Currently Shanxi has 2840 coal mines, but that number will be reduced to 1414 mines by 2010.
The move has come as an attempt to improve mine safety, China’s official news agency, Xinhua, reported.
China’s coal mines are viewed as the most dangerous in the world, with the country recording 3786 coal mining deaths in 2006.
Shanxi accounts for one-third of China’s coal output and has been plagued by mining disasters causing hundreds of deaths.
Last month two top officials from the mine-accident plagued Shanxi Province lost their jobs over the death of at least 254 villagers, who died when their homes were engulfed by muddy waste from the reservoir of an unlicensed mine.
Despite fewer mines, news agency Xinhua reported the provincial government still planned an annual coal output of 942 million tons.
The Shanxi government said it would encourage mergers and acquisitions in the coal mining industry.
It wants two to three mining giants to produce more than 100 million tons of coal per annum and three to five companies producing 50Mtpa, so that 75% of coal output is produced by major groups.