China's annual coal production capacity is expected to top 3.1 billion tons by 2010, 600 million tons more than demand requires, according to latest statistics from the State Administration of Coal Mine Safety.

The country will need about 2.5 billion tons of coal in 2010, according to a previous prediction by the China National Coal Association.

Related readings:  China may halt production of liquefied coal China becomes net coal importer New coal market system to impact the world A policy crackdown on energy-gorging industries

Currently, production capacity of the coal mines being built reached 1.1 billion tons and 83 percent of the newly built coal mines are small ones -- whose annual output is less than 300,000 tons each -- accounting for one third of the national total output but two-thirds of the deaths by coal mine accidents.

"The over-capacity of coal production will affect the healthy development of the coal industry," warned Zhao Tiechui, director of the administration. He urged local governments to take effective measures to stop illegal coal mining.

Coal makes up nearly 70 percent of China's nonrenewable resources. To fuel the robust economic growth, coal production more than doubled from 998 million tons in 2000 to 2.38 billion tons last year and investment in the coal industry has been rising more than 50 percent in recent years.

Ou Xinqian, vice minister of the National Development and Reform Commission (NDRC), the country's economic planning body, previously forecast the demand for coal in China would be 2.5 billion tons in 2007.

China no longer approves coal mines with an annual production capacity of less than 300,000 tons and vows to close 10,000 small coal mines by the end of 2007.

To curb pollution, China last year abolished tax rebates on coal export and imposed export tariffs, while cutting import duties. The country still imported more coal than it exported in the first three months of 2007, according to an NDRC report.

(For more biz stories, please visit Industry Updates)