Benchmark spot thermal coal prices at Newcastle Port CO-FOBNWC-AU have soared 35% over the past week to a record $353.75 a tonne, stoked by fears of worldwide supply shortages as the Ukraine conflict escalates. Russia calls its actions in Ukraine a "special operation".

“We will further release advanced coal production capacity ... and will strive to keep coal production at more than 12 million tonne each day,” China’s National Development and Reform Commission (NDRC) said in a statement.

China’s coal production hit a record high of 4.07 billion tonnes in 2021, mainly buoyed by high operational rate in the fourth quarter when average daily output reached 12 million tonnes.

“The global energy supply situation has become more severe and complex and energy prices continued to hit new highs,” the NDRC said. “Meanwhile, domestic coal consumption is growing rapidly, posing new challenges to stable coal supply and prices.”

China’s thermal coal futures dropped 5% to 865 yuan ($137.02) a tonne in morning trading after the NDRC statement was released.

The world’s biggest coal consumer, China generates more than 60% of its power at coal-fired power plants. The country’s top leaders have reiterated that China should give full play to “coal’s basic guaranteeing role” in energy supplies.

Coal inventory at power utilities across China has reached an all-time high of 149 million tonnes, enough for 22 days of supply, the NDRC said.

The state planner also pledged to speed up approval process for coal mines to expand capacity, as well as paperwork related to environment assessment and mining rights changes.

More than 80% of coal mines that have applied for capacity expansion in order to supply fuel for power plants have completed on-site inspections, the NDRC said, without giving the total scale of the output capacity. ($1 = 6.3131 Chinese yuan renminbi)