An accident that killed more than 270 people at an iron-ore mine in Shanxi in September last year may have been the turning-point, or so provincial leaders hope. The disaster prompted the resignation of Shanxi’s governor, Meng Xuenong. He was replaced by Wang Jun, formerly head of the central government’s work-safety agency—a signal from Beijing that at last it meant business.
Mr Wang’s tactics sent shivers through Shanxi’s coal barons, many of them entrepreneurs from the coast. It had always been a fickle business, with mines routinely forced to close in the build-up to public holidays or big events such as last year’s Beijing Olympics. The central government regards big accidents at such times as hugely embarrassing—so much so that even recalcitrant local officials temporarily fall in line. But until Mr Wang’s arrival, China’s fast-growing power industry and its perennial hunger for fuel had made coal a good investment. Shanxi, more than other provinces, made private investors welcome.
Now the tide could be turning. Early this year the Shanxi government ordered that the number of mine shafts in the province be reduced by more than 1,500, to 1,000 before 2011 and further by 2015, to 800. This would be achieved by closing those with an annual output of less than 300,000 tonnes. The rest would be handed over to the province’s handful of big state-owned operators. Owners would be given compensation in cash or shares (not nearly enough, some have been quoted by the state press as saying).
Read also coverage by Caijing.