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Shanxi, China's largest coal-producing province, plans to put the brakes on the further expansion of coal mining in the next five years. The move is part of tough measures to clean up the sector's record in environmental damage, the waste of resources and mine accidents.

Shanxi governor, Yu Youjun, made the pledge at a press conference Sunday night on the sidelines of the Fourth Plenary Session of the National People's Congress (NPC) in Beijing. Yu said the provincial government aimed to upgrade the region into a "new energy and resource base."

"We cannot continue with the rough way of development any more and must limit coal production strictly with the guidance of the concept of the 'Scientific Approach to Development'," Yu said.

As China aims to build a more effective and environment-friendly economy, the lack of efficiency of the coal industry has become a growing concern. Official statistics show that it takes 2.45 tons of water on average in China to produce a ton of coal. The coal production rate in many small mines is as low as 25 percent and some by-products such as the coal-bed methane are often wasted.

Shanxi produced 600 million tons of coal last year, accounting for 26 percent of China's total output. Yu said Shanxi could guarantee an annual output of 700 million tons in the next five years -- about a quarter of the country's estimated coal demand -- by increasing the recovery rate of coal that can be extracted from the coal-bed without more mining. It is currently shutting down mines with an annual output below 90,000 tons and pushing those producing less than 200,000 tons per year to introduce more advanced and environment-friendly technologies.

"We will also introduce strategic partners to establish large-scale coal mine groups with highly competitive and advanced technologies," he said.

What's more, the local government will promote merger and acquisitions to reduce the number of mines to 2,500 by 2010 and ensure 80 percent of the province's coal output comes from mines with an annual capacity above 1 million tons, said Yu.

Shanxi has shut down 4,876 illegal mines since last September and punished about 1,200 people including more than 60 local officials who turned a blind eye to illegal operations and made  financial gains from their operations.

Coal accounted for 66 percent of China's energy supply last year and will remain the top priority in the long-term energy strategy of China, which is wary of any further heavy reliance on imported oil. China is now the world's second largest oil importer after the US.

Yu said it was a priority in Shanxi's 11th Five-Year Plan (2006-2010) to develop the more value-added coal chemical industries such as power-generating coke, coke oven gas and alcohol-ether fuel, in addition to making progress in other areas such as equipment manufacturing, the development of new resources and tourism.

About half of the coke supply in the world market is from Shanxi.

The province is not only famous for black coal. It also boasts many brilliant cultural legacies such as the Yungang Grottoes in Datong and well-preserved grand courtyards, which were formerly the homes of the country's richest bankers in ancient times.

Yu, previously the mayor of Shenzhen in south China's Guangdong Province, will lead a delegation to Hong Kong in early July to promote local business projects to overseas investors.

(China Daily March 7, 2006)