China's coal demand to see slower increase in next 5 years

Thanks to an energy revolution and economic transformation, coal demand in the world's second largest economy will increase but slowly in the five years from 2016, said Jiang Zhimin, vice head of China National Coal Association.

In the meantime, coal will still dominate China's energy structure, as the country's energy demand is expected to continue growing along with the country's industrialization, urbanization and agricultural modernization, Jiang said.

However, it is unlikely the country's demand for coal will grow as rapidly as in previous years, as, under the "new normal," the service sector is set to take the lion's share of the economy and more coal would be replaced by non-fossil fuel, Jiang said.

The mode and fields for coal utilization are also expected to evolve with the development of science and technology, as coal will be used as raw material as well fuel, he added.

For the five years, the coal industry will prioritize restructuring and upgrades, which means cutting overcapacity and more mergers and acquisitions, Jiang said.

Jiang's remarks came days after the State Council announced plans to slash overcapacity in the coal industry and stop approving any new coal mines before the end of 2019.

The country will shut down 500 million tonnes of capacity and consolidate another 500 million tonnes into the hands of fewer but more efficient mine operators in the next three to five years, according to a guideline issued by the State Council.

Cutting overcapacity in sectors including coal and steel is part of the country's supply-side structural reform and high on the government agenda.

In the past five years, China eliminated about 560 million tonnes of coal production capacity and closed 7,250 coal mines.

The country had about 11,000 coal mines at the end of 2015 with a total capacity of 5.7 billion tonnes. Endi