The Chinese Government is planning to close a total of 4,300 small or inefficient coal mines across the country.
China has agreed to provide of $4.6bn funds over the next three years to support the closures.
In addition, China is planning to slash production capacity by 700 million tonnes a year over the next three years.
State news agency Xinhua said that around one million workers will also be redeployed.
The latest move is part of China’s efforts to cut the share of coal in its overall energy mix and reduce greenhouse gas emissions and follows a previous announcement to close more than 1,000 mines in in Guizhou, Yunnan, Heilongjiang and Jiangxi provinces.
Official data revealed that in 2015, total raw coal output in the country dropped 3.5% to 3.68 billion tonnes.
China’s state planning agency, the National Development and Reform Commission is reportedly inviting opinions from the industry ahead of the release of a plan to address overcapacity in the sector.
New mine approvals will also be banned for the next three years.
The National Energy Administration said that coal consumption amounted to 64.4% of the country’s total energy mix in 2015, which represents a 1.7% fall compared with 2014. China aims to cut the rate to 62.6% in 2016.