Sanmei: how will tackling China's 'dirty coal' problem affect demand?
Since 2013, China's government has been battling the key cause of the country's notorious air pollution – coal. Tens of policies have been released, many of them targeting 'sanmei', a lower quality variety of raw coal burnt using technology incapable of reducing its pollutive effects. But more needs to be done. We believe the government will impose stricter measures in the mid-term, including establishing more coal-free areas across the country, limiting coal use beyond just the major cities and encouraging switching to gas or electricity. All of these initiatives come with their own challenges, but if successful, they could have a huge impact. Sanmei demand among industrial users could fall from 650 Mt in 2012 to as little as 100 Mt by 2035.