Coal mining - Problems and potential

China, the world's largest coal producer, accounts for one-third of the world's total production.  However, it has only exported approximately 30 million tons of coal annually for years, a mere 6 per cent of the world total.  The average coal production a year is around 1 billion tons every year, leaving a total of over 100 million tons unsold annually.  Four-fifths of domestic coal mines failed to generate profits last year.

Occupational hazards are reported at over half a million industrial plants and mines, and more than 25 million employees are exposed to dust, noise or toxic chemicals.  Despite the huge extent of the problem, preventive measures have been slow in coming.  Steps taken so far include the closing of 12,000 small mines and the upgrading of safety equipment at 81 mostly large state-owned coal mining companies.

Last year, 17 Chinese miners died for each 1 million tons of coal extracted from small mines and just under two deaths were recorded for every million tons at large state-owned mines.  By contrast, the United States, the largest coal producer after China, had just 0.039 deaths per million tons. Australia had a total of just five coal mining deaths last year.

In a bid to alleviate the coal glut on the domestic market, China is continuing to support coal exporters by extending its charge-slashing policy on exports for another two years.  These policies include the reduction of port charges, and exemption from railway construction tolls on four major transportation routes, including the railway from Datong, the major coal production base in North China's Shanxi Province, to Qinhuangdao, the major port in Hebei Province.

Growing coal exports

Increasing exports is vital for the coal mining industry, which has been seriously affected by overproduction for years. 

China is expected to export a record amount of 85 million tons of coal this year, about 27 million tons, or 31 percent, more than last year, according to coal industry officials.

Experts attribute China's rapid increase in coal exports to increased coal import by the Republic of Korea and Japan from China and the policy made by the Chinese government to encourage coal exports.  Improved quality of the exported coal has also contributed to the increase.  After years of redundancy reduction and closing down thousands of small coal mines, China's coal mining industry has turned deficit into profit for the first time in years.

Sources said the China National Coal Import and Export Corp. whose exports accounted for two-thirds of the national total, its exports increased by 55 per cent, 11.1 million tons, and expects to export 47.4 million tons this year, compared with 39.2 million tons in 2000.

The Latest Moves

Joint venture of Rio Tinto and Baosteel:

Rio Tinto has forged a deal with China's largest steel maker, Shanghai Baosteel Group Corporation (Baosteel), to form an unincorporated iron ore joint venture operation in Western Australia.

The agreement has been reached by Hamersley Iron (100% owned by Rio Tinto) in Shanghai on 20th December with Baosteel.  Under the agreement, Hamersley will supply Baosteel with 200 million tonnes of products, averaging ten million tonnes of ore per year over the 20-year life of the joint venture. Hamersley will hold a 54 per cent equity share with the remaining 46 per cent held by Baosteel.

Initial capital outlay by the joint venture will be A$124 million (US$64 million) to develop a new mine, 10 kilometres east of the Paraburdoo mine<