China will continue to encourage merger and acquisition and restructuring among upper and downstream sections of the coal industry to foster large coal groups. An insider said this guideline would possibly be written into the 12th Five-Year Plan for the development of the coal industry spanning from 2011 to 2016 now being drafted.

The plan will follow the principle for the 11th five-year plan (2006-2010), which backs mergers and acquisitions among coal producers and the integration of upstream and downstream companies so as to forge several large groups.

According to the present five-year plan for 2006-2010, China aims to create 6 to 8 coal groups each with 100 million tons of annual capacity and 8 to 10 corporations each with 50 million tons of annual capacity, which together contribute over 50 percent to the nation's total output.

To be specific, China hopes large coalmines take up 56 percent of its total coal output, while mid- and small-sized ones take up 17 percent and 27 percent by 2011 respectively.

Currently, the efforts to shut down small mines have taken clear effect, indicated by stable coal prices since last December, an expert pointed out.