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China Orders Coal Companies to Increase Production, Steps in to Keep Prices Stable

Amid coal shortage in some localities, China's State Administration of Coal Mine Safety on Sunday issued an urgent circular ordering domestic coal companies to increase production on the premise work place safety be ensured.

The administration required state-owned coal mines to "take effective measures" to increase coal output and meanwhile step up safety management.

It said mines forced to suspend production by the May 12 quake should strive to resume operation as soon as possible with a prepared safety control plan.

As more rainstorms were forecasted in the south, the administration urged mines to step up inspections on their facilities to prevent any flooding.

China Meteorological Administration on Monday morning continued to issue the orange alert warning, the second most critical level after red, for rainstorms in the south.

It meant precipitation in some areas was expected to exceed 50 mm within three hours, or more rain was forecasted in areas where the precipitation had already exceeded 50 mm.

The governments of Shandong, Shaanxi and Hunan, three of the country's major coal-producing provinces, have stepped in to keep local power coal prices stable, which, analysts said, would help ease the rising cost of coal to reduce losses of power generators who relied heavily on coal.

China froze electricity rates last year to contain inflation. But coal prices had been set by the market.

In the wake of signs coal supplies were running short, the country's state-owned electrical utilities were ordered to ensure reliable power supplies for the Olympics and reconstruction from last month's devastating earthquake.

Big power generators, China Huadian Corp., China Guodian Corp. and China Power Investment Corp., had been asked to ensure enough power "regardless of cost."

The country faced chronic power shortages, especially in the summer and winter peaks for cooling and heating. Power grids were facing harder times this year as many power transmission facilities were damaged by winter snowstorms and the May 12 earthquake in central China, which killed nearly 70,000 people and devastated entire communities in Sichuan Province.

(Xinhua News Agency June 10, 2008)

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