core sector communique

China starts running National Coal Emergency Reserve Program

It is reported that China's long awaited National Coal Emergency Reserve Program is up and running, but protracted quarrels between coal suppliers and power plant operators have cast a cloud over the ambitious project.

Some companies participating in the initial effort to stockpile coal for energy security could face financial viability issues. And some power operators say the government should significantly increase reserve targets.

Coal companies and power plant operators generally welcomed the government's decision to subsidize construction of coal reserve bases around the country.
The project is expected to reduce pressure for those power companies traditionally forced to dispatch buyers, and sometimes entire management teams, to scour the country for coal every summer and winter.

These seasonal scrambles and threats of coal shortages have long vexed operators, prompting some several years ago to plead that the central government establish a national reserve mechanism to ease the bottleneck.

The program was finally launched in February. Ten coal producers and power plant operators as well as eight port operators were named as participants for building and running the first batch of reserve sites. The initial nationwide stockpile target is 5 million tonnes.

A site in Guangdong Province, the largest so far in southern China, is being developed by Zhuhai Port Co, coal producer Shenhua Group and power plant operators Guangdong Yudean Group. The companies plan to invest CNY 4.3 billion.