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China coal town bears scars of waning growth
2015年11月4日 / 晚上9点04分 / 2 年前

China coal town bears scars of waning growth

* Jixi coal city hit by tumbling coal prices, demand

* Longmay Group cutting headcount by 100,000 by year-end

* China National Coal Assoc says 80 pct mines losing money

* Mines across country cutting wages, slashing jobs

* Coal prices at Qinhuangdao port down 28 pct in 2015

By David Stanway

JIXI, China, Nov 5 (Reuters) - Beneath the mask of official Chinese jobless figures, barely changed through thick and thin since 2002, the northeast mining city of Jixi bears the scars of China’s slowing economy and ailing heavy industry.

Giant mounds of unsold coal sprout weeds in the makeshift depots marking nearly every junction, and bitter Siberian winds blow sulphurous dust through streets peopled by laid-off miners.

“This is a coal city and there is nothing else,” said Xin Qinling, a former miner now responsible for dwindling shift rotas at Jixi’s depleted Zhengyang coalmine.

State-owned Longmay Group, which owns most of the collieries in Jixi, including Zhengyang, has been making losses since 2012.

It said last month it would adopt a “wartime work atmosphere” and cut its 248,000 headcount by as much as 100,000 by year-end, more than the entire labour force of the U.S. coal sector.

As a state firm, it still has to grapple with its various “social responsibilities”, including the pensions of 180,000 retirees and the upkeep of 42 hospitals and 130 schools in the region.

With Chinese economic growth dipping to a 25-year-low and government waging a “war on pollution”, the plight of Jixi, 19 miles from the Russian border in the province of Heilongjiang, is echoed across China’s coal belt.

The Luan Group in Shanxi province, another of China’s big state miners, said last month it had no choice but to cut output and put some workers on extended unpaid leave.

The industrial provinces of Liaoning, Shanxi and Heilongjiang were China’s slowest-growing provinces in the first half of the year, with growth of 2.7 percent, 2.6 percent and 5.1 percent, compared with a nationwide 7 percent.

“Many laid-off miners went elsewhere,” said Xin.

Wang Xianzheng, head of the China National Coal Association, said in July that coal firms throughout the country have been slashing wages by as much as 30 percent. His association surveyed 85 coal firms and found 40 were struggling to pay staff, and many had failed to keep up with mandatory pension and health insurance contributions.

The association estimates that more than 80 percent of Chinese mines are losing money because of plummeting prices.

Xin said the Zhengyang mine had already cut its workforce to 1,600 from 4,000 at its peak, and all miners aged 50 and over had been let go. Other Longmay-owned mines in the city have made similar cuts.

“We are certainly facing closure,” Xin said, adding that monthly output, once more than 200,000 tonnes, had been slashed to around 80,000 tonnes.


The malaise affecting coal has also hit other heavy manufacturers and the construction industry.

At job fairs in first-tier cities like Beijing and Shanghai you can find the casualties, like a laid-off welder from Jining in his 30s who gave his surname as Lu.

But the focus of growth in such cities and in booming coastal provinces is in services like finance, cocktail bars, and software development, which doesn’t help people like Lu.

“Jobs are hard to find this year. It’s like an economic crisis that you have to fight so hard for a job,” he said.

While coal consumption in Jixi will pick up as winter temperatures plunge, it won’t compensate for the closure of Beigang, the city’s biggest steel mill, last year.

Demand from major downstream industries like steel, cement and electric power has declined in the first three quarters of the year, leaving massive overcapacity in coal built up in the boom years.

Industry officials say survival for the sector, which employs an estimated 5.9 million people nationwide, with productivity per worker around 20 times lower than the United States, depends on making cuts.

Even so, the job losses are unlikely to budge the unemployment statistics, stuck between 4 and 4.3 percent for 13 years, which even officials admit are unreliable.

Some economists doubt China’s growth figures are an accurate reflection of circumstances on the ground, too, with measures like falling power consumption painting a much less rosy view of economic activity.

That helps explain why coal prices at the port of Qinhuangdao SH-QHA-TRMCOAL are about 28 percent lower than at the start of the year and still falling.

“The prices are either the same or lower than our costs, but we are trying to keep going for the sake of holding onto our customers,” said Sun Meng, who owns a small coal depot in Jixi.

“It is impossible to keep our heads up; everyone is cutting production, but it isn’t enough to make a difference, and most people think the market won’t pick up for at least another three years.”

Reporting by David Stanway; Additional reporting by Xiaoyi Shao; Editing by Will Waterman

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