MAC: Mines and Communities

China Update

Published by MAC on 2006-05-13

China Update

13th May 2006

China has emerged as the world's largest single consumer of coal. The country's contribution to global greenhouse emissions is second only to the US, while the attrition from unsafe coal mines doesn't diminish - with more than fifty miners killed at three mines in the space of just a week. Among the victims at another site were four women, even though Chinese law forbids them from working in coal mines.

Meanwhile the number of officially recorded "labour disputes" over wages, insurance and welfare payments has increased by 20% to a record 300,000 in 2005.

But some are profiting - mostly foreign companies. They're bringing so-called "clean coal technology" to China (and they include Peabody Coal, now accused of unacceptable water wastage on Dene/Hopi land in the US). They are selling purported "environmental technology" in exchange for the purchase of "pollution rights". And they are intent on setting up "alternative energy" plants.

The following three reports were compiled by China Labour Bulletin, Hong Kong
China Labour Bulletin P.O.Box 11362, General Post Office, Hong Kong Tel(852)27802187 Fax:(852)23594324

A total of 53 miners were killed in three separate coal mine accidents last week.

The first mine blast occurred on 29 April at the Wayaobao Township Coal Mine in Zichang County, Yan'an City, when a total of 39 miners were working underground. Only seven miners managed to escape. Rescuers had found the bodies of the other 32 miners.

In another accident, gas deflagration happened at a coal pit near Titian Village of Dongfeng Township in northwestern Guizhou, on the evening of 2 May. All the 14 miners working in the mine, which was 200 metres underground, were killed by toxic gas.

Rescue workers have confirmed altogether 14 miners were killed in a coal pit gas deflagration in mountainous Weining County, southwest China's Guizhou Province. Official reports said the coal pit only had a single shaft without any ventilation facility. The mine did not obtain a permit for coal production. The gas deflagration occurred when the gas accumulated in the shaft met with a spark of fire.

Most of the killed were locals. The two owners of the illegal coal pit have fled and the police have been hunting them down.

In the third accident, seven miners were killed in a coal mine blast in Henan Province. Some 36 miners were working underground when the explosion occurred on 5 May at the Shangjiuwu Coal Mine in Pingdingshan City, a coal industrial base in central China.

After the blast, 28 people managed to escape. Seven workers were found dead and one is
missing, according to Xinhua.

Sources: Xinhua News Agency (2 May 2006, 3 May 2006, 6 May 2006)

Coal mines in Hunan illegally employ women workers

Some 249 female workers are illegally employed in more than 70 coal mines in Lengshuijiang City in Hunan, the provincial labour authorities have found.

According to a recent investigation conducted by the Hunan Provincial Labour and Social Security Department, the women miners working in the coal mines mostly came from poor areas and they received no job training before they went down to work in the mines. They were each paid only a few hundred yuan each month and the longest serving one had worked in the mine for 13 years.

After a gas leakage accident happened at Dongtang Coal Mine in Lengshuijiang City on 6 April in which nine miners, including four women, were killed, the provincial labour authorities set up four taskforces to investigate the mines in the city. The officials found that among the 4,713 miners working in more than 70 coal mines and six other mines in the city, 249 were women.

According to both the "Regulations on the Protection of Female Employees", which was enacted in 1988, and the PRC Labour Law, which was enacted in 1994, it strictly forbids women from working in coal mines.

Li Chu'e, a female coal miner who escaped the Dongtang Coal Mine accident, said her elder sister and brother-in-law were both killed in the accident. She said that in order to support her family, her sister had worked in the mine for more than 10 years. Describing the first time her sister took her down to the mine, Li said, "It felt like hell".

It is common to see women miners working in coal mines in Lengshuijiang City, according to a report of the Beijing News. It said that the working conditions and wages were the same for male and female miners there. There were more than 10 female miners at Dongtang Coal Mine and six of them were working underground when the accident occurred last month. Some women miners said although the work was very exhausting, they could earn a few hundred to about 1,000 yuan each month by going down to work in the mine – which is already an attractive income for women who come from poor villages.

