Will a ban on official investment in coal mining boost safety in China's mines?

Will a ban on official investment in coal mining boost safety in China's mines?

China Labour Bulletin

August 25 2004

Hong Kong - The State Council has recently issued a heavy-handed ultimatum to all levels of government, requiring officials to withdraw their investment in coal mining operations within a month or face heavy penalties.

According to reports from China News Service, the central governmental issued a notice on 22 August, stating that all government officials must withdraw their investment in coal mines by 22 September. But the order does not cover shares in publicly listed coal mining companies.

A report from the China News Service on 25 August pointed out that the issue of "the union of officials and coal mining companies" was highlighted in the State Council's notice.

"There are problems with coal mine safety in our country, especially small coal mines. It was originally intended that the government act as a monitor of coal mine safety, but when government officials get involved directly in the business, then the government can only act as the safety hat of the coal mines," the report said.

The notice was issued in the wake of the recent coal mine disaster in Xingning City, Meizhou, Guangdong Province, in which 123 miners were trapped in a mine flood at Daxing Colliery.

Following this deadly accident on August 7, the central government also launched a high-level investigation into corruption, uncovered among local government officials.

Resolving all the issues surrounding coal mining in China will not be easy. On August 16, the Guangdong provincial government ordered a reorganization of coal mine operations and launched a policy of blowing up unlicensed mines in the province. In response, more than 150 mine owners in Guangdong stage protests and demanded compensation for the destruction of their mines.

A report in the South China Morning Post cited information from the China News Service that Shanxi Province, China's top coal producer, has raised the penalty for the owners of the miners that experience deadly accidents. Mine owners will be fined 1 million Yuan for every death and are required to pay 200,000 Yuan in compensation to each victim's family.

The report said mines in Shanxi have had the highest death toll in China this year, with 316 deaths as at the end of July. Authorities in Shanxi have shut down 1,929 unlicensed mines since a mine explosion in Ningwu County on 2 July killed 36 miners.

Will lives be saved with these orders?

China Labour Bulletin believes that the State Council’s order can only help publicize a public showdown against officials who have invested in coal mining operations, but it will do very little to help ensure safety in the mining industry in China.

Although the government's new policy can stop government officials from investing in coal mines in their own names, it is highly likely that many will circumvent the orders by using the names of others to hide their involvement.

And there is still the issue of bribes from mine owners for operating licences and other kickbacks. For example, in the case of Daxing coalmine disaster, Zeng Yungao, the mine owner, reportedly has strong connections with local government officials, according to a Xinhua report. "Since he bought the Daxing Mine, which was privatized in 1999, Zeng has quickly become known not only for his wealth but his extensive government connections," the report said.

Another report of the official news agency said that Zeng fled after the mine flooded and then tried to spend some 300 million Yuan (US$36.9 million) on a cover-up attempt. However, his plot failed after the Central Discipline Inspection Commission was involved in the investigation.

According to the local government, the Daxing coalmine was founded in 1990 with a designed annual production capacity of 30,000 tons of coal. But the central government's investigation taskforce found that the mine had already produced about 60,000 tons of coal on in the first half of this year. But each miner's monthly salary was just about 1,500 Yuan and some miners did not receive their salary for several months.

So, the real issue that the Chinese government needs to address is that coal mine accidents can only be avoided and mine safety can only be ensured by allowing workers to take part in monitoring their work safety. (See our previous articles and analysis on coalmine safety).

Enforce existing regulations and policies on coal mine safety

Meanwhile, in a report to the 17th meeting of the Standing Committee of the 10th National People's Congress (NPC), senior legislator Li Tieying said China's Law on Work Safety should be steadfastly enforced and coal mine accidents should be drastically reduced, according to a report of the China Daily. "(We) propose the State Council and relevant departments ensure a drastic reduction in the number of gas explosion accidents in coal mines within two years... and resolve the problem of smaller mines within about three years," he said on 25 August.

The NPC senior member's comments are similar to those of other state leaders, such as Premier Wen Jiabao, who visited the Chenjiashan Coal mine in Tungchuan City, Shaanxi Province, about a month after a gas explosion at that mine on 28 November 2004 killed 166 miners. Yet, large-scale coal mine disasters keep happening and local government officials seem to be grabbing every opportunity to gain advantage from the mines.

Despite the enactment of more new laws and regulations on mine safety, major coalmine disasters occur one after another: more than 6,000 miners were killed in 2004 and 951 miners died in 33 major coal mine accidents in the first eight months of this year and some 2,700 miners died in the first half of this year, according to figures from the State Administration of Work Safety.

Rather than drafting another pile of new laws and regulations, China Labour Bulletin urges the authorities to strenuously enforce the existing ones.

Sources: South China Morning Post (24 August 2005), China News Service (24 August, 25 August 2005), China Daily (26 August 2005), Xinhua News Agency (9 August, 18 August, 19 August 2005, 29 August 2005).