Coal in China

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Coal in China

• Mining Safety and Future Consumption
• Patrick Chu
• Piers Wendlandt

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Mine Safety in China

• Deadliest Mines Worlds Worst Safety Record
• 17 fatalities per day death rate of 2.81/mt of
  coal
• 70x worse than US, 17x S. Africa, 7x Russia
  India
• 1996 2000 (Official Reports)
• 4241 accidents 7619 deaths ANNUALLY
• 2001 2005 (Official Reports)
• 3703 accidents 6213 deaths ANNUALLY

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Accurate Numbers??

• State Administration of Work Safety (SAWS)
• A significant underestimate?
• Annual deaths in excess of 10,000
• Indirect Deaths
• Black Lung, Cancer, Air Water Poisoning
• Astronomical Death Rates!

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Why So Dangerous?

• Soaring Coal Prices
• Immense Energy Demand
• Transportation Bottlenecks Spot Shortages
• Illegal Mines Corrupt Local Officials
• Inexhaustible Source of Cheap Labor
• No Mechanization Automation Incentives
• Lack of Legislation and Regulation

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Coal Industry Regulation

• Passed About Chinas Government
• Ministry of Coal (pre 1998 government reforms)
• National Economic Trade Commission (2003)
• Bureau of Energy (Currently)
• Mining Safety
• State Administration of Work Safety
• State Administration of Coal Mine Safety

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Important Legislation

• Law of China on Safety in Mines (1992)
• Basic Provisions for Safety Production in
  Mining Industry
• Coal Law of China (1996)
• Manages Coal Industry
• Explicitly Gives Ownership Management of all
  Coal Resources to the State

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Legislation Continued

• Measures for Administrative Punishment of Coal
  Mines Security (2002)
• Punishments for Violation of Coal Mining Safety
  for Supervisors
• Production Safety Law of China
• Directs Safety Laws to Prevent Accidents
• Not Explicitly for Coal Mining
• Laws Scheduled for Revision in 2008

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Chinas Plan . . . . (2006 - 2010)

• Limit Production to Meet Domestic Demand
• Coal Exports Cease by 2010 at 2.6 B mt
• Large Mines 56, Medium Mines 17, Small
  Mines 27
• Majority of Production from Northern China
• Reduce Accidents by 25, Fatalities by 20

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Chinas Plan . . . .

• Formation of Companies
• 6-8 with 100 M mt/year Capacity
• 8-10 with 50 M mt/year
• 10 Open Cut 10 Mechanized Shafts at 10 M mt
• 13 National Coal Bases
• Elimination of Small Mines
• Reduce number from 20,000 to 10,000
• Decrease Output from 1.08 B mt to 700 M mt

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Chinas Coal Resources

• 3rd Largest Reserve of Recoverable Coal
• 126.2 B tons or 13 (recoverable coals)
• Vast Majority in Northern China
• Shanxi, Shaanxi, Inner Mongolia, Ningxia Hu A.R.
• Southern Coals
• Abundant but Less Desirable
• High Sulfur and Ash

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Chinas Energy Consumption

• Coal accounts for approximately two-thirds of
  energy consumption

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Energy Outlook

• Primary energy demand is projected to more than
  double from 2005 to 2030
• Coal consumption in China is expected to grow
  rapidly
• 63 total energy demand in 2030
• Power sector remains main user
• Net coal imports reach 3 of its demand and 7 of
  global coal trade in 2030

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Energy Outlook contd
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Coal Usage - Industrial

• Emerging technologies
• Coal Gasification to produce synthetic gas
• Stirred up interest in 1990s
• Implementation of technology halted
• Coal-to-Liquids
• Shenhua Group
• Projected to displace 10 of Chinas oil imports
  by 2020

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Coal Usage - Domestic

• Heating and Cooking
• Migration from rural to urban areas
• Higher standard of living
• Legislation prohibiting coal usage in designated
  areas
• Decreased availability of biomass fuel

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Conclusion

• Necessity for a major reform of coal mining
  safety regulations
• Effectiveness of attempted improvements remains
  to be determined
• Chinas heavy consumption of coal will continue
• Possible shift in usage patterns

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Questions?