In the first three quarters this year, 20 major Chinese coal firms suffered a total net deficit of 10.56 billion yuan ($1.7 billion), with only seven of them managing to scrape in a slim profit. Combined accounts receivable also topped staggering 130 billion yuan ($21.2 billion), according to the report.

One major culprit for the industry’s vexing problem is excess capacity, a result of two rounds of vigorous investments in the industry since 2006 in response to the booming market. The inflow boosted the industry’s total annual capacity, including production facilities under construction, to an enormous 5 billion metric tons per year (mtpy), with accumulated investments reaching upward of 3 trillion yuan ($490 billion).

The nation’s coal capacity now stands at 4 billion mtpy, 300-400 million mt more than demand. “Due to overcapacity, the nation’s coal stock has topped 300 million tons for more than 30 months in a row and it will be very difficult to cut the stock in the foreseeable future,” said Lu Yaohua, vice chairman of the China National Coal Association.