China proposes new strategic coal reserve-paper

BEIJING, June 29 (Reuters) China has proposed establishing a strategic coal reserve, the China Daily reported today, as part of an amended law that also seeks to raise safety and environmental standards for the heavily-polluting industry.

China is already filling strategic oil reserves, designed to ensure supply security. It has also proposed identifying more mineral deposits to establish unexploited reserves in the ground that could be tapped for metals in the future.

''The issue of a coal reserve is surely worth discussing because of the importance of energy supply to the economy,'' the paper quoted Wu Zhonghu, an author of China's first energy law, as saying.

It did not specify whether the reserves would be stored in a similar way to crude oil, or simply be identified as deposits in the ground.

Growing domestic coal consumption and a crackdown on small, unsafe mines has helped turn China into a net coal importer in the first five months of 2007.

Other proposed revisions to the Law on the Coal Industry would include raising the threshold to qualify for a mining license, and changes in rules for coal product processing, the paper said without elaborating. The law would be presented to the annual meeting of the National People's Congress next year.

China produced 2.3 billion tonnes of coal in 2006.

It is currently undertaking a broad restructuring of its mining sector, including both coal and minerals, to clarify ownership and consolidate reserves under larger mining firms.

The Ministry of Land and Resources earlier this month declared that sales of mining rights by other government bodies were illegal, and said it would audit local mining appraisal bodies from mid-June through the end of July.

Reuters KK VP0645