The Privatization Of Coal Industry

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China has been the world 's leading coal producer and consumer in recent years. China accounted for 47 percent of total global coal consumption and 20 percent of world energy-related CO2 emissions in 2012. China held an estimated 126 billion short tons of recoverable coal reserves in 2011, the third-largest in the world behind the United States and Russia. Coal comprised 69% of China 's total energy consumption in 2011. Characterized by increasing domestic production and importation, coal’s dominance in China’s energy consumption sector is likely to sustain in the future. Thus, the regulatory and price reform regarding coal would bring significant influences in transforming China’s energy sector. The gradual reform …show more content…

However, they have caused many regulatory challenges such as environmental degradation, tax evasion, and mine accidents. Starting from 1997, the central government plans to close small TVE mines. The small coal mines in China suffered from insufficient investment, outdated equipment, and poor safety practices, they are inefficient and are ineffective in responding to market demand. The current goal of government is to close those small mines and consolidate them into large coal companies. The consolidation can attract greater investment in new coal technologies and improve safety of coal mines. The government 's current 12th Five-Year Plan calls for streamlining the coal industry by forming 10 large coal companies that will account for about 60% of the country 's total coal production and capping the number of coal mines at 4,000 through mergers and acquisitions. Particularly, Shanxi, with the largest coal reserve and coal industry, experienced two consolidations during 2006 and 2009. After the consolidation , 98 percent of coal mines have signed merger or reorganization agreements and 80 percent of mining licenses have been altered. The number of coal mines in Shanxi has been reduced from 2,600 to 1,053, and mining companies, from 2,200 to 130. According to the government of Shanxi, the consolidation has not only led to increased output, but also led to improved safety conditions of coal mines. Accidents and

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