Coal miners in Shanxi province, the nation's second-largest coal producing region, are investing billions of yuan to upgrade production facilities and management, in an industry consolidation ordered by the government to improve safety and efficiency.
Typically, the revamp order requires that a mine ceases operation and undergoes reconstruction for two years - a move that will cut regional output in the short term, but pave the way for larger-scale and more efficient and safer mining in the long term.
One example is the Youyi mine in Shanyin county, a district of Shanxi under the administration of Shuozhou city. The mine is being purchased by Hong Kong-listed King Stone Energy Group, a chemical and optical products maker that diversified into coal mining a year ago.
In Shanyin, 20 out of 21 mines have been ordered to shut down and be overhauled, said the mine's managing director, Sun Chuntian. The only mine that is allowed to continue production, called Shaoyaohua, has gone through a period of modernisation that began in 2006 itself.
Shops and restaurants near the Youyi mine are shut, creating a semblance of a ghost village. Reconstruction is slated to begin next March.
The industry's consolidation began before the Shanxi government's move last year to reduce 2,600 mines to 1,053, although the industry remained fragmented compared to developed economies. Now all mines under 300,000 tonnes of annual capacity have been ordered to close and be absorbed by larger operators.