NDRC nine measures to urge coal enterprises to reduce production capacity


Recently, the National Development and Reform Commission issued the Notice on Further Accelerating the Capacity Replacement of Coal Mines (hereinafter referred to as the Notice), which requires that coal mine projects under construction should strictly implement the volume reduction and replacement policy or the task of excess chemical energy capacity. Encourage trans provincial (district, city) capacity replacement, merger and reorganization, and approved (approved) coal mine construction projects to take on the task of resolving excess capacity through capacity replacement.
It is noteworthy that the Notice adopted nine measures to cultivate and develop advanced production capacity, accelerate the elimination of backward production capacity, and promote the adjustment, transformation and upgrading of the coal industry structure.
Specifically, first, establish a long-term mechanism for coal production capacity replacement; Second, encourage trans provincial (district, city) capacity replacement; Third, encourage the implementation of merger and reorganization; Fourth, encourage approved (approved) coal mine construction projects to undertake the task of resolving excess capacity through capacity replacement; Fifth, steadily and orderly promote coal de productivity; Sixth, strictly implement the requirements for reduction and replacement of new coal mines; Seventh, support local governments to implement capacity replacement uniformly; Eighth, strengthen coal capacity replacement index trading services; Ninth, the coal mines that have been included in the annual implementation plan for overcapacity resolution and have been closed and withdrawn on schedule should sign the capacity replacement index trading agreement before June 30 of the next year.
It is reported that as early as July 23, 2016, the National Development and Reform Commission, the Energy Administration, the Coal Mine Safety Supervision Bureau and others jointly issued the Notice on Matters Related to the Implementation of Reduction and Replacement and Strict Control of New Coal Capacity (hereinafter referred to as the "Original Notice"), which required that all illegal coal mines that started construction without approval should be stopped. For illegal coal mine projects that really need to continue construction, the reduction and replacement policy should be strictly implemented.
Relevant experts said that the Notice proposed for the first time to establish a long-term mechanism for coal capacity replacement, which was also a revision based on the original Notice. It mainly raised the replacement index of new coal mine projects, approved coal mine projects and coal mine projects within some implementation plans after the implementation of capacity replacement across provinces (districts, cities), mergers and reorganization.
Relevant analysts of China Bond Credit Rating Co., Ltd. said that the Notice also made requirements on the time of signing the capacity replacement index trading agreement. "For coal mines that have been included in the annual implementation plan for overcapacity resolution and closed and exited on schedule, the capacity replacement index trading agreement should be signed before June 30 of the next year. For coal mines that have closed and exited in 2016, the agreement should be signed before September 30, 2017 at the latest, and the exit capacity index that has not been signed within the time limit will be invalidated. If the agreement is signed before June 30, 2017 and the capacity replacement plan is reported, the previous 130% conversion ratio can be increased to 150%." This provision will help to urge coal enterprises to exit backward production capacity as soon as possible.