In early 2007, the National Development and Reform Commission (NDRC) released a list of companies to be phased out in the second batch of calcium carbide and coking industries. Shanxi and Inner Mongolia accounted for approximately 70% of the total eliminated capacity, highlighting the intensity of the national effort to remove outdated production facilities. The time between the announcement of this batch and the first one was less than three months, signaling a significant acceleration in the pace of eliminating inefficient industrial capacity.
Calcium carbide and coking are key sectors for energy conservation and pollution reduction. These industries often rely on outdated equipment, leading to high energy consumption and severe environmental pollution. As a result, they have become a priority for government regulation and elimination in recent years. Both Shanxi and Inner Mongolia are major producers of calcium carbide and coke in China, with Shanxi alone accounting for over 40% of national calcium carbide output and more than 45% of coke production. These provinces host numerous small-scale plants with capacities ranging from 20,000 to 50,000 tons annually, which are prime targets for forced closure.
The elimination process involved 211 enterprises: 20 in the calcium carbide sector and 146 in coking. A total of 22 outdated units were removed from calcium carbide, reducing annual capacity by 221,400 tons, while 213 outdated units in coking were shut down, cutting 12.23 million tons of annual capacity. Geographically, calcium carbide’s backward capacity was mainly concentrated in Shanxi, where 15 companies and 17 units were eliminated, reducing 107,400 tons/year. In coking, the focus was on both Shanxi and Inner Mongolia, with 34 and 75 companies respectively, removing 4.89 million and 3.9 million tons/year.
In October 2007, the NDRC had already announced the first batch of eliminations, with 221,400 tons/year of calcium carbide and 12.43 million tons/year of coking capacity being phased out. Shanxi eliminated 4.89 million tons of coking capacity, while Inner Mongolia eliminated 4.2 million tons. These efforts reflect the growing emphasis on improving efficiency and reducing environmental impact.
Shanxi and Inner Mongolia, as major producers, have played a central role in these initiatives. Shanxi has imposed strict controls on new calcium carbide projects during the "Eleventh Five-Year Plan" period, aiming to limit production to 2.65 million tons by 2009. By the end of 2007, 58% of its outdated capacity had been removed. In Inner Mongolia, a quota system was introduced, restricting calcium carbide output to 5 million tons in 2007, with further reductions planned.
China's calcium carbide industry suffers from overcapacity, with an average operating rate below 50%. The outdated facilities not only consume excessive energy but also distort market competition. However, after phasing out old capacity, larger installations are expected to absorb the market demand with minimal impact on overall supply.
Similarly, the coking industry faces similar challenges. Shanxi, the country's largest coking producer, plans to close all outdated and illegal coke plants by 2008, shutting down 103 projects and eliminating 24.07 million tons of capacity.
While the elimination of outdated capacity may temporarily affect local GDP, it ultimately promotes sustainable development by protecting the environment and optimizing resource use. For example, in the first half of 2007, Shanxi's large-scale coke enterprises saw a 51.4% increase in main business revenue and a 163% rise in profits and taxes. Moreover, energy consumption per unit of industrial added value and per unit of GDP showed a “double decline,†reversing the trend of rising energy use during the previous five-year plan.
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