China Takes Aim at Steel to Coal Gluts With Curbs on Land Use

  • Approval for coal mining also halted for next three years
  • Move follows NDRC's `negative list' released this week

China will stop approving land to be used for new steel and coal projects as the country seeks to reduce excess capacity, two days after announcing restrictions on investments in a “negative list” of oversupplied industries.

Applications for coal mining will also not be approved for the next three years, the Ministry of Land and Resources said in a statement Thursday. The ministry will widen the scope of law enforcement and punish those who flout the rules, according to the statement.

Restricting land use is China’s latest effort to tackle the structural problems facing the economy by eliminating overcapacity in heavy industries. The National Development and Reform Commission on Tuesday published a 135-page document laying out trial rules that ban a range of developments in the country from outdated railway projects to beer-bottling plants deemed too small. In January, the government pledged to slash steel capacity by as much as 150 million metric tons in five years.

China’s crude steel-production capacity reached a record 1.2 billion tons at the end of last year as new operations planned before 2013 started, according to the China Iron and Steel Association. The China Metallurgical Industry Planning and Research Institute estimates that output will drop to 781 million tons this year, while Mysteel Research expects steel consumption to be 770 million tons.

China’s total coal-production capacity including mines under construction is estimated at more than 5 billion tons, according to the China Coal Transport and Distribution Association in Beijing. Coal output will probably reach 3.7 billion tons this year, leaving more than 20 percent of its capacity idled.

— With assistance by Feiwen Rong

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