Billions of yuan in catch-up funding needed to avert shortfall, expert says
China needs billions of yuan in investment to boost coal mining capacity and avoid energy shortages amid tight supply of the fuel up to next year, according to a government-backed industry think-tank.
He Youguo, vice-director of the China Coal Industry Development Research Centre, put the country's coal supply at 1.82 billion tonnes next year - 130 million tonnes short of demand - based on existing mines and projects under construction.
'This year and next year will be the toughest period for supply to match demand. We must expand production capacity through technology upgrades,' he told the second China Steel Industry Strategy Development and Investment Conference.
Assuming a conservative development cost of 300 yuan to 400 yuan per tonne, 45.5 billion yuan of investment will be needed to plug the 130 million-tonne supply gap.
The government halted new coal-mining projects for five years up to 2002 amid a power surplus in the mid-90s. The investment clamp means the industry will need a huge financial outlay in the next five to 15 years.
Based on known capacity-expansion projects and the expected rate of depletion at existing mines, Mr He sees supply edging up to 1.86 billion tonnes in 2010 and then falling to 1.5 billion tonnes in 2020.
