Inner Mongolia Halts 15 Coal Mines Over Capacity Breaches

China’s Crackdown on Coal Overcapacity Escalates in Inner Mongolia

Inner Mongolia has ordered 15 coal mines to halt operations after surpassing their approved production quotas by more than 10% in H1 2025. The directive follows inspections launched by the Inner Mongolia Autonomous Region Energy Bureau and reflects a broader national effort to rein in overcapacity. Beijing has intensified scrutiny across major coal-producing provinces, aiming to enforce strict production control policies and stabilize the sector.

The affected mines, located in Ordos—China’s top coal-producing city—must pass regulatory safety inspections before resuming operations. However, the Energy Bureau did not provide a timeline for the inspections. These shutdowns are part of a nationwide campaign launched in July by China’s National Energy Administration (NEA), which instructed eight provinces to investigate capacity breaches across 2024 and H1 2025.

This regulatory tightening aligns with the NEA’s broader agenda to implement a coal production reserve system by 2027. The system aims to balance supply and demand, ensure energy security, and limit environmental risks. The NEA operates under the National Development and Reform Commission (NDRC), which oversees long-term energy strategy in China.

Capacity Cuts Trigger Surge in Coking Coal Prices

The suspension of coal operations in Inner Mongolia has already impacted global coal markets. On the Dalian Commodity Exchange, the most active coking coal contract surged nearly 8% to ¥1,048.5 ($146.19) per tonne. This marks the highest price since March 2025, as traders react to supply concerns driven by the production halts.

Market analysts warn that further price volatility could follow if more regions report overcapacity or if inspections delay mine restarts. Given Inner Mongolia’s role in both thermal and metallurgical coal supply, the ripple effects could extend into global steel and energy markets. Buyers may also turn to alternative sources like Australia or Indonesia, adding pressure to international trade flows.

Meanwhile, the Chinese government remains focused on ensuring energy stability without triggering price spikes that could affect downstream industries. Policymakers are now caught between enforcing regulatory compliance and maintaining adequate coal reserves to meet demand through winter and early 2026.

SuperMetalPrice Commentary:

China’s decision to halt 15 coal mines in Inner Mongolia highlights the country’s firm stance on capacity control. While the move supports long-term energy policy goals, it introduces near-term supply risk and price volatility. The sharp rise in coking coal prices reflects how sensitive the global market is to Chinese policy shifts. With Beijing aiming to finalize its coal production reserve system by 2027, we expect continued regulatory oversight and periodic supply disruptions. Industry stakeholders should prepare for potential tightening in Q4 2025 and consider diversification of sourcing strategies.