Sources: Mingpao (9 May 2006), Beijing News (8 May 2006)

Over 300,000 labour lawsuits filed in 2005, ACFTU survey says

The number of labour disputes and incidences of worker unrest leaped in 2005, with more than 300,000 labour dispute lawsuits filed, according to a survey recently released by the official trade union.

The report, done by the All China Federation of Trade Unions (ACFTU), said that the number of labour disputes in 2005 was 20.5 percent higher than in 2004 and 9.5 times more than the number in 1995.

While more than two-thirds of the disputes lodged last year were of cases occurring in the seven most developed economic areas in China – Guangdong, Jiangsu, Shandong, Shanghai, Beijing, Zhejiang and Sichuan, most cases occurred in Guangdong, where 61,200 labour lawsuits were submitted. Jiangsu was second with 50,800 cases and Shandong third with 26,000.

According to the report, the two most common issues dealt with in the lawsuits were the failure to honour contract terms and disagreements over wages, insurance and welfare fund payments. The report said there was a trend towards more confrontations over labour issues, but it did not give any further details.

The survey also said that employees won almost half of all cases last year, while employers succeeded in only 15.8 percent of the cases. But the report did not specify the outcome of the other remaining cases.

Hu Xingdou, a professor of economics at the Beijing Institute of Technology, was quoted by the South China Morning Post as saying: "Many disputes happen because governments go ahead with development of the local economy regardless of labour rights. This is a very dangerous mistake for the nation."

Source: South China Morning Post (12 May 2006),
Xinhua News Agency (11 May 2006)

China: A green energy bonanza?

Ethical Corporation

10th May 2006

Foriegn investment in clean coal technology could cut China's emissions

China’s growing focus on energy conservation and clean energy production is likely to prove lucrative for foreign energy companies investing in the world’s second biggest power market.

As a growing band of publicly listed, clean technology companies expand into China, portfolio investors also stand to benefit from the nation’s shift towards greener energy production.

One of the key numeric targets of the government’s 11th Five Year Plan is to reduce energy consumption per unit of GDP by around 20% by the end of 2010.

Last year, China consumed the equivalent of 2.2 billion tonnes of coal, and Chinese analysts warn that total energy demand may reach 4 billion standard coal equivalent (SCE) tonnes by 2020 if allowed to continue unchecked.

But this could be kept below 3 billion SCE tonnes, they say, if effective energy-saving measures are put in place.

In February, China’s central government – known as the State Council – released its science and technology strategy document for the period 2006-2020.

Clean coal moves

Emphasising the importance of energy conservation, the report also recommends promoting “clean coal” technology and diversifying into renewable energy sources, notably wind power, solar power and biomass/geothermal energy.

Renewable energy currently accounts for roughly seven percent of China’s total power supplies, and the official aim is to increase this to 15% by 2020.

“Currently,” the report states, “there is an acute imbalance in China’s energy supply and demand, which is unreasonably structured, with poor efficiency in energy utilisation. Coal figures predominantly in primary energy consumption, and massive consumption of fossil energy has caused serious environmental pollution.”

Foreign investment in clean coal technology may be the key to containing the growth of carbon emissions in China, now the world’s second biggest carbon emitter after the US.

Disputed technology

Environmentalists argue that clean coal is a myth: coal remains a dirty fossil fuel, they say, even if it does reduce carbon emissions from conventional burning.

But around 75% of China’s energy needs are currently supplied by coal, which is abundant in China and by far the cheapest energy source. Coal will remain China’s primary energy source for the foreseeable future.

One company bringing clean coal technology to China is South Africa’s Sasol Group, the world’s leading producer of coal-to-liquids and publicly listed in Johannesburg and New York.

Sasol operates the world’s only commercial scale coal liquefaction plant at Secunda in South Africa, where it produces 150,000 barrels of liquid fuel per day (bpd).

