Coal Industry Faces Slowdown, Layoffs [Updated]

Recent government statistics indicate that China has been burning 17 percent more a year than previously recorded—creating a greater challenge in establishing goals for emissions reductions ahead of the U.N. climate change talks in Paris. Chris Buckley reports for the New York Times:

Even for a country of China’s size, the scale of the correction is immense. The sharp upward revision in official figures means that China has released much more carbon dioxide — almost a billion more tons a year according to initial calculations — than previously estimated.

The increase alone is greater than the whole German economy emits annually from fossil fuels.

Officials from around the world will have to come to grips with the new figures when they gather in Paris this month to negotiate an international framework for curtailing greenhouse-gas pollution. The data also pose a challenge for scientists who are trying to reduce China’s smog, which often bathes whole regions in acrid, unhealthy haze.

The Chinese government has promised to halt the growth of its emissions of carbon dioxide, the main greenhouse pollutant from coal and other fossil fuels, by 2030. The new data suggest that the task of meeting that deadline by reducing China’s dependence on coal will be more daunting and urgent than expected, said Yang Fuqiang, a former energy official in China who now advises the Natural Resources Defense Council. [Source]

The errors in the data are due to an underestimation of China’s coal consumption, according to the New York Times report. But official statistics in China are notoriously opaque and inaccurate, as Gwynn Guilford recently reported in Quartz. [Update: James West of Mother Jones reports that U.N. officials have long been aware of the revised statistics in the New York Times article, which were announced by the Chinese government in February 2015.]

Meanwhile, the coal sector is suffering an economic slowdown due to decreased demand. In Shaanxi, the heartland of China’s coal industry, 61 mining companies are expected to be closed. From Laura He at the South China Morning Post:

Among the 27 mainland-listed coal companies that have revealed third-quarter results, more than half have posted a loss, compared with the 45 per cent of coal firms that reported a loss in the first half of the year, according to statistics from financial information site 51iFind.com.

Analysts said the deteriorating results for the coal sector were mainly due to a slump in coal prices, with the price of steam coal, mostly used for power generation, falling 7 per cent quarter on quarter on the third quarter of the year and the price of coking coal, mainly used in steel production, falling 4 per cent. The price of steam coal has fallen 17 per cent so far this year, and the price of coking coal is down 15 per cent.

Weak industrial demand, coupled with an overcapacity problem plaguing the coal industry, has forced mainland governments to shut down many coal . Shaanxi province, the mainland’s major coal export base, announced last month that it would shut down 61 coal with “operation difficulties” or “lower than expected earnings”. In August, the State Council, China’s cabinet, said the country had suspended 48 per cent of all the coal mines as an effort to eliminate outdated production capacity. [Source]

Up in Qitaihe, , Marketplace’s Rob Schmitz talks to miners who have been impacted by mass layoffs and their families. Many of them work in mines run by Longmay, the largest state-owned coal mining company, which plans to lay off 100,000 workers this year:

As government leaders in Beijing hammer out reforms meant to transform China’s economic growth model from one based on building infrastructure to another based on consumers buying things, coal mining regions like this one are being left behind. The miners here have spent their lives contributing to China’s incredible growth, but they are finding themselves on the losing end of China’s historic economic transformation.

Next door, a vendor named Song sells vegetables to the families of miners. Song’s husband is a miner, too. He’ll soon be out of work. “Once he’s laid off, we’ll get modest living expense payments for three years,” she said. “After that, they claim they’ll offer him job training, but come on! Train him to do what? What can they possibly train him to do? Coal mining is all he knows!”

Mining makes up nearly a quarter of Qitaihe’s economy. Most of the city’s 800,000 people work to support the city’s coal mines. Longmay runs twelve mines here. Several will be shut down as the company lays off 40 percent of its workforce. “This is all related to corruption,” Song said, yelling. “The whole Communist Party is corrupt; the entire system. They do whatever they want. We could all die on the street and it’s no business of theirs!”

Four years ago, Longmay made more than $100 million in profit. But now this region has the slowest economic growth in China, and lower coal prices have plunged the company into hundreds of millions of dollars’ worth of debt. [Source]

In a separate post, Schmitz recounts his run-in with local officials from the Longmay mining company and Qitaihe government who tried to prevent him from reporting the story:

Later that evening, two officers arrived with Wang. This time, he showed me his identification badge, and I showed them my press card.

“When are you leaving Qitaihe?” Wang asked, exasperated.

“That’s none of your business,” I replied.

“Yes, you are right. But tomorrow morning, you can’t report here,” Wang announced.

“It’s not in your power to tell me that,” I said. “I’ve got a press card, and I can legally report here.”

Wang switched to English: “No! No! No!” he yelled. [Source]

Read more about coal and the mining industry in China, via CDT.