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Safety Curbs in China's Shaanxi May Tighten Coal Supply



June 15, 2020 - Safety authorities in China's Shaanxi province have suspended operations at a string of coal mines for violating safety rules. The move will probably tighten coal supply from the province and support prices.

The coal mine safety administration in northwest China's Shaanxi, the country's third-biggest coal-producing province, has listed the first batch of 22 mines that must shut down temporarily to rectify their safety practices. It is unclear how much producing capacity is affected.

The administration said that 16 of the 22 mines must close for 7-60 days. It did not specify how long the other six mines should remain closed.

The affected mines have also been fined a total of 27.05mn yuan ($3.81mn) for the violations.

A fatal mine accident in Shaanxi last week may prompt further government safety probes, although the incident is unrelated to the 22 announced mine closures. The latest mine accident, and the safety inspections this is likely to trigger, could again potentially curb coal production.

Seven coal miners were killed in a collapse at the 600,000 t/yr Liaoyuan mine on 10 June. The private-sector mine was found to have gas-related hazards during previous safety inspections. Smaller and privately operated mines in China are generally considered to have higher safety hazards and the local government could conduct stricter checks at these mines following the accident.

An accident in Shaanxi that resulted in 21 deaths early last year led to strict inspections during January-March 2019, forcing many mines to suspend operations. The tighter supply helped push prices of domestic NAR 5,500 kcal/kg coal up by 9pc from late January 2019 to $95.36/t fob Qinhuangdao on 8 March 2019, according to Argus assessments.