China Labour Bulletin appears in the following article. Copyright remains with the original publisher.
China Coal-Mine Deaths Rise as Owners Resist Closure (Update1)
By Ying Lou and Tan Hwee Ann
Bloomberg
7 December 2006
China's coal-mine deaths rose to the highest in at least five months in November, as owners of small pits and local authorities resisted government closure orders.
More than 150 accidents killed 420 miners during the month, the State Administration of Work Safety said on its Web site this week, as pit owners stepped up output to tap winter demand. Disruptions to supplies caused by blasts and flooding at China's mines may contribute to higher Asian prices, according to a Citigroup Inc. report.
China has pushed back by two years a 2008 deadline to close coal mines considered unsafe or too small to be efficient, because of opposition to the plan, the official Xinhua news agency said Oct. 12. Reluctance to obey this decree underlines the conflict between satisfying soaring energy needs and improving one of the world's worst mine safety records, said researcher Michael Zhang.
``A lot of local governments count on small coal mines for revenues and are reluctant to shut down the pits,'' said Zhang, a Hong Kong-based researcher at China Labour Bulletin. ``Closing them is very tough.''
Accidents in China's coal mines killed 5,986 workers in 2005, a fatality rate of 2.836 for every million metric tons of the fuel mined, according to the work safety administration. In contrast, U.S. coal mining deaths last year fell to a record low of 22, according to the U.S. Department of Labor's Mine Safety and Health Administration. The nation's mines produced 1.13 billion tons of coal, indicating a fatality rate of 0.02 for each million tons extracted.
Coal Shortages
China Shenhua Energy Co., China Coal Energy Co. and rivals in the world's largest producer of coal used by power stations are failing to keep pace with demand as mine failures reduce supplies, Citigroup said.
Mine accidents in Taiyuan, Datong and Linshi in Shanxi province, and at Leiyang in Hunan have killed as many as 100 workers, and led to shortages of coal at coastal power stations in China, Citigroup analyst Alan Heap wrote in a Dec. 4 note.
Chinese exports of coal have fallen by 14 percent this year to 44.3 million tons, and the mine failures could cut exports further, he said. Chinese demand for coal will rise 10 percent this year, and its power stations are now restocking ahead of winter.
``More than usual, China is energy-hungry,'' said Heap, who had forecast Asian contract prices in 2007 at $50 a metric ton, down from $52-$53 this year. The failures could result in a higher price, he said.
`Spate of Disasters'
``Asian thermal prices, including seaborne and Chinese domestic, are receiving strong support from a supply shortage in China, created by a spate of mine disasters in recent weeks,'' said Heap. ``China's coastal utilities are desperately seeking imports, while coal marked for exports is being increasingly diverted to the local market.''
Prices of coal exported out of Newcastle in Australia have jumped $8 a ton to $50 a ton in two weeks, he said. Chinese imports of coal have risen by 92 percent so far this year to 7.7 million metric tons.
China uses coal to generate two-thirds of its electricity and mines producing less than 90,000 tons a year accounted for 37 percent of the nation's total 2005 output, said Feng Zhang, a Hong Kong-based analyst at JPMorgan Chase Co.
``Closure of small coal mines will be carried out because of the high mortality rate and low efficiency, which causes an awful waste of resources,'' he said. ``But the government has to carry out the closure in a gradual manner to ensure coal prices don't surge because of the loss of production from smaller coal mines.''
Mergers, Shutdowns
The government is pursuing a target of shutting all mines with annual production capacity of less than 30,000 tons by the end of next year and has ordered small producers to merge with larger ones.
Some owners who defy decrees to close down rename their pits to evade detection, others flee from police when there are casualties underground. After a Nov. 26 blast that killed eight at a pit in the southeastern province of Jiangxi, five of the mine's six owners fled before police could detain them, Xinhua reported.
Smaller operators and local authorities want to get their share of profit from producing the fuel, the China Labour Bulletin's Zhang said.
``There's a conflict of interest between local and the central governments,'' he said. ``It will be very difficult for the central government's policy to be implemented at the local level.''
China's domestic coal prices may rise next year because of increasing output costs, partly as mines invest in better safety measures, the China Coal Trade & Development Association said this week. Production costs may increase by between 30 yuan ($3.8) and 80 yuan a ton, Yang Xianfeng, secretary general of the association, said in Shanghai. That's as much as almost 40 percent of current selling prices.
The world's deadliest coal mine accident took place in northeastern China in 1942 when 1,549 miners died.