- Inner Mongolia cracks down on coal overproduction
- Supply tightens due to inspections, rains; thermal coal prices surge
Mysteel Global: The Inner Mongolia autonomous region, one of China’s largest coal-producing hubs, has named 15 mines for breaching state-approved production limits during the first half of this year, according to a document published by the regional energy regulator last week.
As part of a campaign launched by the National Energy Administration (NEA) to crack down on overproduction in the industry, in late July, China’s top energy regulator launched inspections across eight major coal-producing provinces, including Inner Mongolia, to identify coal mines operating beyond their approved capacity. Any mine whose monthly output in H1 2025 exceeded approved capacity by more than 10% will face immediate suspension, as Mysteel Global reported.
According to market sources, the NEA set a deadline of August 15 for their taskforce teams to submit their inspection results, yet the document said some city-level energy bureaus have delayed their submissions for up to 20 days, causing progress on the campaign to fall behind schedule.
Of the checks conducted on 299 coal mines in Inner Mongolia, the teams found that in 89 cases – accounting for 30% of the total – the mines’ production in 2024 was not fully aligned with their licensed capacity, the document said. Of that, there were 33 mines whose monthly production exceeded 110% of their approved capacity.
During the January-June half of this year, 15 coal mines were found to have produced above the 110% approved level, all of which are located in Ordos, the top coal city in Inner Mongolia. Seven of these were among those that operated beyond approved capacity in 2024.
Authorities had ordered these 15 violators to halt operations until they passed further safety checks, according to the document.
In follow-up research conducted by Mysteel and published in a special report on September 16, these 15 mines have a total production capacity of 34.6 million tonnes/year (mnt/y). Of these, 13 are thermal coal mines, with a total capacity of 32.2 mnt/y, while the remaining three are coking coal mines.
Five of these 15 mines had been ordered to suspend for 5-7 days while safety deficiencies were rectified, and as of September 16, four had resumed operations after passing the relevant inspections, the report showed.
The suspension could have spelt a huge revenue loss for these coal mines even as it just lasted around a week. For example, a 300 mnt/y coal mine produces about 10,000 tonnes of coal every single day. By far, given that the 5,500 kcal/kg NAR coal has been priced around Yuan 500/tonne ($70.3/t) in Inner Mongolia, that equates to daily revenue of Yuan 5 million. A seven-day halt could have erased nearly Yuan 35 million in sales, Mysteel Global estimates.
Those three coking coal mines have suspended sales, and one has paused production, the report notes. Before that, production at local mines had been limited by local environmental checks.
The clampdown has tightened supply in major producing hubs at a time when coal flows were already disrupted by heavy rains from late July to early August. Sources said the constraints could embolden miners to push for firmer prices, especially with winter restocking looming before the October National Day holiday week.
On September 16, Mysteel assessed the benchmark 5,500 kcal/kg NAR thermal coal at Yuan 690/t ($97.1/t), FOB China’s northern ports with VAT, up substantially from September 11 when the price stood at Yuan 681/t.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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