China Hikes Penalties on Illegal Coal Mining

China Hikes Penalties on Illegal Coal Mining

Planet Ark

January 27, 2005

Shanghai - China will increase fines on illegal coal mines and raise the bar for mine permits, hoping to reduce accidents in an industry that claimed more than 6,000 lives in 2004, the country's central planning agency said.

The rush to produce coal for an economy that expanded 9.5 percent in 2004 has led miners to re-open old mines or dig perilously close to existing shafts.

Fines for illegal mining would rise by up to six times, with the penalty for sales from illegal operations rising to a maximum of 30,000 yuan ($3,625), the National Development and Reform Commission said in a statement posted on its Web site (www.sdpc.gov.cn).

The new regulations take effect this week, or 30 days after the statement's issue date on Dec. 27, 2004.

To get an operating licence, miners must maintain capital of at least 50 million yuan and storage space of over 20,000 square metres.

Coal contracts must specify volumes, pricing and delivery procedures, the statement said, potentially restrict sales channels for illegal mines.

China houses the world's most lethal coal mining industry. For every 1 million tonnes of coal produced, 3 miners die from floods, gas leaks, tunnel collapses or fires -- a fatality rate 100 times that of the United States.

Major accidents can spur the government to shut nearby mines for inspections -- thereby raising coal prices and the incentive for illegal mining, state media have charged.

Nearby minerals mines have in the past been shut as part of crackdowns on illegal coal operations.

China is preparing new coal mining legislation to raise safety conditions in mines -- a task that will require $6 billion in investment in major state mines alone, the China Daily reported on Tuesday. (US$1=8.276 Yuan)

Reuters News Service