MAC: Mines and Communities

China update

Published by MAC on 2007-06-29

China update

29th June 2007

Partly sparked by widespread revulsion at last month's revelations of appalling abuses in the brick kiln industry, the Chinese regime has introduced a new labour law. Ostensibly this will protect the rights of sub-contracted workers and enhances the capacity of workers to negotiate employer agreements.

However, the legislation only seeks to enforce the right to individual contracts (a measure which has been vigorously opposed by trade unionists in Australia); and in no way does it reduce the power of the communist party's monopoly union. Nor is it clear that it will be rigorously enforced.

As the Hong Kong-based China Labour Bulletin comments:

"Everyday, there are large scale labour protests in towns and cities across China, and it is difficult to see how the new Labour Contract Law can help reduce such protests unless it is rigorously enforced and workers are given the genuine right to collective bargaining."

A mine owner has been jailed for life, accused of arranging the assassination of a journalist investigating illegal coal mines in Shanxi province. However, as a recent report by another investigator reveals, local officials continue to collude with mine managers in operating such mines, in what is officially the most polluted place in the entire country.

In our regular round-up of what Chinese companies are doing abroad, we report on yet more takeovers of UK-listed mining companies, including a major acquisition by Zijin Mining.

As Unrest Rises, China Broadens Workers' Rights


NewYork Times, BEIJING

29th June 2007

China's legislature passed a sweeping new labor law on Friday that strengthens protections for workers across the booming economy, a response to increasing signs of restiveness among tens of millions of migrant laborers.

The law, enacted by the Standing Committee of the National People's Congress over the objections of foreign investors, requires employers to provide written contracts to their workers, restricts the use of temporary laborers and helps give more employees long-term job security.

The law, which is to take effect in 2008, also enhances the role of the Communist Party's monopoly union and allows collective bargaining for wages and benefits.

It softens some provisions that foreign companies said would hurt China's status as the leading low-wage manufacturing base, but retains others that American multinationals had lobbied vigorously to exclude.

In the past, workers have had to negotiate wages with their employers individually, and China's state-run union has had almost no involvement in setting wages and benefits.

"This is the biggest change in Chinese labor law in the reform and opening period," said Qiu Jie, a labor law expert at People's University in Beijing. "It gives legal protection to the vast majority of workers, who had no way to protect their rights under the old system."

In recent years, President Hu Jintao and other leaders have sought to increase worker protections because discontent among migrant workers has contributed to a surge in social unrest and violent crime.

But the new measure may not improve conditions for low-wage workers unless it is enforced more rigorously than existing laws, which already offer protections that on paper are similar to those in developed economies.

Urban workers may also see little change unless the state-run union, which in the past generally represented management over workers, decides to play an active role in defending worker rights, which many analysts consider unlikely.

Passage of the measure came shortly after officials and the state news media unearthed the widespread use of slave labor in as many as 8,000 brick kilns and small coal mines in Shanxi and Henan Provinces. It was one of the most glaring labor scandals since China began adopting market-style economic policies a quarter century ago.

The police have freed nearly 600 workers, many of them teenagers, held against their will in factories owned or operated by well-connected businesspeople and local officials.

Abuses of migrant laborers have been endemic in China, where millions of temporary workers have faced unpaid wages, unsafe working conditions and collusion between factory owners and local officials.

Party-run courts and local labor bureaus often fail to enforce the legal rights of migrant workers, many of whom never seek remedies.

While the new law will do little to eliminate violations of existing laws, it does require that employers treat migrant workers as they do other employees. All will have to have written employment contracts that comply with minimum wage and safety regulations.

It also moves China closer to European-style labor regulations that emphasize employment contracts. It requires that employees with short-term contracts become full-time employees with lifetime benefits after a short contract is renewed twice.

Perhaps most significant, it gives the state-run union and other groups representing employees the power to bargain with employers.

Many multinational corporations had lobbied against certain provisions in an earlier draft of the new labor law. An early draft gave unions greater powers and made it more difficult to fire workers.

