Shanxi abolishes small mines

• Source: Global Times
• [05:37 September 25 2009]
• Comments

By Zhang Han 

The authority of Shanxi Province, China's largest coal producer, has given all its private coal mines an ultimatum: agree to merge with large-scale companies, mostly State-owned, by Wednesday or face water and power shutdowns.

The order is part of the government's ambitious plan to build a few giants by combining the production capability of small coal mines in a bid to "have a bigger say"in business negotiations with buyers such as electric-power producers in the national market, industry observers said.

A number of coal-mine investors, especially those from Wenzhou, Zhejiang Province, have complained about "great losses"caused by the plan.

But government officials said they have made adequate compensation. And most of the Internet users who commented about this news expressed their support for the government.

In a blueprint disclosed last week, the Shanxi government announced that it will cut the number of coal-mining companies from about 2,200 to 100 by the end of 2010, and build several enterprises with annual productions of about 50 million to 100 million tons.

The move is also aimed at reducing the number of deadly accidents, which have been plaguing many small coal mines that often lack adequate safety equipment and procedures, officials said.

According to the timetable announced yesterday, the coal companies with an annual production of 300,000 tons must sign formal merger agreements with large companies by the end of the month, just days away. And by the end of November, all mergers should pass government approval.

"If the owners refuse to sign a contract with the relevant parties before the deadline, the government may force the coal mines to close by terminating services of water and electricity,"said Tian Yun, director of the research center of the Chinese Academy of Macro Economy.

In addition, more than 300 coal mines that have failed to meet production standards must close by end of this year, Shanxi officials also said.

So far, two-thirds of the coal-mining companies have signed official transfer protocols, while the other third has only gotten to the initial-agreement stage.

"The plan aims at controlling and changing the pre

 vious coal-development patern of too many small enterprises operating throughout the province without regulations,"Shanxi Coal Information said.