China has announced it will lay off close to two million workers in its coal and steel industry to help cut market oversupply.
An official at China’s human resources and social security ministry said the nation’s industries expect to cut around 1.8 million workers as it seeks to reduce capacity, and address the growing stockpiles in the country, according to Bloomberg.
The latest plan to slash the country’s coal and steel workforce came only days after Chinese coal companies pushed the government to set a price floor for coal to protect against bankruptcy and stem job cuts.
Deng Shen, an analyst with ICIS China, predicted this government action, last week telling Bloomberg “the government probably won’t take any action on setting a price floor in the near future and instead focus on curbing the supply glut this year”.
Chinese premier Li has also previously forecast the swathe of job cuts, stating that production should be cut and costs releaxed to reduce oversupply, adding that coal miners could be transferred to other industries.
The country plans to reduce around 500 million tonnes of coal production over the next three to five year, mainly by closing more than 5000 coal mines around the nation and relocating around one million workers, setting aside 30 billion yuan ($6.5 billion) to aid relocation of the workers.
China also has also announced it will not approve any new coal mines for the next three years.
Speaking last month, Nur Bekri, the director of China’s National Energy Administration, told a conference that “with production overcapacity expected to last for quite some time, green and low-carbon forms of energy will be the main focus of the 13th Five Year Plan (running from 2016 to 2020),” according to China Daily.
The country also plans to reduce national output by around 60 million tons in 2016, while at the same time building its nuclear energy capacity, as well as generating more than 20 MkW from wind power and 15 MkW from solar power.
Part of this plan was first launched early last year, when the National People’s Congress (NPC) outlined plans to reduce thermal coal consumption by 160 million tonnes over the next five years.
China’s ongoing pollution and smog issues were the main focus of the NPC, with Chinese president Xi Jinping stating that the government will be increasing focus on the nation’s environmental standards and regulations.