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Asian Petroleum Review : Jan-March 2011
Thousands of small and inefficient industrial plants have already been shut down and the standards are likely to get tougher in the com- ing years. As Beijing introduces new environ- mental taxes that will push up the price of coal even further, big consumers will have another incentive to cut back. Paul Manley, Wood Mackenzie's coal analyst in China, said the country's coal production could soon return to normal growth levels once Bei- jing's consolidation drive comes to an end and is forecasting annual output to increase another 1.9 billion tonnes by 2020 to more than 5 billion tonnes a year. China has spent heavily on new mines - - 320.7 billion yuan ($50 billion) in fixed asset invest- ment in the first 11 months of the year, up 22.7 percent compared to the same period of 2011, according to industry figures. Extensive geological surveys in Inner Mongolia - - an autonomous region of 1.2 million square km accounting for 12 percent of China's total area - - may lead to more coalfield discoveries. Massive investments in wind power will reduce the country's dependence on coal, while some believe China's rapidly developing solar power technology may well hold the key to long-term energy security in a country that has some of the world's biggest deserts. Although solar power generation costs are now about 2-3 times higher than for coal in China, solar power could become as cheap as coal-fired power by around the middle of this decade, thanks to the sharp fall in the cost of photo- voltaic cells used in solar panels, said Dylen Liu, a researcher at Pacific Epoch consultancy in Shanghai. When it comes to supply shortfalls in the short term, however, some traders reckon the only quick fix is abolishing the 17 percent import tariff on coal. "Clearly, the government should cut the import tariffs and allow foreign coal to compete on a level playing field. It is also the most effective way to lower fuel costs for the state-owned power plants," said the head of a European coal trading firm. COAL THEME PARK In Fuxin, the mines may be running dry but coal will continue to dominate the city's future. Out- lying mines produce around 20 million tonnes of coal a year, and state power giant Datang Group is building a massive coal gasification plant in the city. At the bankrupt Haizhou mine, more radical solu- tions are necessary. It employed 30,000 miners at its peak, but now only around 1,000 brave the fires to excavate the last remnants of coal. Production will cease at the end of 2012. The city has lined up investors from Guangdong and Macau for a five-star hotel near the site, but plans to construct a golf course have been put on hold. Local officials remain open to the possibility of building a "coal mine disaster theme park" in the area, where methane blasts could be simulated by bombarding guests with black ping-pong balls. Premier Wen Jiabao, who visited the site in 2003, encouraged the rehabilitation project. Eating dump- lings with miners during Chinese New Year celebra- tions, he urged the country to learn from the suffer- ing and sacrifices of coal workers everywhere. Chen Qi, head of the Fuxin tourist bureau, said pri- vate investment in the tourism and park projects was expected to reach about 4 billion yuan over the com- ing years, while the complete rehabilitation of the mine will cost more than 10 billion yuan. The city also aims to become a wind power base, manufacturing blades and turbines as well as sup- plying electricity to the rest of Liaoning, a transfor- mation almost as startling as turning its colliery into a tourist site. "The situation in Fuxin is horrendous - - it is like going on the moon, and the scale of what needs to be done is frightening, " said Sindicatum's Creedy, who visited the site. Through the smoke and haze of the Haizhou mine, local officials in Fuxin look on the bright side. "You're probably surprised by what we have already done, " said Chen of the Fuxin tourist bureau, waving her hand at the city's new museum housing the model of the coalmine park near the entrance to the Haizhou mine. The spotless public square on which the museum stands displays a monument to the city's sacrifices, along with three giant pieces of old Soviet-era machinery dragged from the pit. "We are convinced that all these plans will come to fruition and in 10 years time this place will be com- pletely transformed." (Editing by Bill Tarrant) "Massive investments in wind power will re- duce the country's dependence on coal, while some believe China's rapidly developing solar power technology may well hold the key to long-term energy security in a country that has some of the world's biggest deserts" - Dylen Liu, Pacific Epoch consultancy