China: Coal mining slow to resume after Shanxi accident

• Shanxi mine restarts remain delayed
  
  
• Tight supply lifts coking coal prices
  
  

MySteel Global: The resumption of mining in North China's Shanxi province following the May 22 mine blast accident is proceeding at a much slower pace than market participants had anticipated. As of May 29, 112 coking coal mines in the province were still under suspension for safety inspections, according to Mysteel's survey. The 112 mines have a combined capacity of about 122 million tonnes/year.

The findings of the latest Mysteel survey were little changed from those of an earlier survey on May 27 and showed little progress in restarting the suspended Shanxi mines.

Changes were mainly seen in Changzhi city, where three mines in Zhangzi and Wuxiang counties had newly resumed production. The three mines mainly produce meagre coal, meagre lean coal and low-volatile primary coking coal, with their annual capacity totaling 7 million tonnes, Mysteel's survey shows. As of late May 29, some 25 coking coal mines in the city remained stopped.

In Linfen city, a mine that had previously resumed production has been suspended again, reason unclear. Mysteel's latest survey showed the city has 34 mines still suspended.

The situation for other regions in Shanxi remains the same as in Mysteel's previous survey.

"Earlier expectations were for the mines to be stopped for only three to five days but the duration of the stoppages has lengthened, with most now approaching a week," said an analyst in Shanxi. "Optimistically, most mines could restart production in early June, although the timetable for mine resumptions in (Changzhi city's) Qinyuan county remains highly unclear." The deadly mine accident that occurred in Qinyuan late on May 22 prompted a rush of extensive safety inspections that are still ongoing, as reported.

These inspections target illegal activities such as concealed working faces and wrongful subcontracting of mining work, Mysteel Global learns. Some mines have made rectifications voluntarily during their self-inspections to avoid possible punishment by local authorities, according to survey respondents.

Tightened coking coal supplies amid the broad mine suspensions have caused a jump in domestic coking coal prices. On May 29, the Mysteel Coking Coal Index, which tracks coking coal prices nationwide in China, reached Yuan 1,436/tonne ($212.1/t) including the 13% VAT, higher by Yuan 73.5/t on week, according to Mysteel's assessment.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.