the implementation of the regulation and enforcing the stockpiling requirements.

The coal production reserve system is expected to help mitigate the impact of supply disruptions caused by factors such as mine accidents, environmental inspections, or geological hazards. It will also help maintain a stable coal supply during periods of high demand, such as during the winter heating season or industrial production surges.

Moreover, the system is expected to help stabilize coal prices by reducing the volatility caused by supply disruptions or unexpected demand shifts. This could help provide price certainty for coal-dependent industries and consumers, promoting economic stability and growth.

The implementation of the coal production reserve system is part of China's broader efforts to ensure energy security and improve the stability of its energy market. The NDRC has also been working on similar reserve systems for other energy sources, such as oil and natural gas, to ensure energy security and price stability in the country.

The regulation is expected to take effect after it is officially published and will be implemented in phases. The specific timeline for the implementation of the regulation has not been announced yet. However, the NDRC has stated that it will provide detailed guidelines and support to help participating mines meet the stockpiling requirements.

In conclusion, the Chinese government has finalized a regulation to establish a coal production reserve system by 2027, with the primary objective of ensuring the stability of coal prices and coal supply in the country. The regulation will require large-scale coal mines to maintain a minimum stockpile equivalent to three months of their average annual production. The implementation of the regulation is expected to help mitigate the impact of supply disruptions and promote price stability in the Chinese coal market.