Most small mines in Shanxi in merger deals -Xinhua

SHANGHAI, Aug 19 - More than 70 percent of over 2,000 small mines in China's top coal province Shanxi have agreed with bigger mines on merger, as industry consolidation pushes forward, the Xinhua news agency said on Wednesday.

Shanxi's provincial government expected all mines to sign merger deals by the month-end, while construction to expand these mines would start in September, the official news agency said.

Although China has called for coal industry consolidation for years, many small mines have survived the power struggle between Beijing, determined to improve mine safety, and local governments, whose fiscal revenues largely come from these mines.

But notoriously dangerous small mines have been blamed for the poor safety record in China's coal industry. Their inefficiency has added to Shanxi's environmental woes.

Shanxi's ambitious plan is to cut the number of its mines by 60 percent to 1,000 by 2011.

Coal mines need to have a minimal annual production capacity of 3 million tonnes, and individual shafts are required to have a minimal capacity of 900,000 tonnes a year, Xinhua quoted Shanxi's Governor Wang Jun as saying.

Currently, 80 percent of Shanxi's mines have an annual production capacity of 300,000 tonnes or lower.