China coal mines closing down
A villager moves coal at local businessman Sun Meng's small coal depot near a coal mine of the state-owned Longmay Group on the outskirts of Jixi, in Heilongjiang province, China, October 23, 2015

China has earmarked 30 billion yuan ($4.56 billion) for shutting down small and inefficient coal mines and redeploying 1 million workers over the next three years.

Beijing will spend the money on closing outdated production facilities, directing "zombie" companies to close and expediting coal-electricity integration, Xinhua reported, citing the Economic Information Daily.

The report said China plans to close 4,300 coal mines and remove outdated production capacity of 700 million tonnes and relocate 1 million employees,

China's move has come in the wake of an economic slowdown, and the dwindling of coal demand in the country over the years. Domestic coal demand shrank 2.9 percent year on year in 2014 while the drop in 2015 is expected to be around 4 percent.

Jiang Zhimin, deputy head of the China National Coal Association, also said environmental protection policies are also behind the decision to close down mines, Xinhua said.

Over the past five years, China has cut coal production to the tune of 560 million tonnes and closed 7,250 coal mines, Chen Yangcai, head of statistics and information with the association said.

A Reuters report meanwhile suggested that China would need far greater funds to restructure the coal sector efficiently.

The funds required to tackle overcapacity in the coal and steel sectors could reach 200 billion yuan, 70 percent of which would be needed for coal, analysts at Shenwan Hongyuan Securities said, according to the agency.