China earmarks $15.3 bln for 1.8 mln laid-off coal, steel workers

The central government will spend 100 billion yuan ($15.25 billion) every year for up to five years to address overcapacity in sectors such as steel and coal, according to a report in Economic Information Daily on Friday.

The budget will mainly be used to relocate employees, the report said, citing sources from petrochemical market information provider ICIS and industry insiders.

The sources said there will no minimum financial allocation for the coal industry, which had been a topic of speculation previously.

Steel and coal have the largest inventories in China, to address this no new projects are being given the go ahead, outdated production facilities are being shut down, and "zombie" companies are being forced to shut.

"The steel and coal sectors should take the lead in cutting overcapacity, reducing costs and improving efficiency," Premier Li Keqiang said at a State Council symposium on Wednesday.

Including local governments financial share, around 200 billion yuan will be allocated every year to cut excess capacity in the two industries, Shenwan Hongyuan Securities estimates.

The coal industry alone will get around 140 billion. 1.8 million employees in the sector will be relocated while 360 million tonnes of outdated production capacity will be removed.