Companies argued that the rules would substantially increase labor costs and reduce flexibility, and some foreign businesses warned that they would have little choice but to move their operations out of China if the provisions were enacted.

International labor experts said several of the most delicate clauses had been watered down. But lawyers representing some big global companies complained that the new law still imposed a heavy burden.

"It will be more difficult to run a company here," said Andreas W. Lauffs, head of Baker & McKenzie's employment law group, which represents many of America's biggest corporations in China.

The National People's Congress released only a summary of the legislation, and officials did not detail how they had changed it from the many earlier drafts.

The summary said companies must "consult" the state union if they planned layoffs, suggesting a softening from earlier drafts that would have given unions the right to approve or reject layoffs before they could take place.

But the summary retained language that limits the "probationary contracts" that many employers use to deny employees full-time status. It tightens conditions under which an employee can be first, while requiring severance packages for the first time. High salaried workers would face caps of severance, however.

Moreover, the law empowers company-based branches of the state-run union or employee representative committees to bargain with employers over salaries, bonuses, training and other benefits and duties.

The Communist Party's monopoly union, known as the All-China Federation of Trade Unions, is a legacy of China's socialist planned economy. It is an official state organization charged with overseeing workers, that in practice has tended either to play no role whatsoever or to help managers monitor and control workers. The state union rarely if ever presses for higher wages or enhanced benefits. It does not permit strikes.

Workers are not allowed to form independent unions.

But as Mr. Hu has pressed the state union to take a more active role, it has demanded greater representation in private Chinese and foreign-financed companies. Some foreign company executives say that if the union takes part in wage and layoff negotiations, that could greatly complicate labor relations.

Foreign executives said they were especially worried about new labor regulations because their companies tended to comply with existing laws more rigorously than some Chinese competitors do. This disadvantage could increase sharply, they said, if the new rules produce fresh burdens that local counterparts ignore.

Chinese legislative officials said Friday that such concerns were overblown, and that many local governments bent the rules to favor foreign investors over local companies.

"If there is some bias in the application of the law, it would tend to be in favor of foreign investors because local governments do so much to attract investment," Xin Chunying, deputy chairwoman of the legislature's law committee, said at a news conference announcing the new measures. "The only people who will suffer under the new law are those who violate the law."

National People's Congress approves new Labour Contract Law

China Labour Bulletin

29th June 2007

The Labour Contract Law approved by the Standing Committee of the National People's Congress today is a laudable attempt to protect the rights of individual workers. The majority of workers in the private sector (especially migrant workers) do not have any kind of contract with their employer and as such are subject to whatever terms and conditions the employer imposes. Management regularly (in violation of the existing Labour Law) withholds wages, demands excessive overtime, and can dismiss workers almost with impunity.

A great many migrant workers are not officially employed by the enterprise they work for and only have contracts, valid for a few months, with a labour supply or labour service company (see The True Story of Migrant Workers at Dongfeng Auto). Although these workers will remain formally employed by the labour service company, the new law seeks to limit abusive practices by eliminating short term contracts and giving supplied workers basically the same rights as regular workers, including the right to join or organize a trade union at their place of work.

The new law confirms that all individual workers have the right to negotiate their own written employment contract with their employer, specifying terms, conditions and benefits. It enhances specific individual rights by establishing a statutory probationary period for a fixed term contract, improving heath and safety regulations, requiring redundancy payments to be made after the termination of a contract, and generally making it more difficult for employers to terminate contracts, especially those of long serving workers.

Collective or Individual Rights?

Overall, the law tends to prioritize individual rights over collective rights. Nevertheless, it does allow workers' representatives to negotiate collective (factory or workplace-wide) contracts through the official union monopoly, the All-China Federation of Trade Unions (ACFTU), which is still a permanent fixture in state-owned enterprises. And according to the final draft of the law, in enterprises where the AFCTU has not established a branch (and this includes the great majority of enterprises in the private sector) workers may elect their own representatives to negotiate a collective contract with management but only under the "direction" or "guidance" (zhidao) of the ACFTU. This represents a significant climb down from provisions in the second draft of the new law which allowed workers representatives to independently negotiate with management.

