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China to enhance coal industry restructuring
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China is urging local governments to speed up their coal industry restructuring and put small collieries under strict administration.

The move was in response to the recent frequent mine accidents since October 1, said Ma Xiaoguang, an Umetal.com website coal analyst.

Six severe mining accidents occurred in Yunnan Province, Guangxi Zhuang Autonomous Region, Sichuan Province, Henan Province, Hebei Province and Ningxia Hui Autonomous Region between October 9 and October 16. The accidents killed 43.

Four central government organs jointly issued a circular on Thursday saying the number of small collieries would be reduced to below 10,000 by 2010 to cut accidents and balance supply and demand.

The four institutions include the National Development and Reform Commission (NDRC), National Energy Administration, the State Administration of Work Safety (SAWS) and the State Administration of Coal Mine Safety (SACMS).

The country currently has 14,069 small coal mines. According to the circular, 2,510 of those mines will shut by the end of 2010, and 1,616 will undergo expansion reconstruction.

"A large number of small collieries remain a threat to the production safety and provide more coal than market demands amid the industry slump," said Wang Shuai, a chief coal industry analyst with Orient Securities.

He added the circular was timely as the industry had been getting gloomy.

SACMS head Zhao Tiechui said the move aims at eliminating small coal mines with obsolete capacities and enhancing restructuring. The number of small collieries with a production capacity below 300,000 tonnes annually would be cut to no more than 10,000.

Ping An Securities analyst Chen Liang said in the long run, massive closure of small mines would ease the pressure of overproduction.

An unnamed industry insider shared the view, saying the move would speed up industry restructuring, and the central government and local governments had achieved the agreement over the ongoing restructuring.

The country is considering creating six to eight trans-regional, multi-industrial and mixed-ownership maga coal enterprise groups with yearly production at more than 100 million tonnes each by the end of 2010.

Coal-rich Shanxi Province in north China is scheduled to reduce its number of mines to 1,414 from 2,840 at present. The capacity of each mining enterprise will be no lower than 3 million tonnes annually.

According to latest figures, the country's coal mines reported 1,029 deaths from 258 accidents through 2008. Last year, 3,786 deaths were registered in mine accidents.

China has about 16,000 coal mines, 90 percent of which are classified as small and their safety record is far worse than that of large mines.

NDRC vice director Zhang Guobao said the deaths claimed in small mines accidents were eight times higher than those in state-owned major mine accidents.

According to SAWS statistics, China closed down 10,000 small coal mines between 2005 and 2007.

(Xinhua News Agency October 18, 2008)

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