China’s Coal Hub Tries to Tackle Issues Unresolved in Earlier Consolidation

North China’s Shanxi province has kicked off a four-month safety inspection of the coal hub’s multitude of state-subsumed small and midsize mines in the wake of a series of fatal mining incidents.

The campaign, announced by the Shanxi government Monday, targets unresolved issues left over from an earlier government-led consolidation effort that sought to tackle problems with the underregulated coal mines scattered throughout the province.

The rounds of consolidations that took place from 2008 to 2012 merged the mines into state-owned enterprises, but left a gap in oversight, a person familiar with the province’s coal industry told Caixin.

In 2016, the then-director of the Shanxi Coal Mine Safety Administration, told local media that the merger of coal mines left a “vacancy in safety supervision” in part because many SOEs did not bother to take ownership of the mines in any but the most formal way.

One reason was that upgrading the facilities at small coal mines would have been a financial burden for the SOEs that acquired them, said a person working at a state-owned coal company in Shanxi.

When it announced the campaign, the Shanxi government criticized SOE mine owners who hadn’t made substantial investments in their mines, had failed take over management of their mines or had convoluted shareholding structures for the ownership of their mines. It gave these SOEs until the end of the campaign to fix these issues.

Any SOE that failed to meet these requirements by the end of the campaign would have to sell off their stakes, the government said in the Monday announcement.

In 2016, the government ordered operations suspended at all small coal mines belonging to five local coal conglomerates after 19 people died in an incident at a mine that had been merged into the state-owned giant Datong Coal Mine Group Co. Ltd. The suspension lasted until safety inspections could take place. But fatal incidents continued to occur at coal mines in the province.

In the first 11 months of 2020, a total of 15 people died in mining incidents in Shanxi, according to the Shanxi Coal Mine Safety Administration.

Contact reporter Lu Yutong (yutonglu@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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