HARBIN - The largest coal mining group in Northeast China is struggling to reduce its losses and pay thousands of its employees.

Heilongjiang Longmay Mining Holding Group Co Ltd, suffered around 5 billion yuan ($815 million) in losses last year due to the drop in coal prices, the exhaustion of mines and high production costs.

With 240,000 employees, the state-owned firm has subsidiaries in Jixi, Hegang, Shuangyashan and Qitaihe in Heilongjiang province. The group started management restructuring last year in an attempt to give its subsidiaries more power to become self-operating market entities.

However, some managers have not been paid since last September, a senior executive of subsidiary Shuangyashan Mining Co said on Tuesday.

Structural streamlining should be finished by August, which will reduce the number of administrative employees from 36,000 to 20,000.

The company will also expedite development of its coal-related chemical industries.

Longmay's difficulties reflect the wider economic slowdown in Heilongjiang, which only grew by 5.6 percent last year, much lower than the national rate of 7.4 percent.

Economic growth in Jilin and Liaoning province was also weaker than the national average.

Earlier this month, Premier Li Keqiang urged northeastern regions to offer preferential policies to encourage innovation and entrepreneurship; to promote systemic reform in major state-owned enterprises; and support the growth of micro, small and medium-sized firms, including private enterprises.

"Due to shrinking coal demand and the company's accumulated problems, Longmay faces losses and strained cash flow. However, it is thinking about ways to guarantee employees are paid," an executive of the group told Xinhua.

Song Yufei, acting chief accountant of Longmay Mining, said the group would reduce costs and losses by improving management and follow up outstanding payments totalling 4.8 billion yuan.

In April, the provincial government loaned 500 million yuan to Longmay Mining and earmarked a special unemployment insurance fund of 500 million yuan and another 100 million yuan for those laid-off to find new jobs.