Last year, Sasol completed feasibility studies and signed agreements with two Chinese coal companies, Shenhua Group and Ningxia Coal Group, to build two coal-to-liquids plants, each with a capacity of 80,000 bpd at a total cost of US$6 billion.

The two plants will together have an annual capacity of around 8 million tonnes, with per barrel production costs of just US$10. Last, year China imported 22.1 million tonnes of crude and refined oil.

Others taking an interest

Other companies with clean coal interests that are looking to expand in China include US coal giants Peabody Energy, which is listed in New York and recently opened a representative office in Beijing, and Alliance Resource Partners, listed on the Nasdaq.

Bangkok-listed energy group Banpu Plc, one of Asia’s few large coal producers with clean coal technology, has a minority stake in Asian American Coal Inc, which operates in China.

GE Energy and Shell also have considerable investments in coal gasifiers in China.

A number of foreign companies are betting that carbon trading – whereby foreign companies provide producers in developing countries with environmental technology in exchange for buying their pollution rights – will take off in China.

The market leader in China is UK-based Camco International, which recently listed on London’s AIM stock exchange. Hong Kong’s Noble Group, listed in Singapore, has a growing carbon trading business in China, as well as further interests in clean coal technology and the worldwide ethanol market.

More dams on the way?

Hydropower ranks as China’s major energy source after coal and has received considerable international attention, largely thanks to a number of controversial damming projects – notably the Three Gorges Dam and plans to generate electricity from the upper reaches of the Chinese Mekong.

There is still huge potential for more dams in China’s water-rich, mountainous southwest. Major foreign hydropower players likely to benefit are Norway’s Veidekke (listed in Oslo), which supplied technology for the Three Gorges project, GE Energy and Siemens Power Generation.

According to Tsinghua University energy expert Professor Wang Weichang, however, wind power is on course to supplant hydropower as China’s chief renewable energy source by the middle of the century.

And wind too…

The State Council’s strategy document calls for the development of large-scale wind farms, particularly in China’s remote, underpopulated and agriculturally backward western provinces.

But China currently does not have the technology to produce wind turbines larger than 300 kilowatts, and has to import 95% of its wind technology.

The biggest beneficiary is likely to be Danish wind technology firm Vestas, the world’s largest supplier of wind power systems with 30% of the global market.

Publicly listed in Copenhagen, Vestas currently has 480 wind turbines in China with an output of 279 megawatts. There is clearly huge potential for further investment: Vestas has 2,856 wind turbines in India, producing 1,025 megawatts, and a further 8,176 turbines in the US, producing 2,778 megawatts.

Another winner could be GE Energy, which supplied 23 wind turbines to Hebei province’s Shanyi Manjing wind farm and recently announced it would provide 150 megawatts of turbines for the Rudong wind farm in Jiangsu province, to be completed in 2007.

Both Siemens and Spain’s Gameas, the world’s second largest wind turbine manufacturer and listed on the IBES stockmarket in Spain, may also look to expand in China.

Solar options

Solar power lags behind other renewables in China. But the Chinese government forecasts that the market for photovoltaic products and systems, which stood at just 20 megawatts in 2005, should reach 400 megawatts by 2010 and 10 gigawatts by 2020.

In December last year, BP Solar and China Xinjiang SunOasis Co. signed a contract to form a solar power joint venture with a 25 megawatt energy capacity. Based in the northwestern city of Xi’an, the new company will focus on providing sustainable power to remote rural areas throughout China.

And finally…fuel

As China slowly moves towards a car-owning economy, green transport fuel is also a growing concern.

One small company to watch is the UK’s D1 Oils, which makes biodiesel for the transport industry by using a unique method of crushing Jatropha seeds, a tropical oil seed plant.

Listed on the AIM stock exchange, D1 Oils recently signed a deal with the Chinese Ministry of Agriculture to promote the production of Jetropha biodiesel in southern China, where conditions are suitably warm and wet for cultivating Jetropha plants.

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Tom Miller is a freelance journalist working in Beijing

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