12 December 2006

Reshaping China's Coal Industry

SURELY NO NATION ON EARTH has as many coal miners or coal mines as China. In 1996, 5 million Chinese mined coal, virtually all of them underground. At the same time in the United States, about 90,000 miners were digging about the same amount of coal. The reason for the disparity, of course, is that Chinese mines rely much more on cheap labor than on costly machines. In addition to its many large mines, China has tens of thousands of tiny mines that each employ just a handful of miners.* The small mines are vastly more deadly than the big mines, which are themselves quite dangerous. In 1991, a particularly bad year, 10,000 Chinese coal miners died in accidents. By comparison, the number of Americans killed in coal mining in 1992, a bad year for the U.S. industry, was fifty-one.
*In 1998, China had about 75,000 mines employing an average of thirteen miners each. These small mines have a death rate seven times higher than the large ones.
... As they are in the United States and other coal-producing nations, the small inefficient mines are shutting down in favor of larger ones. In China, though, the scale of the disruption is mind-boggling: Beijing claims to have closed down 30,000 small mines just since 1998. Although the true number is surely less, there are undeniably painful reforms underway that have already thrown perhaps a million Chinese coal miners out of work.* These sweeping changes reflect the fundamental shift in Beijing's economic philosophy over the years: In a move more reminiscent of J. P. Morgan than Mao Zedong, the Communist government is now openly urging coal companies to merge into larger and larger enterprises, and to form "cartels" to limit overproduction and improve profitability.
*According to widespread reports, many communities have defied Beijing and quietly reopened their small mines; as a result, several officially "closed" mines have suffered deadly mining accidents in recent years. However, reports that miners are being laid off in huge numbers, including at large state-run mines, are more credible. Between 1992 and 1995, reportedly 883,000 coal miners (more than ten times the total U.S. coal mining workforce) were laid off, and there are plans to lay off nearly 800,000 more.
SOURCE: Coal: A Human History, by Barbara Freese (Penguin, 2003), pp. 207-208, 221-222

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