Thursday, November 5, 2015

Mass Layoffs in Chinese Coal Fields

Behind the doors of this gritty coal town, nobody answers the repeated knocks. When they hear there's a foreign journalist on the other side, most keep their doors shut. But then, a woman opens hers, shoos the visitor inside, and explains why. "We don’t dare talk about what’s happened," she said. "You talk, and they’ll retaliate."
She's referring to local government officials and the managers at the Eastern Wind coal mine across the street. The mine is run by Longmay, the largest state-owned coal mining company in China’s northeast. It’s one of several here in the city of Qitaihe that will empty when Longmay lays off 100,000 workers later this autumn....
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.
Corruption also played a part. A few years ago, a company vice president was charged with accepting $50 million worth in bribes, money he used to buy dozens of sports cars and 58 houses, several of which he had never even visited...."Longmay’s situation is in fact rather universal in China in recent years," Deng said "Datong Coal Mine Group in Shanxi, China National Coal Group, Yankuang Group in Shandong, Shandong Energy Group — all these old coal companies have similar predicaments. They all have heavy personnel burdens, and they all have big local social responsibilities."
Combined, these companies have 600,000 employees whose jobs could soon be on the chopping block, too. “This situation is precisely what the government fears the most," Deng said. "A lot of idle men in their prime working age, without jobs. It threatens to cause social unrest.”
100,000 employees laid off?  Potentially more layoffs than that in the industry?  What gives?  Is coal from Australia cheaper, or has demand decreased that much?  I wouldn't think demand would be going down with all the power plants that have come on-line in the last few years.  I can imagine that many unemployed coal miners could lead to social unrest.  From here, China appears very opaque.  I have to wonder what in the hell is really going on over there.

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