Coal prices to rise on mine closures in run up to China's leadership transition

Coal prices are set to receive a boost from the closure of small mines in China during the lead up to the 18th National Congress of the Chinese Communist Party, where the country's incumbent leadership will be succeeded by a new administration.

Bloomberg reports that China's State Administration of Work Safety has sent inspectors to "spot hazards" and temporarily shut small mines in key coal mining regions in order to prevent any untoward contingencies during the run-up to China's decennial leadership transition.

The inspections will affect mines in the key coal producing provinces of Inner Mongolia, Shanxi and Shaanxi, all of which are landlocked areas situated in China's inner north.

The three provinces account for 60% of all coal production in China, which is currently the world's largest producer and consumer of the solid fossil fuel. According to China-based analysts the closures could impact 47% of coal production in Inner Mongolia, 42% in Shaanxi, and 30% in Shanxi.

The 18th National Congress of the CCP is scheduled to commence in 8 November in Beijing and will run for a week. President Hu Jintao and Premier Wen Jiabao are set to be succeeded by Xi Jinping and Li Keqiang as China's paramount political leaders.