This revision is in the interests of the ACTFU, which has been steadily losing its influence and becoming more anachronistic as the private sector expands. It also reflects the concerns voiced by foreign chambers of commerce who (in CLB's view, unjustifiably) claimed the draft was too restrictive and could lead to foreign companies moving operations out of China.

In this regard, as in many others, foreign companies and the ACFTU are natural allies. The ACFTU and retail giant Wal-Mart famously went to war in 2004 over the right to set up union branches in its China stores. Last summer Wal-Mart capitulated and allowed the ACFTU to set up branches in all its mainland stores. But in reality Wal-Mart now benefits from having the ACFTU in-house because the ACFTU, unlike a genuinely representative union, is more interested in collecting its legally mandated two percent of monthly payroll, than actually representing the fundamental rights and interests of its members.

Workers need to be granted genuine freedom of association, not just the "privilege" of joining the ACFTU. They should be given the right to strike, and allowed to freely and democratically elect their own representatives who can negotiate a collective and mutually beneficial contract with management, without the interference of third party vested interests.

The need for legal enforcement

Above all, the contracts that are negotiated either collectively or individually need to be legally enforced. All too often in China, employers can disregard the terms and conditions of the contracts they have signed with their workers and impose their own terms and conditions as and when it suits them. And because workers have no genuine right of association, they have little or no ability to fight back except through (effectively illegal) strike action or other confrontational tactics that sometimes turn violent. By contrast, if workers could organize genuine democratic unions, such confrontational and disruptive disputes could mostly be solved through negotiation and mutual compromise.

The resolution of protests

Everyday, there are large scale labour protests in towns and cities across China, and it is difficult to see how the new Labour Contract Law can help reduce such protests unless it is rigorously enforced and workers are given the genuine right to collective bargaining. Simply adding a new layer to the existing labour legislation that is routinely ignored by employers and not enforced by local authorities will not help protect labour rights, no matter how laudable the new legislation may be. Earlier this month, for example, several hundred workers at a shoe factory in Dongguan, Guangdong Province, staged a highway blockade protesting low wages, poor conditions and wage arrears.

The protest was broken up by over a hundred riot police, leaving one worker badly injured. The local government labour bureau then colluded with management to dismiss 70 of the protest organizers as a condition for the payment of back wages to the remaining workers. According to existing provisions in the 1994 Labour Law, the company should have met the workers' demands for the legally mandated minimum wage and overtime payments and had no right to sack the workers. Moreover the company should have been legally sanctioned for promoting such abuses of labour rights in the first place.

Unless the government takes real steps to ensure the new Labour Contract Law is properly enforced, it is unclear how it will help prevent similar abuses in the future.

Massive crackdown on slave labour camps – a response to years of neglect and collusion

China Labour Bulletin

29th June 2007

The public outcry in China that followed the discovery of a slave labour camp at a brick kiln in Shanxi province has prompted a massive crackdown on kilns and small mines in the region. By June 17, 45,000 police officers had raided some 8,000 mines and kilns in Shanxi and Henan, freeing 591 slave labourers including 51 children. The official All China Federation of Trade Unions has vowed to bring rural labourers under the protection of grassroots unions.

Local governments have agreed to pay compensation to all freed labourers, and Premier Wen Jiabao has personally ordered an in-depth investigation into the use of slave labour, promising that all perpetrators will be punished. As of June 17, 168 suspects had been detained.

The scale of the government and official trade union response reflects the extent of their neglect over the last decade, and their failure to protect the rights of workers. Slave labour camps are merely the worst aspect of an employment system where rural labourers have little option but to work in low-paid, dangerous and often lethal conditions. As China Labour Bulletin revealed this month in “A Journey into the Black Heart of Shanxi” there has been widespread corruption and collusion between local government officials and mine owners that has led to the proliferation of thousands of small-scale unlicensed mines in the province in which on average at least two miners die each year.

