China's coal mines are cashing in on the strong market demand,
triggering frequent fatal mine blasts across the country and
prompting the government to tighten workplace safety inspections
one after another.
But mines will remain dangerous because robust demand encourages
mines to continue increasing production beyond their capacity,
experts told China Business Weekly last week.
When a coal mine accident takes place, all the mines in nearby
areas are requested to stop their operations for inspections.
"Stopping production cuts down the coal supply in the market,
and eventually, stimulates others to produce more to cash in on the
strong demand, " said Huang Teng, an analyst with Beijing Changmao
Consultant Co Ltd.
It is like a chain reaction.
Although the coal prices have been increasing this year due to
swelling demand driven by brisk economic growth and heating in
winter, as much as 55 percent of the increase was transferred to
circulation areas.
"The low prices have caused losses to coal industries for
decades, said Pu Hongjiu, vice president of the China National Coal
Association. "Mining companies have to cut down the investment in
safety improvement and maintenance of pits, and the salaries of
workers. "
In all, the mines are short of 50 billion yuan (US$6 billion) in
safety investment, according to Pu.
More than 300 miners have died in two major coal mine explosions
in the past two months.
A gas blast at a coal mine in Guizhou
Province killed at least 16 people last Thursday, just three
days after an explosion in Shaanxi
Province, claiming 166 lives.
The two blasts followed another deadly explosion that killed 147
in Henan
Province in late October.
Apart from the old story of poor safety conditions, experts said
the over-production is also partly to blame for these
accidents.
Coal mines are producing beyond their capacity in order to cash
in on market growth. Strong economic growth, especially the hefty
electricity generation demand, has continuously pushed up coal
consumption, increasing coal prices.
Over-capacity production is becoming more serious during the
winter when more coal is needed for heating.
Chenjiashan, where the Shaanxi accident occurred, completed 1.8
million tons full-year production plan in November. But the local
mining bureau demanded it produce 2.2 million this year.
Official statistics show 20 of the 27 coal producing areas have
operated beyond their capacity. Most of the areas have produced 10
percent over their normal capacity, while some are even producing
50 percent more.
This overproduction, without the necessary maintenance and rest,
worsened working conditions and made the mines increasingly
dangerous.
Meanwhile, the price increase in the coal market also led to the
reopening of many illegal small coal mines, which have been forced
to close down because of their poor safety records and inefficient
production.
Some local governments overlooked the reopening of the illegal
mines as they contribute tax revenues and meet the immediate coal
demand.
In the first 10 months of the year, China, the world's biggest
coal producer, turned out 1.6 billion tons of coal, an increase of
19 percent year-on-year.
But fires, explosions, floods and other accidents killed 4,153
coal miners in the first nine months of this year, although the
figure was 13 percent below the death toll from the same period
last year.
In response to the recent coal mine accidents, the government
issued new regulations that aim to improve ventilation in mines,
and better handle deadly coal gas.
The government also vowed to intensify safety inspections, and
crack down on illegal production.
Ironically, the move could even be dangerous.
The average Chinese miner produces 321 tons of coal per year,
just 2.2 percent of a US miner's output.
But the fatality rate measured per 1 million tons of coal
produced was 100 times that of mines in the United States.
About three miners died for every 1 million tons of coal
production in China this year.
Pu blamed the high fatality rate on poor equipment, unqualified
workers and low spending on protection facilities.
China's coal mines, mired for years in deep losses, lack safety
facilities and safety-control management.
Thousands of county-level coal mines do not even have
specialized technicians for safety control, and the coal miners
have not received necessary training, said Pu.
But Pu also complained that unreasonable low coal prices also
played a role in poor safety.
Pu said coal mines have been suffering from low prices to supply
the power industry, which is one of the most profitable industries
in China.
The coal price only accounts for 20 percent of the electricity
price, as compared with 50 percent in the United States, according
to Pu.
Wu Ning, deputy director of the Energy Bureau under the National
Development and Reform Commission, said the government is
supporting the mines to improve safety.
Since 2001, the government has subsidized nearly 6 billion yuan
(US$725.5 million) from treasury bonds to help mines upgrade safety
facilities.
The subsidy, combined with 5.4 billion yuan (US$653.0 million)
from the companies themselves and banking loans, has helped
complete more than 530 projects of safety upgrading. Another 488
projects are underway.
Wu said the government will continue to support the
improvement.
Wu said the government has started to collect 2-10 yuan (24.2 US
cents-US$1.2) a ton specialized fund to upgrade the safety
facilities.
About 6 billion yuan (US$725.5 million) is expected to be
collected this year.
Coal supplies two-thirds of China's energy needs.
Officials say China will rely on coal for at least half of its
energy for the next 30 to 50 years.
Major accidents in October and November
October 10: 14 died in a carbon monoxide poisoning accident in a
coal mine in Central China's Hunan Province.
October 12: Four died when a mine collapsed in Changchun, in
Northeast China's Jilin Province.
October 20: 147 died in a gas explosion in Daping coal mine in
Central China's Henan Province.
October 22: 15 were killed in a gas blast in a coal mine in
Southwest China's Guizhou Province.
November 6: Four died in a gas explosion in a coal mine in
Northeast China's Jilin Province.
November 11: 33 were killed in a gas blast in a coal mine in
Lushan County, in Central China's Henan Province.
November 13: At least six died and 13 went missing in a gas
explosion in Pengzhou, in Southwest China's Sichuan Province.
November 28: 166 died in a gas explosion in a coal mine in
Tongchuan, in Northwest China's Shaanxi Province.
(Xinhua News Agency December 13, 2004)