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Thread: The Effect of the Shanxi Coal Mine Blast to Shanxi’s Economic Growth In 2009

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[quote=GUEST34766,360083]

From www.chinastockadvice.com

The death toll in north China's coal mine blast rose to 74. Rescuers said that among 114 hospitalized miners, six are in critical condition. The accident occurred at 2:17 a.m, Feb 22, while 436 miners were working underground at the Tunlan Coal Mine of Shanxi Coking Coal Group in Gujiao City, about 50 km away from Taiyuan, the provincial capital.

The Tunlan Coal Mine with an annual production capacity of 5 million tonnes boasts one of the best mining facilities in China. The mining company, Shanxi Coking Coal Group, is China's largest coking coal producer. The mine has had no major accidents for the past five years.

This serious accident would make the Shanxi economic growth even worse. In the second half of 2008, Coal industry entered its downside trend, coal price was lower month by month. As a result, the coal sales decreased a lot, and coal stocks stacked the ports such as Tianjin Port and Qinhuangdao Port.

With the coal sales decreasing and coal price getting cheaper, Shanxi economic growth was slower from 2008. In Nov 2008, it’s economic added value was even negative.

Shanxi is an inland province in China; coal industry is the only main industry in Shanxi. Coal industry constitutes more than 60% of Shanxi’s economics. As a result, Shanxi economics relies on the coal industry greatly. It’s really a dangerous development method.

In 2008, coal industry entered its downside trend. And for each coal mine, it can only had 7 or more months to operate. During the great Olympics, some coals would stop operation, to guarantee Beijing’s clear air and safety. To stop operation is the best way to decrease operation accident. Besides, after each big accident, all coal mines in Shanxi would stop operation for 2-8 weeks for the inspection.

So for 2009, spring festival is in January, almost all coal mines would have a long vocation, it’s the most important festival for Chinese; in February, the big accident occurred. The inspection would last two weeks to four weeks, during which all coal mines would stop operation. It’s certainly that for the first quarter, Shanxi GDP growth would be quite low, lower than 6% I think.

It’s a bad start. Even worse, the bad economic condition continues, under which the coal industry is difficult to have a reverse.

We can expect that after the accident. Shanxi government and each coal mine would pay more attention to safety production, it’s a good news. China produces 38% of the coals in the world, but the death is 80% in this industry. China coal mine is 100 times more dangerous than US coal mines. It must be changed.

Although the safety production would slow the economic growth, it’s worthwhile to do it. After all, the life is of greatest important.

www.chinastockadvice.com -----Leading provider of investment research on stocks traded on China’s A-share market.

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