This state of affairs is tolerated by the higher levels of government until tragedy strikes or members of the press or public expose the true horror of the situation. Indeed, it took an online campaign by parents searching for abducted children in Henan and Shanxi, and a petition addressed to Wen Jiabao pleading with the prime minister to; “save our children who have been abducted by devils and are living in hell,” before any action was taken.

Mr Wen has a reputation for personally intervening in cases involving ordinary people, such as the worker Xiong Deming whose wages were seriously in arrears. After meeting Xiong in 2003, the prime minister launched a high profile campaign to solve the problem of wage arrears but the systemic problems remain in place today.

Likewise the current crackdown on slave labour will make a lot of noise, and grab television and newspaper headlines for many weeks, but it is unlikely to get to the root of the problem.

As CLB columnist Cai Chongguo pointed out in his paper “Why Can’t Regulations Safeguarding Labour Rights be Implemented?” the key problem is the gross imbalance of power between employers and the state on the one side and the workers on the other. The government has sought to address the problem with legislation and periodic high profile crackdowns but as Cai Chongguo explained this approach could create even more problems in the future.

“There is a huge imbalance of power between labour and management within Chinese enterprises… To date, the government has not adopted any measures to give workers the power to organize unions, and redress this imbalance. The only plans so far have been to intensify the efforts of law enforcement agencies. The result is that not only is there no improvement in the enforcement of these laws and regulations, but, even more serious, the idea is being instilled and reinforced that the Chinese worker is always a pitiable figure, one that requires saving, and that workers are some sort of 'disadvantaged group' requiring charity. Because of this, many people believe that workers in China cannot protect themselves or even control their own fate. Without the assistance of the government, or the employer, or some social group, they are lost. Chinese workers are falling into a vicious spiral where the more protected they are, the weaker they become.”

It is difficult to imagine a more pitiable sight than that of children rescued from barbaric slave labour camps. It can help make the rescuing government look like a hero but it does very little to help address the underlying systemic issues that give rise to slave labour camps in the first place.

Mine boss jailed for reporter death

Al Jazeera

28th June 2007

The owner of a mine in northern China has been jailed for life for his role in the death of a reporter investigating unlicensed mines, state media has reported.

A court in Linfen city in Shanxi province ruled that Lan Chengzhang and a fellow reporter were attacked and beaten in January by a gang of five men organised by mine owner Hou Zhenrun.

Lan died of his injuries in hospital a day later.

The case sparked a public uproar and an unusual intervention by the Chinese president who demanded a top level investigation into Lan's death.

Lan was apparently looking to interview the mine owner when he was attacked, the official Xinhua news agency said.

The five attackers were all given sentences of between five and 15 years, Xinhua reported.

Another man, Zheng Gui, was sentenced to a year in jail for harbouring the suspects, it said.

A Journey into the Black Heart of Shanxi

China Labour Bulletin

29th June 2007

THE northern province of Shanxi is the centre of China’s ever expanding coal industry, and deep in the very heart of Shanxi are the mountainous rural county of Fenxi and the smoke enveloped city of Linfen, officially the most polluted place in China.

Air, land and water pollution are so bad in Fenxi and Linfen that local clinics have seen a dramatic rise in cases of bronchitis, pneumonia and lung cancer over the last decade. And with the privatisation of China’s health system, this has placed an intolerable financial as well as medical burden on the region’s already impoverished population. Very often the only way the people of Fenxi and Linfen can pay their family medical bills is by working in the very industry responsible for the environmental degradation and pollution all around them. With an ample supply of labour, the county has seen a rapid growth in the coal mining industry, especially small unlicensed mines producing poor quality, highly polluting coal in hazardous and all too often life-threatening conditions.

