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How Coal Chemical Parks Can Overcome the Coal Shortage Author/Source: Sinochem News Network Date: November 6, 2019 Clicks: 55,861 Views Author: Jiang Bei Source: China Chemical Industry News, November 5, 2019 Bookmark China’s energy resources are characterized by an abundance of coal, a scarcity of oil, and limited gas reserves. In particular, in the western regions where coal is abundant, there are large coal reserves, and many coal chemical parks have been established as a result of this coal abundance. However, recently the author has heard reports of coal shortages in some coal chemical enterprises; for example, in the Xilin Gol League region of Inner Mongolia, the demand for coal exceeds supply, which forces the coal chemical enterprises there to reduce production due to insufficient coal supplies or to incur losses as a result of rising coal prices. As the author understands, not only in the Xilin Gol region but also in other coal-rich areas of China, signs of a shortage of coal resources are emerging. Many coal chemical enterprises are complaining about this situation, and even more are feeling concerned; coal has become the biggest threat facing these enterprises. The author believes that this phenomenon may currently be limited to individual cases or certain regions, but it is showing a tendency to spread, and it warrants serious attention from coal chemical industrial parks across the country. First, it is necessary to clarify a concept here: coal reserves are not equal to coal production capacity, and coal production capacity is not equal to the actual coal output. The reason for the shortage of coal in some areas is mainly that the rate of increase in coal consumption has outpaced the rate of increase in coal production, leading to this problem. For example, the shortage of coal in the Xilin Gol region is due to two main reasons. First, there are more and more coal-consuming enterprises, which has changed the supply and demand relationship. Over the years, some coal-rich regions have taken advantage of their local resource advantages and geographical locations to invest heavily in modern coal chemical and coal power projects. These enterprises are major coal consumers; due to their rapid expansion, the increase in coal production has been relatively slow, which inevitably leads to a shortage of coal supply. Second is the insufficient coal production capacity. It is understood that although Xilin Gol League has abundant coal reserves, its production capacity cannot be fully utilized. The main reason is that land issues have gradually emerged in most coal production enterprises. Lignite is generally mined in open-pit methods. As the stripping surface at some coal production facilities reaches its limit and the available land for acquisition has been exhausted, it becomes difficult to secure new land, which leads to production shutdowns or significant reductions in output. Coal production enterprises have been forced to reduce or halt production due to unresolved land acquisition issues, leading to an imbalance in regional supply and demand and placing the coal industry chain in that area in an unprecedented predicament. Coal chemical industry cannot function without coal. Coal shortages are something that some coal chemical enterprises never anticipated at the time of their establishment, and they will remain a bottleneck issue that these companies will have to deal with for a long time to come. As hubs for coal chemical enterprises, coal chemical parks in various regions must pay close attention to this issue, conduct a thorough reassessment, give priority to the problems related to coal, strengthen supply and demand planning, and prepare various contingency plans in advance; it will be too late if we wait until there is an imbalance between supply and demand or even a shortage of coal available. Regarding the coal shortage currently facing some coal chemical parks and enterprises, the author puts forward three suggestions. First, help coal companies release production capacity. There are historical reasons for the widespread land acquisition issues in open-pit coal mines in areas such as Xilin Gol. **The relevant departments and local authorities **should adopt a problem-oriented approach, with the goal of ensuring an adequate supply of coal for industrial use; they should simplify procedures and minimize the time required for local approvals, so as to release the necessary coal production capacity as soon as possible. For land applications by coal enterprises tasked with ensuring supply, it is possible to handle the procedures while continuing production. At the same time, a regular assessment system for the land used by coal enterprises should be established to provide timely warnings to key coal production companies facing land shortages, thereby preventing production disruptions or reductions in these companies due to land acquisition issues. Secondly, relax import controls in coal-deficient areas. To safeguard the domestic coal market, **controls on coal imports have been tightened in recent years; this is certainly necessary, but it should also be adjusted according to the circumstances. As far as the author knows, last year some regions faced a coal shortage and planned to import coal from abroad, but were unable to do so due to import policy restrictions; even the ships carrying the imported coal could not dock and had to stay at sea. Today, some companies are also considering resolving this issue by importing coal, but they hesitate due to policy restrictions. In fact, importing coal appropriately at present is the most direct and effective way to meet the demand for coal, thereby addressing the urgent need of enterprises for coal. Once again, let’s reexamine the issue of coal supply security. The problem of insufficient coal supply faced by coal chemical enterprises in the Xilin Gol region will soon affect the entire coal chemical industry. Parks and enterprises in other areas should review their coal usage plans as soon as possible, so as not to find themselves without coal once the projects are up and operating. Don’t assume that when a project is launched, the local authorities have given their commitments and that there will be a supply of coal; don’t focus only on the next three to five years, but think ahead to a longer horizon. As time goes by, with more local projects being undertaken and leadership changes, the local **coal supply commitments are likely to be unmet. There are many such examples. Even if one has a coal base, one cannot be careless. All possible scenarios must be taken into account to ensure a secure coal supply and reliable access to coal throughout its entire life cycle.