Slump in Shanxi's coal industry

TAIYUAN - Coal mines in North China's Shanxi province face a bleak future, with a continued slump in the fortunes of an industry that was once the backbone of the local economy.

Shanxi's coal industry lost more than 4 billion yuan ($644 million) in the first half of 2015 as government curbs on the polluting sector took their toll, official statistics indicated on Tuesday.

Coal production reached 463 million tons during the first six months, a year-on-year decrease of 3.2 percent. Meanwhile, coal storage climbed to 47 million tons, up 35 percent compared with the beginning of 2015 and accounting for almost half of China's total inventory.

The industry has now suffered losses for 12 consecutive months.

The Shanxi government has controlled the growth of coal production in recent years in the hope of shaking off the economic mode of relying heavily on coal resources. The provincial government is approving no new coal mines for the next five years to tackle overcapacity.

Meanwhile, banks in China have issued a variety of restrictive financing measures for coal-related industries, including raising the financing threshold for coal producers and lowering loan scales.

"It will be difficult to reverse the situation in the coal market," said Pan Yun, deputy head of the Shanxi Academy of Social Sciences.

"On one hand, the economic slowdown will cap demands for coal. On the other, the country has increased efforts to save energy and reduce emissions. The rising proportion of alternative energies including hydropower and natural gas will also reduce demand for coal," Pan added.