There are nearly a thousand unlicensed mines in Fenxi, which, despite numerous clampdowns, continue to operate covertly with the connivance of local officials.

In April, 2007, Jin Ying, a reporter from Democracy and Legal Times (Minzhu yu Fazhi Shibao), investigated the operation of illegal mines in Fenxi, known locally as “black mines,” and exposed an elaborate network of official corruption and collusion that creates lethal working conditions for miners.

His report, translated and edited here, is important not only because of the story about the mining industry it tells but because it demonstrates the determination of many journalists in China today to report the ugly truth, even at considerable risk to their own safety.

Shanxi Province’s 1,000 unlicensed mines:

Owners collude with officials over “black” pits There are nearly a thousand unlicensed coal mines operating in Fenxi County. These “black” pits are the result of years of unbridled expansion, defying repeated banning orders, with new mines opening after every batch of closures.

One of the many local labourers attracted to this illegal industry was named Liu Wei. In mid-March this year, Liu was working in a “black” pit in Fenxi County‘s Dianping village.

He was crushed to death when the underground roof of the mineshaft he was working in collapsed. Because he was working in a “black” pit, Liu’s death was completely ignored by officialdom until Liu's brother, in desperation, turned to the legal support centre of the Judicial Bureau of Ziyang County. From late March to early April, Yang Pei of the legal support centre repeatedly took members of Liu’s family to Dianping village to seek a settlement.

Finally, with three mine accidents in Linfen this March alone, and a province-wide campaign underway to clean up local mining and end unsafe and uncontrolled extraction, local officials and police launched an investigation. After many setbacks and delays, on April 10, Liu’s family were paid RMB 250,000 in compensation.

In Fenxi County, the local view is that Liu was lucky: his death generated a hefty compensation payment. With nearly 1,000 “black” mines in the area, they say there is no way of knowing who might have died underground, adding that many accident victims get no compensation at all.

In the town of Heping, a former “black” mine boss, who we shall call Yiming (One Light) told Democracy and Legal Times; “Believe it or not, we have over a hundred black mines in this one town here, and the whole county has a thousand. I heard personally from Deputy Mayor Ma, that Heping has altogether 167 unauthorised mines. In fact, it’s a lot more than that. My understanding is that the real number is at least 200.”

Yiming offered to show me around Heping, so on March 19, before dawn, I followed him from Linfen and, after barely two hours, we reached Heping. Entering Zhang village in the south of the town, we saw a procession of trucks loaded with raw, unprocessed coal going down the mountainside. All mine production was supposedly suspended in this county five months earlier, so where was this coal coming from? "It all comes from here,” Yiming said. “No production takes place during daylight hours; they have to wait till five o'clock in the afternoon before they can start getting the coal, and they have to wait until just before daybreak to haul it all away.” He added: “An accident happened at this mine before the Spring Festival and somebody got killed. On the 15th day of the first lunar month [last day of the Spring Festival], there was another accident, in which one person was killed and two injured. In the end the town government paid the family of the deceased on the quiet.”

It is a situation former “black” mine manager Yiming is only too familiar with. "Deep in the mountains of Fenxi County, black mines of all sizes are scattered everywhere,” Yiming went on. “They have shattered many families and brought devastation to our once beautiful mountain scenery.”

That evening, at 10 o'clock, Mr Yiming took me into the mountains, heading this time for a village called Sengnian. When the car reached the smoke veiled Jinyuan coal processing plant, we saw a light shining out from the mountaintop.

“That’s definitely a working black mine,” Yiming said. He suggested we stop the car and continue on foot; “They all have watchmen, and if they see a light approaching, they stop working." We did not dare use a torch, but groped our way along the stony mountain road until we got near the light. We heard the sound of a three-wheeler; it was a mine alright. We got closer. An old winch operator was opening and closing the shaft cover at the sound of a bell. Coal buckets from the mine shaft passed up and down, the three-wheelers ran back and forth like loom shuttles, and the coal heap grew bigger and bigger.

