Shanxi's coal producers step up to tackle power shortages

Several companies sign new deals to provide multiple regions with additional fuel supplies

Shanxi Coal International Energy Group, a major coal producer in Shanxi province, received a letter of thanks from Datang Henan Power Generation based in Zhengzhou, Henan province, on Nov 1.

In the letter, Datang Henan expressed its gratitude for SCIEG's efforts in ensuring a stable, cost-effective supply of coal for its eight power plants throughout Henan, saying that SCIEG is a trustworthy company with a strong sense of corporate social responsibility.

Since the third quarter of this year, some regions in China, including Henan, have suffered power shortages due to the short supply and rising price of coal.

Shanxi's coal producers reckon the power shortage poses a challenge to economic development and people's lives, especially when there is a need for heating as winter sets in.

To overcome the challenge, the producers collectively signed long- and medium-term agreements on Sept 29 with clients in the power-generation industry across 14 provinces, municipalities and autonomous regions to ensure their coal supply.

The agreements are an upgrade of the long- and medium-term agreements they signed at the beginning of this year, which involved a total coal supply of 286 million metric tons.

According to the upgraded agreements, Shanxi's coal producers will additionally supply 53 million tons of coal to clients this year, and deliveries will arrive by the end of December.

To meet the demands, coal mines in Shanxi are now operating at full capacity.

According to the Shanxi Energy Administration, 39 coal mines in the province reported an increase of 41 million tons of coal produced by the end of October. The output increase for the fourth quarter is projected at 29 million tons.

Jinneng Holding Group is another major coal producer that signed upgraded agreements to increase coal supply and was among the earliest in China to deliver additional coal.

Its first train loaded with "supply-assuring coal" departed from Shanxi on Oct 5, six days after the agreements were signed. By Oct 26, it had delivered 3.3 million tons of supply-assuring coal to six regions in China, according to company executives.

Shanxi Coking Coal Group is another major supplier of additional coal. To ensure supplies, the company's coal mines have increased their production to full capacity.

"While ensuring safe production, we are going all out to produce as much coal as possible," said Hu Xiuming, a manager at Ximing Coal Mine affiliated to SCCG. He added that the daily output had surpassed 10,000 tons.

Statistics from the Shanxi Energy Administration show the daily output of Shanxi's coal mines reached 3.54 million tons on average during the first seven days of November. That represents a daily increase of 170,000 tons from the same period of last year.

By Nov 9, Shanxi had delivered 15.19 million tons of supply-assuring coal to the 14 regions.

To ensure the smooth transportation of coal, railway operators in Shanxi have made great efforts to improve efficiency.

At the loading area of Tashan Railway Station in the city of Datong, a train wagon that can carry 80 tons of coal can be filled in 50 seconds. Datong is the starting point of the Datong-Qinhuangdao Railway.

According to Li Shu, a manager of Taiyuan Railway Bureau responsible for the Datong-Qinhuangdao Railway cargo shipment, such efficiency is made possible with a highly automated pipeline transport system.

Li said the cargo transportation volume on the railway is about 1.3 million tons a day at present. That is a daily increase of nearly 150,000 tons compared with September's figures.

Linking Datong and the port city of Qinhuangdao in Hebei province, the rail line is largely dedicated to coal transportation.

The electricity sector in Shanxi is playing an important role in addressing the nationwide power shortage.

Shanxi is a major part of the State Grid's nationwide power supply network, with its electricity from local power plants being transmitted to the rest of the country through high-voltage electricity lines.

However, Shanxi's power industry has also been affected by the short supply of coal and the undercapacity of new-energy power generation sites due to rainy weather since this summer.

In early October, the inventory of coal at power plants in Shanxi was about 4 million tons, a volume for about 10 days' consumption, according to the Shanxi Energy Administration.

Hopefully, the administration said, the situation is changing for the better. As coal prices dropped from 2,000 yuan ($312) to 1,000 yuan a ton recently, the inventory at power plants increased to 6.4 million tons.

Thanks to the growing output of power plants, Shanxi's electricity supply to other regions has been increasing steadily this month.

According to Bao Lei, an executive of the Shanxi branch of State Grid, Shanxi's outbound electricity supply is expected to have a 40 percent year-on-year increase this month. The growth rate in December is projected at 46 percent.