In early 2007, the National Development and Reform Commission (NDRC) released the second batch of companies slated for elimination in the calcium carbide and coking industries. Notably, Shanxi and Inner Mongolia accounted for approximately 70% of the total eliminated capacity. The short interval—less than three months—between the announcement of the first and second batches highlights a growing pace of national efforts to phase out outdated industrial capacities.
Calcium carbide and coking are key sectors in China's energy conservation and emission reduction strategies. These industries often rely on outdated, inefficient equipment that leads to high energy consumption and severe environmental pollution. As a result, they have become focal points for government regulation in recent years. Shanxi and Inner Mongolia are major production hubs for these industries, with Shanxi alone producing over 40% of the nation’s calcium carbide and more than 45% of its coke. These regions host numerous small-scale plants, typically with capacities between 20,000 to 50,000 tons annually, which are prime targets for forced closure.
The latest round of eliminations involved 211 enterprises, including 20 calcium carbide firms and 146 coking companies. A total of 235 outdated facilities were shut down, removing 221,400 tons/year of calcium carbide capacity and 12.23 million tons/year of coking capacity. Geographically, calcium carbide backward capacity was mainly concentrated in Shanxi, where 15 companies and 17 units were phased out, eliminating 107,400 tons/year. Coking industry backward capacity was spread across both Shanxi and Inner Mongolia, with Inner Mongolia shutting down 75 companies and 126 units, removing 3.9 million tons/year, while Shanxi eliminated 4.89 million tons/year through 34 companies.
This initiative reflects broader national efforts to improve industrial efficiency and reduce environmental impact. In Shanxi, for instance, new calcium carbide projects were effectively banned during the “Eleventh Five-Year Plan†period, with a target to limit total production to 2.65 million tons by 2009. By 2007, 58% of the province’s outdated capacity had already been removed. In Inner Mongolia, a quota system was introduced, restricting annual calcium carbide output to 5 million tons in 2007, with further reductions planned.
China’s calcium carbide industry as a whole suffers from overcapacity, with an average utilization rate below 50%. This has led to weak profitability, especially for outdated facilities that not only consume excessive energy but also distort market dynamics by competing unfairly with modern, efficient producers. However, after the removal of these outdated units, larger installations are expected to absorb the market demand, minimizing supply disruptions.
Similarly, the coking industry faces similar challenges. Shanxi, the country’s largest coke producer, has taken decisive action to eliminate all illegal and outdated coking plants by 2008, closing 103 projects and removing 24.07 million tons of outdated capacity.
While such measures may temporarily affect local GDP, they ultimately contribute to environmental protection and more rational resource use. For example, in the first half of 2007, Shanxi’s large-scale coke enterprises reported a 51.4% increase in main business revenue and a 163% rise in profits and taxes. At the same time, energy consumption per unit of industrial added value and per unit of GDP saw their first “double decline,†reversing the trend of rising energy use during the Tenth Five-Year Plan period.
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