Following the tyre tracks, we continued deeper into the mine area. Before we had gone one kilometre, we saw three more openings. None showed signs of activity, except an occasional, melancholy “dong-dong” from underground. “The men at the top of the shaft have all hidden, but those underground are still working. There has already been some disturbance here, so let’s go somewhere else.” Following Yiming's directions, we went back. When we got to the crossroads at the Jinyuan processing plant, we took a different road up into the mountains. “The black mines are all in the ravines; we go up here and over to find them,” said Yiming, who knows this area very well. Far ahead, we saw a bright array of lights. As we went on, the lights got closer.

A procession of coal-haulage trucks, headlamps burning, was trundling down a twisting mountain road, looking at this distance like a small moving town. Yiming explained: "At this time, you can only see the heavy trucks laden with coal; the empties all come back up in the afternoon. You need wider roads than this; if you use it in both directions, you get jams.” We went towards the trucks, and walked on for another half hour or so until we found another scene of bustling activity. An old man in a cotton-padded overcoat stood on a pile of coal, loudly shouting out instructions: "Drop! Again! Good!" Nearby, a power shovel began to load coal into a carefully positioned truck. He paid no attention to our arrival, as he instructed the truck driver to “go up and compact the load.” I walked up to the man in the overcoat and started to interview him. He was unexpectedly friendly, and began explaining: "This mine is called Tongdi, and it was opened by the former party secretary of Nangoudi village. The quality of the coal is not good—grade11—and one ton will only fetch about RMB 100. But here, you can produce 20-30 tons in one evening." Walking around near the pithead, I was unable to see where the coal was coming from. "Look here," the man in the overcoat said, pointing behind him.

Looking closely, I finally picked out a small hole through which only one person could pass. "Right now, most of the workers have knocked off,” he said. “There are only four men at work, and two small flatbed trucks are taking the coal away. This is one of the smallest shafts around here. If you go further on from here, all the black mines are small - there are probably about 40 or 50 of them."

How did all these “black” mines spread through the mountains and valleys? Zhang Dahai (not his real name), an official at a local branch of the Bureau of State Land and Resources in Fenxi County, gave the following explanation. Zhang, who like Yiming himself once ran a “black” mine, told Democracy and Legal Times: "Two or three years ago, you only had to invest about RMB 20,000 or 30,000 if you wanted to open a small mine in Fenxi. You would dig a shaft up a mountain, bring up a power generator and winching equipment, hire some workers, and then you could start getting coal out. If you wanted to open a black mine, you only really needed two things: a lot of money, and very good connections.”

The first requirement is sufficient capital. You don't need much money to open a small pit, of course, but it certainly isn’t something that anybody can do. The hardware investment runs to several tens of thousands of yuan, and you have get somebody to do the sample-testing. If you pay a lot of money, you will get an expert, and if you pay little, you will get a low-level technician. At this point, the amount that has been invested in human resources and the depth of the sampling and the coal quality are very important. You dig a shaft, bring up the power-generator, winch, scoops and other pithead equipment. Finally, you have to hire some people, and you will need to take on some of them long-term. “Black” mines are not able to produce coal every day, so if you get wind of an official clampdown, you have to stop production, but you cannot just fire workers in the downtime, because you might have to produce on the quiet at any time.

In addition to the hardware, there are also “soft” investments. You have to hand over RMB 20,000 to the village authority, for without their support and protection you cannot open a mine. Then you have to pay regular “tributes” to the Bureau of State Land and Resources and local police. All this will cost you RMB 50,000-60,000 at least. In addition, you need will considerable working capital. “Black” coal mines produce “black” coal, and if you have not got the right paperwork you cannot simply sell it off, you have to transport it to a central storage depot and wait for a big buyer to agree a sale and take it away in large trucks. Coal is often stockpiled, so you need ample working capital otherwise you are out of business.

