More than two thirds of Chinese coal mining companies are operating at a loss, according to the China Coal Industry Association.
Speaking yesterday, CCIA chairman Wang Xianzheng said more than 70 per cent of China’s coal firms are making a loss, Reuters reports.
He went on to say these problems are only likely to increase.
He went on to say more than half of Chinese coal companies are even struggling to pay their workers.
China has carried out a massive crackdown on its underperforming coal industry over the last year.
Last year China brought in new regulations to lift the standard of coal mined in the country, banning coal with a net calorific value of 4540 kilocalories per kilogram or less.
It also announced a plan to shut 2000 coal mines by 2015.
Currently China has more than 12 000 operating coal mines.
The closures will reportedly target mines with an annual output below 90,000 tonnes, as well as those with lower quality coal or questionable safety records.
The new rules will also tighten approval and development processes, banning the construction of operations with annual capacities below 300,000 tonnes and those with annual capacity less than 900,000 tonnes that produce low quality coal and safety issues.
In 2012 China closed 628 smaller coal mines, enhanced technological efficiencies at 622 mines, and amalgamated 388 mines.
The nation also announced a plan to increase safety at its coal operations, after more than 3000 deaths were recorded in two years.
These conditions have created a storm for many of the smaller players that could not keep up with the tightening regulation, a falling coal price, and a focus on reducing the high levels of pollution in the country by closing coal fired power plants.
Wang said problems have been piling up for the sector.
His statements came on the back of China’s ministry of Industry and Information Technology stating that coal was one of China’s poorest performing sectors this year, as profits in the industry fell 43.9 per cent in the first five months of 2014.