From Macquarie:
While supply-side reforms are supposedly encouraging the elimination of inefficient producers to the benefit of more efficient producers, what we are seeing in coal under the “276 days” policy is the most efficient miners being forced to cut output in order to support inefficient, higher cost miners. This is purely being encouraged in an effort to raise coal prices and alleviate financial problems with coal miners failing to pay wages and defaulting on their debts.
However, looked at in another way, what we are seeing in coal embodies the political balancing act required to achieve supply-side reforms. While the longterm goal of reforms to consolidate and rationalise capacity may be positive, in the short term it is hard for local provinces and government to overcome the pain imposed from layoffs and debt write-offs.
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