(Bloomberg) -- China recorded its second-worst coal mine accident this year, after a fire at a conveyor belt killed 16 in the southwestern province of Guizhou on Sunday.
All-too-frequent fatalities at Chinese mines continue to blight the industry and test the ability of regulators to balance safety with the government’s energy security priorities.
The fire in Guizhou follows a disaster in Shaanxi province in August that killed 11, prompting another round of stricter regulations that pushed up coal prices. Another death was reported earlier this month at a mine in neighboring Shanxi province, the top producer.
The worst incident this year occurred in February at a mine in Inner Mongolia, where 53 died. An investigation led to the arrest of 13 employees at an engineering company involved, after it was determined they’d been reckless in switching the mine from underground to open-pit operations.
Beijing is pushing miners to ensure supply of China’s mainstay fuel to avoid the power crunches that have afflicted the economy in recent years. Another record year for output in the world’s biggest producer is in the offing, although mounting casualties are likely to trigger ever tighter regulation that could ultimately curb supply and drive prices higher.
Mine owner Guizhou Panjiang Refined Coal Co. is the top supplier in southwest China, according to its latest earnings release. The company added 1.2 million tons of new capacity in the first half of the year, even as net income halved after coal prices fell. Its stock dropped on Monday by as much as 6% in heavy volume in Shanghai before paring losses.
China’s southwest was hit hard last year by power shortages caused by an epic drought that sapped the hydropower on which the region relies. A seasonal dry spell looms in November, when coal is likely to shoulder more of the burden of electricity production for factories and households.
Benchmark thermal coal prices have risen in recent weeks amid the heightened scrutiny on safety and as the economy enters a busier period. But they’re still about a third lower than this time last year — a situation that could change if Beijing responds to the latest fatalities with another round of safety inspections and threats to close operations it deems unsafe.
The Week’s Diary
(All times Beijing unless noted.)
Monday, Sept. 25
- Nothing major scheduled
Tuesday, Sept. 26
- China Intl Aluminum Week in Yinchuan, Ningxia, day 1
Wednesday, Sept. 27
- China industrial profits for August, 09:30
- CCTD’s weekly online briefing on Chinese coal, 15:00
- China Intl Aluminum Week in Yinchuan, Ningxia, day 2
Thursday, Sept. 28
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~15:30
- China Intl Aluminum Week in Yinchuan, Ningxia, day 3
Friday, Sept. 29
- China holiday
Saturday, Sept. 30
- China’s official PMIs for September, 09:30
Sunday, Oct. 1
- Caixin’s China PMIs for September, 09:45
On the Wire
Iron ore slumped as China’s persistently weak property market causes construction companies to hold back restocking of steel before the National Day holiday period.
Bloomberg Economics expects China’s September business surveys to show mildly positive signals — providing some reprieve after a spate of weak data and troubling news from the property sector.
After a strong summer, China’s travel market is about to get another boost as the Golden Week holiday arrives.
Australia will continue pursuing a case at the World Trade Organization against China’s tariffs on wine imports, rejecting a proposal to tie the issue to a separate dispute on steel products.
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