Ordos, the largest coal producing city in northern China’s Inner Mongolia, will cancel the “sales quotas” system from September 19 to accelerate the efficiency of coal transport as part of the drive to ensure domestic supply, according to market sources.
The cancellation, though confirmed by several market sources, was yet to be officially announced. It is learned that Ordos had withdrawn all checkpoints as of September 18.
Another coal hub Yulin in Shaanxi province announced on September 1 to cancel the “sales quotas” system that had existed for more than 16 years, in response to suggestion of the inspection team from the State Council.
The system is for the local government to check and control local production, and to protect miners from expanding production and sales without permission. Coal mines got quotas at the beginning of the month and allocate corresponding invoices to the truckers for confirmation at checkpoints set by the local government along key roads to other provinces.
In this way, a closed-loop system is created to ensure that mines do not produce beyond their approved capacity. However, it takes quite a long time for trucks to go through the checkpoint, especially when trucks waited in a long queue.
More importantly, coal mines often have to suspend operation when quotas run out. This has affected the stability of supply.
Yet, there have been electronic ways to replace the paper invoice. The sources said Ordos will still use electronic bills of lading and weighing to supervise coal production and sales, which will significantly enhance the efficiency of truck transport.
China is seeking more domestic coal supply when global energy supply pattern has been profoundly changed since the Russia-Ukraine conflict, forcing it to optimize its internal management system.
China has weathered a tough period in August when unprecedented heat sent power consumption to all-time highs while curbing hydropower generation. With proactive measures such as boosting coal production, smoothing rail transport and reinforcing storage capacity, China’s coal supply to power plants was generally sufficient and prices at a relatively low level.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
Leave a Reply