With the arrival of the cold months, it is time for Chinese energy companies to replenish coal reserves. However, they have thinned so much that the problem is felt not only by industrial areas, but also by ordinary Chinese. Energy suppliers are not able to provide enough energy even for household lighting.
–
As of September 21, China’s six major electricity producers had only 11.31 million tons of coal available. According to Sinolink Securitis, these are enough to satisfy the demand for only 15 days. From September to February, China is estimated to need 1.85 billion tons of thermal coal. Up to 19 percent of the material will be missing to cover real consumption.
–
The world’s second largest economy is suffering from the worst power outages in ten years. State media reported on Tuesday that at least 20 of the 31 provinces, from the rich south to the belt of declining industrial areas in the northeast, had implemented measures to redistribute electricity in recent weeks.
–
To illustrate the gravity of the situation – after the decision on electricity allocations last week in the northeastern city of Shenyang, traffic lights suddenly went out. Local authorities called the move necessary “to prevent the collapse of the whole network”.
–
After a power outage at a factory in Jilin in the northeast of the country, 23 people ended up in hospital due to carbon monoxide poisoning caused by shutting down the blast furnace exhaust system. “Power outages will be the new standard,” stated the city administration in a statement that was later deleted from the website due to “inaccurate wording”.
–
Last month, the US National Oceanic and Atmospheric Administration reported a “70% chance that the La Niña phenomenon will hit in the coming months and bring a colder winter to China.” Although some Chinese regions are accustomed to seasonal reductions in electricity supplies, the frequency of outages has risen sharply since the second half of last year.
–
Prize for pride
The gap between the country’s coal reserves in the country’s main energy groups and raw material consumption began to widen in April. From January price thermal coal increased from approximately 670 yuan (about 2,260 crowns) per tonne to about 1,100 yuan (about 3,700 crowns) due to strong demand and limited supply.
–
Due to rising prices, power plants are not even willing to produce enough energy to meet demand. Electricity production in China increased by 11.3 percent year on year between January and August, but coal production by only 4.4 percent, official data show.
–
China consumes more than 3 billion tons of thermal coal a year, of which about seven percent is imported. Even before Beijing unraveled with Australia, it provided almost two percent of the total coal consumed. Australian “black gold” was popular especially for its high quality and reasonable price. According to official Australian figures, it was about 50 million tons a year. After a diplomatic dispute between the two countries, China had to replace the missing goods by importing coal from countries such as Mongolia and Indonesia.
–
The type of coal that China bought from Australia had an energy value of 5,500 kcal / kg, which coal from alternative sources with lower quality and calorific value cannot match, analysts say.
–
“Since the Australian ban, 35 million tonnes of high-quality coal have been missing. At present, 70 percent of China’s imported coal from Indonesia has an energy value of 3,800 kcal / kg, and it is difficult to import enough high-calorific, low-sulfur thermal coal, ”said Nanhua Futures’ report on Tuesday.
–
At the beginning of 2016, China began to reduce its coal mining capacity, which led to a significant difference between supply and demand. Meanwhile, the number of operating mines has decreased due to over-mining. According to analysts a combination of several factors thus contributed to the current coal crisis.
–
The electricity crisis that’s wreaking havoc on the Chinese economy is at risk of worsening this winter if freezing weather exacerbates surging power demand and soaring fuel prices https://t.co/4Wr6v53nQB
— Bloomberg (@business) September 29, 2021
–
“In the last few years, all easy-to-extract and high-quality coal has been processed. For example, in Shanxi Province, coal used to be in shallow layers, easily mined and of sufficient quality. However, such resources are now relatively scarce, coal lies in deeper layers, is less mined and is not of such quality, “explained Jün-che Chou, Associate Professor in the Department of Electrical Engineering and Electronics at the University of Hong Kong, for SCMP.
–
According to experts, China’s ambition to reduce carbon emissions is also to blame. “Some say it’s for the good of reducing emissions, others say that the more we produce for export, the more we consume metals and coal and benefit the devaluation of the US dollar,” Guangzhou fabric manufacturer Terry Tan, whose company struggles with electricity shortages. “We manufacturers just want to function normally, deliver on time and get paid on time. But I still owe a lot of money to my employees and suppliers. ”
–
Sleepy staff and Christmas in danger
It is small and medium-sized enterprises and households that suffer the most from power outages. The Chinese thus began to buy candles on a large scale, but factories producing these scarce goods are also facing a reduction in traffic. Problems with the potential to affect Western markets as well reports and footwear manufacturers.
–
“We have reduced production by at least a third, we can only work from midnight to eight o’clock in the morning. Employees sleep here and are much less efficient than working in broad daylight, ”said Wang Tie, a shoe manufacturer in Guangdong Province. “It will affect exports, the sending of orders will be delayed, we must already reject orders.”
–
He added that outages will also be felt by consumers in the West. “If we do not jump to the normal pace of production, we will not have time to send the goods to Western countries before Christmas,” he added.
–
“Smaller businesses have already suffered too much this year – rising raw material costs, transport charges, logistics disruptions, late payments.” described the plight of small businesses Kuo Li, a manufacturer of home appliances for export from Tung-kuan. “We don’t have to survive this time because of a lack of electricity. We are unable to meet deadlines. Some factories are even allowed to produce goods only one day a week and not the next six days. It sounds ridiculous, but it is so. “
–
Corruption
Coal security was also disrupted by the situation in Inner Mongolia, where a third of China’s coal production is mined. Mining in the autonomous region with 523 mines with an estimated annual capacity of 1.3 billion tonnes was marked by severe corruption cases.
–
Inner Mongolia’s coal industry has been targeted by Chinese President Xi Jinping, who announced investigating cases dating back twenty years. “We will be uncompromising in new cases. We will not tolerate those that happened eight or nine years ago, “he said, referring to 2012, when he took over the leadership of the party. “Our anti-corruption campaign will never end,” he added.
–
Several employees, regardless of age, had already felt that he was serious about his words. In December 2019, a 69-year-old former employee received a suspended sentence for accepting a bribe of 449 million yuan. The investigation began six years after he retired. His two colleagues are currently serving 16 and 14 years in prison.
— .
