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This post was last edited by jordan569 on 2013-1-6 22:46: “We are working on a plan.” "On February 4, Qian Pingfan, a researcher at the Industrial Economics Department of the Development Research Center of the State Council, told our newspaper that a plan for a coal reserve system in which he is involved is under consideration, and a national coal reserve network might be established. Similar measures have already been piloted in some major coal-consuming provinces. On January 17, 2009, Wu Guochao, chairman of Zhejiang Energy Group, proposed the establishment of a coal reserve base with a capacity of 3 million tons. Shandong Province took action earlier – its first coal storage facility in Longkou has been put into operation, with an expected annual capacity to store and sell 10 million tons of coal. There have long been calls to establish a coal reserve mechanism. On August 19, 2008, the **Draft Framework for Coal Regulatory Regulations** developed by the Energy Bureau included provisions for establishing a coal reserve mechanism. During periods of economic decline, falling resource prices led to an accelerated implementation of this plan at both the national and provincial levels. "Since the second half of 2008, the coal market has cooled down sharply, with coal prices falling significantly. The timing is favorable for activating coal reserves. "Wu Guochao wrote in his proposal. Unlike food reserves, the plan proposed by the Development Research Center of the State Council calls for a \"market-based approach\" to coal reserves; \"this would be a solution that requires no **investment** and can **ensure** energy security.\" "Qian Pingfan said. Zhejiang and Shandong provinces, which have already begun taking action in this regard, have also established the principle that state-owned energy companies under the State Assets Supervision and Administration Commission shall act as the operating entities, using market-based approaches. Flattening the peaks and filling the valleys: In Qian Pingfan’s plan, this coal reserve facility serves both the public purpose of ensuring energy security and operates on a market basis to generate profits. Since coal remains China’s primary energy source, Qian Pingfan regards the establishment of a \"coal reserve system\" as a sufficient condition for maintaining production, while oil reserves are only considered a necessary condition. He believes that although there is an overcapacity of coal production in the country at present, the supply problems caused by insufficient transportation capacity remain severe and hinder economic development. In a speech in Zhejiang in January, Wu Guochao also identified the establishment of an effective coal reserve mechanism as the “top priority” for ensuring the security of energy supply in Zhejiang Province. He stated that, as a province with high energy consumption, Zhejiang is almost entirely dependent on external sources for its coal supply, and its coal supply security system has always been fragile. During several periods of coal shortage in recent years, Zhejiang had to mobilize its entire resources just to “manage to maintain its coal supply,” at a great cost. " And the strategic importance of coal reserves for ** is not as great as that of food reserves. If it can operate through market-based methods, it will not only be able to control costs by balancing supply and demand but also gain a say between the coal suppliers and consumers. "Firstly, it should be **dominant, but the operating entity can be a company. I think as long as there are profits, companies will be willing to invest.” Qian Pingfan said that **certain support can be provided**, such as ensuring sufficient transportation capacity and offering certain tax relief measures. Correspondingly, coal reserve bases ensure that coal is supplied at fair prices to areas and enterprises in urgent need during periods of tight coal resources. In Shandong, such a model has already begun to operate. The coal storage and distribution facility located in Longkou is led by Shandong Province; state-owned enterprises such as Longkuang Group and Longkou Port Group are responsible for its operation. Together, they established Shandong Longhai Coal Distribution Co., Ltd. (hereinafter referred to as Longhai Company), with an annual capacity to store and distribute 10 million tons of coal. In the actual buying and selling process, it also adopts market-based approaches. Longhai Company has successively signed strategic cooperation agreements with several large-scale coal production, transportation, and sales companies, including Inner Mongolia Yitai Group, Shanxi Coal Sales Group, and **Zhonghui Energy (Group). These companies will supply the facility with over 20 million tons of high-quality coal of various types each year. After securing a source for coal, Longhai Company entered into coal supply and demand agreements as well as joint venture agreements for projects with 9 other companies in the fields of electricity, chemicals, building materials, and logistics and transportation, including Shandong BaiNian Electric Power Development Co., Ltd., Guodian Shandong Electric Power Co., Ltd., Yantai Transportation Group, and Shandong Linglong Group, in order to find solutions for dealing with the coal supply. In the Zhejiang plan, this model differs slightly in terms of its source of funding. Wu Guochao believes that coal reserves require substantial capital investment, and for such projects it is appropriate to use **government funding, corporate operations, or** financial subsidies. It has basically chosen the Zhoushan Liuheng Coal Vocational School Wharf as the reserve site. Given that Zhejiang Province consumes around 200,000 tons of coal per day, it is recommended to stockpile 3 million tons of coal. "The establishment of coal reserve bases brings certain benefits to both the current coal supply and demand sides. "Another industry insider with 10 years of experience in the coal sector also told reporters that coal companies choose coal storage bases with high demand as stable partners, which helps to reduce the price risks associated with excess coal production in China. Many small and medium-sized enterprises that rely on coal cannot obtain the same level of resource security or price advantages as power plants with high demand if they sign contracts directly with coal companies; in this regard, coal storage bases may play a useful role. Reserve disputes: Coal reserves are divided into spot reserves and resource reserves. Among the plans that have been disclosed, **both the national and local pilot programs have opted for the method of holding spot reserves. This signal indicates that since the release last year of the \"Draft Framework for Coal Regulation Regulations,\" a decision has been reached within the industry regarding whether coal reserves should be managed through spot markets or through resource-based approaches (that is, by restricting extraction). However, on-site storage faces numerous challenges due to the fact that coal is highly prone to weathering, deterioration, and even spontaneous combustion; moreover, it requires large amounts of space when stored outdoors, leading to environmental pollution. In addition, the risk of falling coal prices, storage costs, losses, and financial costs all pose challenges to the viability of coal storage and distribution bases. "In fact, the annual storage volume is a concept related to dynamic storage, said Li Chaolin, a market observer at the China Coal Transport and Marketing Association. Considering that it takes 10–15 days for coal to travel from the point of loading to its destination, even if Shandong sets its long-term storage capacity at 50 million tons, the storage facility only needs to maintain a fixed stock of around 3 million tons. "A coal reserve base should not be viewed as a simple warehouse, but rather as a dynamic coal processing plant that processes and organizes coal, thereby extending its influence to downstream areas and participating in the management of the coal supply chain; it is through this that added value and profits are generated. "Qian Pingfan said. As a contingency measure, Qian Pingfan believes that the coal reserve levels set by Shandong Province and Zhejiang Province are in line with the actual conditions of the two provinces and are fairly reasonable. Regarding the deteriorating relationship over thermal coal, Qian Pingfan believes that \"as a third party, the coal reserve base does not have any direct conflicts of interest with either side.\" Establishing bases in this way can ease conflicts. " "I only care about the price,” said Zhang Mingsheng (a pseudonym), who has worked in coal mines in Shanxi for 6 years and is currently working in a coal mine in Inner Mongolia. “If there’s a base that can purchase coal during my off-season, I’d be happy, even if I don’t make huge profits during the peak season. It has at least ensured my long-term stable income. " Based on the projections for coal prices in 2009 released by analysts from various industries, the overall outlook for the coal industry is positive and the trend is clear: there are strong expectations of further price increases, sustained high levels for these prices, and rapid growth in industry profits. . Note $ # , $ $