China Coal Industry Remains World's Deadliest

SHANGHAI—A spate of accidents has put the spotlight back on a fast-expanding Chinese coal-mining sector that remains the world's deadliest despite a measurably improved safety record in recent years.
Some 76 people were killed in three Chinese coal-mining accidents since Aug. 13, according to reports by the State Administration of Work Safety. In one of the worst accidents in recent years, 45 people were killed in a mine explosion outside the city of Panzhihua in Sichuan province, while another 14 people died in a blast Sunday in Jiangxi Province.


Rescuers gather to search for survivors at the Xiaojiawan coal mine after a gas explosion in Panzhihua, in southwest China's Sichuan province, on Aug. 31.

China is the world's largest miner and consumer of coal, and has long had the deadliest mines. This partly reflects the difficulty of regulating 12,000 mines, and the fact that its coal veins are so deep underground.

Growing social awareness in China of workplace safety, and of the environment, represents added political challenge to the ruling Communist Party, which is increasingly faced with public demands to deliver more than economic growth. Late last week, the official Xinhua news agency—the voice of the party—said in a commentary under the headline "Multiple accidents test CPC's governability" that 75,512 people had lost their lives as a result of "man-made" incidents so far in 2012.

Analysts say the coal industry is improving. They credit continued attention to safety in key resource-rich areas like Shanxi Province for reducing mining's death toll toward 2,000 in 2011 from 3,786 in 2007 and the nearly 7,000 who perished in 2002, according to figures from Hong Kong's China Labor Bulletin.

The latest accidents all occurred at relatively small pits, operated by owners who prosper by satisfying China's giant appetite to fuel power plants and steel mills, but which individually are Beijing's biggest challenges in enforcing safety regulation. Analysts said these facilities often hire untrained labor and pay based on tonnage, leading to frequent deadly accidents.

According to the World Coal Association, China's 3.47 billion metric tons of output last year was about 45% of the global total 7.678 billion tons, and nearly 3.5 times more than the next biggest coal producer, the U.S.
The economic slowdown in China this year isn't seen significantly slowing its coal production, according to Barclays, BARC.LN +0.57% which forecasts a 5.9% rise in output in 2012 to 3.6 billion metric tons.
Sustaining the big output numbers are numerous small producers that dominate the industry, despite efforts by Beijing to consolidate coal-mine ownership into fewer hands, particularly under large state-owned enterprises.

China's top eight mining groups accounted for only around 20% of national coal output in 2010, according to Xu Yi-chong, a professor of Australia's Griffith University in Brisbane, whereas in the U.S. just three companies produced 70%.

"To me, this is the main problem," says Ms. Xu. "The small coal mines tend to have very, very, very low safety standards and very, very, very low labor standards, and are very difficult to regulate."
She says large mine owners tend to be more responsible: large, government-run coal producers recorded a fatality rate of 0.28 per million metric tons mined in 2010 but small operations killed five times more people, or 1.4 per ton. She says China's national average in 2010 was 0.75 deaths per million tons, down sharply from 7.6 deaths per million during the mid-1980s.
According to the U.S. Labor Department, 17 people died in U.S. coal mining accidents last year, and that the thirteenth so far in 2012 occurred on July 31 when a 43-year-old was crushed repairing a machine underground in West Virginia.

National and provincial policy makers have spurred China's safety efforts with carrots and sticks: firing officials after big accidents and using government subsidies to create incentives for good behavior.

One of the nation's largest miners, Shandong Province-based Yanzhou Coal Mining Co., 600188.SH +0.64% for instance, says in its latest annual report that it has recorded a rate of zero fatalities per million tons of raw coal mined in each of the past five years. The biographies of its top executives highlight their training in worker safety and its financial accounts tally rising compliance costs, like a 50 yuan-per-metric-ton work-safety charge that applies to one of its big Shanxi mines.

"Credit has to go to the authorities in Shanxi and to some extent Inner Mongolia," says Geoffrey Crothall, director of communications at the Hong Kong-based China Labor Bulletin. "But the rest of the country hasn't gotten the same message."

That's a worry as coal mining presses into new areas that haven't been embarrassed into action as, analysts say, officials have been in coal-rich Shanxi. According to the Work Safety Administration, at least two people remain trapped underground after both the Sichuan incident Aug. 29 and Sunday's accident in Jiangxi.

In its biting commentary, Xinhua said, "Every man-made accident, be it the collapse of a bridge (last) month or the bullet train collision last year—stems from something, and many suspect that dereliction of duty, a lack of proper supervision, abuse of power or corruption could be behind these accidents."