China closed its largest financially struggling coal strip mine on Wednesday, a move regarded as a firm step towards snuffing out the country's dying state-owned mines.

The state-owned Haizhou Coal Mine in Fuxin, a city in northeast China's Liaoning Province, was Asia's largest open coal mine in the 1950s. It has now become the largest coal mine to announce bankruptcy since China began to close failing mines in 1999.

Experts said the government has closed more and more large, struggling mines to show its determination to excise a "dying" part of China's strong economy.

"It is a historic moment and also a tragic moment," said Sun Hongmao, head of the colliery, after hearing the bankruptcy announcement by a local court.

As one of the largest coal mines built since 1949, Haizhou had a glorious past. By 2003, it had contributed 210 million tons of coal and 3.38 billion yuan (US$407 million) in profits since opening in 1953, said Sun.

But after years of over-exploitation the mine now has reserves of only 870,000 tons.

There are over 400 coal mines that have experienced or are expected to experience Haizhou's fate, and finding a way out for the mine companies has become a challenge for the government.

Declaring bankruptcy is the usual route, but compensating former employees is costly.

The government will pay an average of 20,000 yuan (US$2,410) compensation to each of Haizhou's 100,000 employees. The mine is responsible for finding them new jobs.

"The whole cost is around 860 million yuan (US$103.6 million)," said Li Qiang, deputy chief economist of Fuxin Coal Mining Group (FCMG), which ran Haizhou, and deputy administrative director of the mine's Bankruptcy Liquidation Group.

FCMG signed a cooperation agreement with an opencast coal mine in north China's Inner Mongolia Autonomous Region, where it will be responsible for the exploitation of a coal field with reserves of 2 billion tons.

"Our 2,000 workers will be the first group to work in the mine," said Zhang Xiaojiang, director of FCMG's office in charge of the bankruptcy.

"Compared to finding a completely new job that I have never done before, I would rather to do my own profession," said one Haizhou miner named Du.

"To find new resources is also a good way out for a dying coal mine, however, considering long-term development, the earlier this is done the better," said Guo Yuchen, director of the Liaoning Provincial Mining Industry Administration's planning office.

(Xinhua News Agency June 9, 2005)