Beijingis requiring state-owned companies that own coal mines as noncore assets toexit the industry, as part of its nationwide capacity reduction program, the State-owned AssetsSupervision and Administration Commission said in a July 8 notice.

Thenotice, which summarized a meeting held in June to discuss the impact ofstate-owned enterprises on overcapacity in the steel and coal sectors, said itwill "in principle" require companies which are involved in coal —but not focused in the sector — to exit the industry, without elaboratingfurther.

At2015-end, the Chinese central government controlled 16 companies which own coalmines, Shanghai Securities News reported July 9.

Theseinclude coal majors China ShenhuaEnergy Co. Ltd. and China Coal Energy Co. Ltd., as well as companies whosecore business were not coal, such as electric utility , State PowerInvestment Corp., conglomerate China Resources (Holdings) Co. Ltd., andAluminum Corp. of ChinaLtd.

MengJianmin, deputy director of the commission, said during a June 29 internalmeeting that the combined capacity of steel and coal producers owned by thecentral government will be reduced by 10% in the next two years. The rate willbe increased to 15% in five years' time, according to the statement.