If you do have the money, there is still one other requirement for opening a “black” coal mine. You need powerful backers. Every “black” mine needs good protectors in every office from the local government to the Public Security Bureau. They can press for leniency after an accident, and they can also pass on information. If an investigation is launched by the higher authorities, a connection on the inside can immediately warn the affected mine owner.

Usually these connections have a major share in a “black” mine enterprise. They do not themselves make investments, do any work, or participate in management. In business terms, all they do is use their special status to provide information to mine owners. From the businessman's point of view, these expenses seem impossibly high, but as Zhang said, “If you want to make money from a black mine, the important thing is to keep officials onboard at every stage. Otherwise, it becomes a bottomless pit.”

Anybody who wants operate a “black” mine long-term has to keep three organizations sweet: the village or township government, the Bureau of State Land and Resources, and the local police. If you hand over RMB 20,000 to the local government, you can open a small mine for business. But that RMB 20,000 is definitely not a one-off payment. Now, all over China, unlicensed mines are being targeted by tough official investigators and hundreds of mines have been closed down or even blown up. If you want to reopen for business, you will be considered as a new operation and will have to hand over another RMB 20,000. The payoffs to the Bureau of State Land and Resources and local police are a bit smaller: usually the top men need to be given between RMB 5,000 and 10,000 for general business information, but these two departments give “black” mine bosses the biggest headaches.

Former “black” mine boss Hao said that his experience is typical. In 2005, he had a “black” mine in Heping. At that time, it was a considerable operation, with daily production of up to 100 tons. But the quality of the coal was not good, and one ton would only fetch RMB 100.

Because he lacked good connections, he could only work the mine for 15 days a month, and only had eight months of regular operation per year.

After production costs, he could only make a profit of RMB 700,000 on annual revenues. Start-up investment was RMB 130,000, palm-greasing officials at every level cost RMB 150,000, RMB 200,000 went into payoffs to connections (Bureau of State Land and Resources cadres), and he had to pay RMB 210,000 in compensation to the family of an employee killed in an accident. Total “procedural costs relating to the accident” were RMB 170,000. “There were also food, drink and entertainment expenses, which cannot really be calculated. After a year, I not only failed to make money, I could not even recoup my investment.”

The State Administration of Coal Mine Safety in Xinzhou in northern Shanxi only has ten employees but they have built themselves a very fine office building, and bought a new car each from money extorted from mine owners. The office building has 34 rooms. The ten employees occupy 14 of them, while 20 stand empty. The average room size is 60 square metres, and each room has its own sleeping and washing area.

However, officials at the State Administration of Coal Mine Safety do not even consider themselves responsible for safety at “black” mines, as Democracy and Legal Times discovered during an interview at the Fenxi County branch.

“We at State Administration of Coal Mine Safety only supervise licensed mines; unauthorised mines fall under the remit of government and the Bureau of State Land and Resources,” an official said. Asked about the situation in which “black” mines continue secret, uncontrolled coal extraction, while legal mines are “closed down for reorganisation purposes,” a source at State Administration of Coal Mine Safety for Fenxi County told the paper the following:

Fenxi County has altogether 22 authorised mines. Although the quality of the coal is not that good, they are still tolerably profitable. At the end of September 2006, a directive came down ordering all mines to cease production, restructure and get re-licensed for 2007. But now, after at least five months, not one mine has acquired a new license, and production has remained suspended at all of them. Recently, I found out, 12 mines in the county had completed the first round of legal clearance, and after getting written approval had already begun basic construction. The State Administration of Coal Mine Safety has placed inspectors at each licensed mine to check that production is carried out correctly. But “black” mines do not come under the remit of State Administration of Coal Mine Safety, and within the county are only checked by “unannounced” inspections. Can that really hurt or root out “black” mine operations?

Local people are sceptical.

