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China orders halt to coal exports


The coldest, snowiest winter in decades has left millions of Chinese without heat and running water, leading China’s government to order a suspension of coal exports as the country struggles to meet its power needs.

The Transport Ministry’s emergency notice, posted on its Web site, warned of “severe” consequences for failing to comply with the order, which will stay in effect through the Lunar New Year holiday in February and the annual session of the national legislature in early March.

The notice ordered railways and other transport networks to make hauling coal and food a priority over coming weeks. Ocean shippers should stop loading coal for export and divert shipments “for domestic thermal coal requirements,” if needed.

It was unclear what amount of coal shipments would be affected for China, the world’s biggest coal producer.

The country’s economic planning agency has ordered utility companies and coal suppliers to cooperate in fighting power shortages that have forced more than a dozen provinces to ration electricity.

Chronic wintertime shortfalls of coal, used to fuel three-quarters of China’s electricity supply, have been aggravated by unusually heavy snow disrupting transport networks.

The energy shortages are expected to continue, with forecasts predicting prolonged cold weather and more snowfall for many regions of central and southern China.

In some areas, the snow has damaged power grids. Storms felled three power transmission towers last week along a major line of the massive Three Gorges Dam, disrupting a link in central China’s transmission system, the official Xinhua News Agency reported.

Coal shortages have worsened due to friction over prices for coal and electricity.

China’s domestic prices of coal and crude oil rose 14.2 percent and 35 percent yearon year, respectively, in December, the central bank said in a statement posted on its Web site Jan. 25.

Meanwhile, electricity prices rose only 2.1 percent. Utilities have chafed at caps on electricity rates that prevent them from passing the higher costs for coal on to customers. Coal suppliers are pushing for higher prices.

The Transport Ministry notice said state-owned shipper Cosco Holdings Co. Ltd. was hauling emergency shipments of 760,000 tons of coal to help bridge the gap between faltering supply and soaring demand.

China exported 53 million tons of coal in 2007, down 16 percent from 2006, while imports rose 34 percent to 51 million tons. Net coal exports dropped to just over 2 million tons from 25 million tons in 2006.

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