BEIJING - Profits of Chinese coal producers nearly quadrupled last year as the country's ongoing capacity cut prompted a recovery in coal prices, a report said.
Coal mining companies with annual turnover over 20 million yuan ($3.17 million) reaped 295.93 billion yuan in profit in 2017, up 290.5 percent from a year earlier, according to the China National Coal Association (CNCA).
Their combined turnover rose 25.9 percent year on year to 2.54 trillion yuan. Some 90 major companies generated 145.19 billion yuan in profit, more than fourfold from 2016.
CNCA vice president Jiang Zhimin attributed the performance to rising prices driven by a nationwide campaign to downsize the saturated sector.
Addressing overcapacity in bloated industries like steel and coal has been high on the government work agenda in recent years as gluts of production bit into corporate profit and dragged down economic growth.
China slashed 250 million tonnes of coal capacity last year, outperforming the annual target.
Despite the solid progress, addressing the overcapacity remains an arduous task as there are still numerous small and outdated mines across the country. China has more than 3,200 coal mines with capacity less than 300,000 tonnes and nearly 2,000 mines with capacity below 90,000 tonnes, said the report.
Jiang cautioned against lingering problems in many coal producers, including piling debt, financing difficulties and a shortage of workers. "Some companies have yet to completely step out of the operation hardship."
The government announced plans to reduce another 150 million tonnes of coal capacity in 2018 in its work report.
"With more closures of substandard mines in southern regions, coal production will be concentrated on resource-rich, competitive regions in Shaanxi, Shanxi and Inner Mongolia," Jiang said, predicting a shift in the landscape of coal supply.