On April 14, word spread across Fenxi County that the authorities intended to carry out unannounced inspections by the Bureau of State Land and Resources and Public Security Bureau at “black” mines. It was supposed to be a secret action but in the affected areas everybody was talking about it and it was hard not to suspect the news had been leaked. At seven o'clock in the evening on April 14, members of the public security forces charged with “smashing the black mines” stood at the entrance of the Bureau of State Land and Resources offices of Fenxi County awaiting orders. After a quick meal, at least a dozen off-road vehicles and police cars set off in a convoy, creating an impressive spectacle.

There was nothing very secret about this procession. "The black mines with connections have already stopped production; they are only targeting the small illegal mines that have no connections," remarked bystanders in a crowd of onlookers, chatting dismissively about what was by now a familiar sight.

It is understood that this clampdown was led by Fenxi County Deputy Party Secretary Wang and County Head Ma. The clampdown had two official purposes: to investigate the “black” mines, and to check the papers of coal-trucks they met along the road. A reporter from a local TV station turned up to record footage and asked if he could do some interviews. Wang and Ma replied pointedly: “At the moment our society lacks sufficient harmony, so for safety reasons we do not agree to a reporter coming along.” The reporter was then told, in menacing tones, “Did you know that in Datong, Shanxi, a reporter was beaten to death?”

On the evening of April 14, there were hardly any coal trucks on the roads of Fenxi County. Now and then a few passed by, stopping and starting, drivers using their mobile phones to dodge the convoy of “black” mine busters. Late that night, I returned to Qiangoudi village outside Yongan. All the “black” mines were down. In the pitch dark, all the small mines had sheets of plastic draped over their buildings.

They were waiting for the danger to pass, before resuming work. On the way back, four three-wheelers passed by in a line. Wearing their safety helmets and lamps, the miners told me that 78 men had gone underground that day, and after just four or five trips they had been told to stop work and go home.

Sengnian municipal party secretary, Wu Jianming, has frankly admittedly to the media that his government can do nothing. "The state does not have strong compulsory measures against unsafe, uncontrolled coal mining. In most cases, people are detained and then the sentence is not carried out.” Asked about secret mining within the boundaries of Sengnian, Wu said, "Yes, it certainly exists, I recognise that. The village and town governments have no means of dealing with black mines. It is pure luck that accidents do not happen. But they are inevitable, so far we have been very lucky."

Zijin on the warpath yet again

Hong Kong-listed Zijin Mining Group Co. Ltd., one of China's largest gold miners, is finalising its acquisition of London-listed Avocet Mining PLC's gold mine in Tajikistan. Commonwealth & British Minerals (UK) Ltd., a 100% Avocet subsidiary, currently holds a 75 percent stake in the Zeravshan gold mine project in Tajikistan, while the Tajikistan government holds the remaining 25 percent. The mine has been the largest gold mining operation in the country since it commenced production in 1996.

This will be Zijin's second acquisition, in as many months, of a UK company, following its takeover of Monterrico Metlas, which operates the highly controversial Rio Blanco projest in Peru.

Zijin is also currently in the initial round of negotiating for several other overseas mining projects - including a lead and zinc mine in the Tuva Republic of eastern Russia's Siberia, a copper and nickel project in Russia and gold mining projects in Vietnam and Mongolia.

Jiuquan Steel's ferrochrome JV kicks off in South Africa

Another London-listed mining company, International Ferro Metals Limited (IFM - a joint venture established by Jiuquan Iron and Steel Group and its South African and Australian partners) recently commenced operation of a 267,000-ton ferrochrome facility in South Africa.

The IFM project includes a chromium ore mine with an estimated 25 million tons reserves, an affiliated ore selecting plant with an ore processing capacity of 900,000 tons per year and a pellet plant with an annual capacity of 400,000 tons. IFM was established in 2002 with a registered capital of $157 million, at which time Jiuquan Steel was the largest shareholder with a 26.1 percent stake. The company raised 80 million pounds to finance the project by listing on the London Stock Exchange in September 2005.

[data from Interfax China Metals, 29 June 2007]


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