After going through a difficult year in power generation, China will make every effort to ensure coal production and keep coal prices at a reasonable level in 2022.
While measures to increase production have borne fruit, the supply of and demand for coal has continued to improve, with smart and green energy playing an important role in energy supply.
Tight supply and high demand for electricity, a dilemma plaguing China’s power industry since early 2021, worsened in September and October due to the shortage and rising prices of coal. At the time, several provinces across the country reported electricity rationing, with some areas experiencing power cuts.
Following the September blackouts, in a series of meetings, the country stressed the importance of efforts to prioritize energy sufficiency. At an executive meeting of the State Council in late October, China ordered concerted efforts to ensure the production and transportation of coal, increase gas supplies and suppress speculative activity in the market.
An improved pricing mechanism for coal-fired electricity has also been put in place to deepen market-oriented pricing reform in the sector.
Since October, coal companies have also encouraged the supply of coal and stabilized prices.
Huayang New Material Technology Group Co Ltd, a coal producer in Shanxi Province (northern China), one of the main coal-producing regions of China, has improved its mining technology and is operating at full capacity, half of its production being transported to the province of Hainan (southern China). .
By December 22, 2021, Huayang had completed the shipment of 1.7 million tons of thermal coal to Hainan ahead of schedule.
These timely measures, both at the local and central level, have proven to be effective in restoring coal supply in the short term and have helped to gradually ease the pressure on power generation, industry insiders noted.
Both spot prices and coal futures have fallen rapidly since mid-October as long-term supply contracts cover more coal producers while surveillance is tightened to curb excessive speculation. In early November, electricity supply and demand in areas operated by the State Grid had returned to normal.
Smart mining helps
Smart technologies have become an important medium for increasing the production and supply of coal.
The city of Yulin, a coal-producing area in northwest China’s Shaanxi Province, has built 20 modern ultra-large coal mines with a capacity of 50 percent of the city’s total output.
At Shaanxi Coal Caojiatan Mining Co Ltd, an intelligent monitoring system connected to telephone applications helps workers dispatch and monitor the real-time operation of equipment and the production process.
“With the help of smart devices, the actual number of workers in a mining team has increased from 15 to seven. Now only seven people can produce 3,500 tons of raw coal in two hours,” said Li Peichen, a team mining. Head of party with the company.
In addition, a total of 154 smart mining zones have been built in Shanxi Province, with technologically advanced production capacity accounting for 68% of the total.
As the growth in global energy demand slows and supply constraints ease, the mismatch between supply and demand is expected to improve in 2022, experts say.
At the same time, the domestic coal supply capacity will be further strengthened in 2022 as relevant government departments increase their production capacity, according to industry insiders.
In 2022, the system of medium and long-term coal contracts will be further improved.
Recently, a batch of long-term contracts have been signed by coal companies in Shanxi, Shaanxi, Inner Mongolia and other places, as well as large national electricity, steel and heating companies, which further stabilize price expectations and promote a stable energy supply.
The country will also continue to increase the absorption capacity of new energies and optimize the use of coal and new energies. Large businesses, especially state-owned enterprises, are at the forefront of securing electricity supplies and stabilizing prices.