Zhang Jian has changed from being owner of a coal mine in North China's Shanxi province to a shareholder of China's largest coal mining firm, Shanxi Coking Coal Group Co Ltd.

An order from the National Development and Reform Commission in September required the country's top coal producing province to close about 1,600 of its 2,600 mines by the end of 2010 through mergers and reorganizations.

The plan is that a coal mining company would have an annual production of at least 3 million tons, and that each mine would produce at least 900,000 tons in order to end the province's reputation for pollution and fatal mining accidents.

By the end of 2010, all 1,000 coal mines in Shanxi should be mechanized, the commission said.

Zhang's mine in Zuoquan county had an annual production capacity of 300,000 tons, so it was targeted for takeover.

"As a shareholder, I retain a 35 percent share in the mine, which is to be developed. It has an annual output of more than 1 million tons," Zhang said.

He said the merger process has been supervised by the provincial government, which had conducted an evaluation of the mine's assets.

Unlike Zhang, Wang Jianzhen, general manager of Sanjia Group, a private mining company in Shanxi, has decided to shift its business focus from coal mining to other sectors - especially tourism.

Negative effect

"The coal mining sector, which helped start the company, has been badly affected by the economic downturn since last year. It was our investment in tourism that has enabled us to withstand the crisis," Wang said.

The company began to diversify 10 years ago. It has invested more than 2 billion yuan to develop Mianshan Mountain in Shanxi into a tourist attraction, which generated almost 150 million yuan in revenues in the first six months of this year.

"About 500 coal mining firms have invested an estimated 12 billion yuan in tourism," said Ji Zhenfang, director of the Shanxi Tourism Bureau.

Agriculture has also attracted private coal mining companies, said Sun Lianzhu, director of the Shanxi Agriculture Bureau.

He said coal companies had invested about 6.8 billion yuan in the farm produce processing sector.

Li Baoqing, head of the Shanxi Provincial Development and Reform Commission, said the provincial government planned to open big government projects worth 650 billion yuan to private investors in the next two years to help direct private investment in building infrastructure and developing public transportation and facilities.

Du Fuxing, chairman of Shanxi Coking Coal Group Co Ltd, said Shanxi had more than 5,000 coal mines in the 1990s.

"Under the circumstances, the more coal we produced, the less money we earned. The resource has been exploited," he said.

According to the province's coal industry bureau, small mines with an annual production of less than 300,000 tons produced 70 percent of Shanxi's coal, and less than 30 percent of Shanxi mines in Shanxi were mechanized.

"Small coal mines have a low recovery rate in mining. They waste 4 tons of coal for every ton they extract," said Ding Jigang, an official with the provincial coal industry department.

He said the annual waste of coal resources in Shanxi is estimated at 1.4 billion tons. Industry consolidation will help improve mining technology and make better use of the resources, Ding said.

Xinhua

(China Daily 11/16/2009 page4)