China's Coal Crisis  

The WSJ has a look at Chinese coal production - China's Coal Crisis. I'm not much of a believer in imminent peak coal globally (or even in the next few decades - other than through a drop in demand) but Chinese resources may be constrained compared to local demand.

The idea of peak oil—the point at which global production reaches its maximum—has fixated the energy industry for years. Now, China is grappling with a new worry: peak coal.

State-run media reported that Beijing is considering capping domestic coal output in the 2011-2015 period, partly because officials worry miners are running down reserves too quickly to meet the needs of a rapidly expanding economy.

"China accounts for around 14% of global coal reserves but its share of global coal consumption is already over triple that at 47%, which is unsustainable," Hong Kong-based brokerage CLSA Asia-Pacific Markets said in a report last month.

Imposing a cap would be significant as China's mining sector is already finding it hard to keep up with domestic coal demand, which has grown around 10% annually over the past decade.

Its net coal imports exceeded 106 million metric tons in the first nine months of the year—higher than the level for 2009 as a whole—and state companies have been aggressively acquiring overseas coal assets to secure long-term supply.

In the three years to September 2010, Chinese companies spent $20.96 billion on overseas coal-sector acquisitions, according to Dealogic.

An output ceiling would also underpin regional coal prices, which are near six-month highs on expectations that China will import record volumes of coal this month and in December.

While China hasn't declared publicly it will impose a coal production cap, the idea is gathering momentum.