China ‘war on coal’ to drive labour unrest — report

Sorting coal out of waste rocks at Jin Hua Gong Mine. (Image by LHOON | Flickr Commons)

China’s decision to speed up closures and mergers of small coal mines, in a bid to reduce pollution and improve energy efficiency, will face mounting resistance, a new report shows.

According to BMI Research, labour unrest across the country’s coal industry, following late salary payments and job cuts, will increase costs for local miners in the medium term, 80% of which were already losing money by the end of last year.

The measures, aimed to shrink both oversupply and environmental pollution, will be met with increasing resistance.

The situation is likely to worsen soon, the analysts say, following last month’s fresh decision by Beijing to invest $4.6 billion in closing about 4,300 coal mines. The fresh move includes removing outdated production capacity of 700 million tonnes and redeploying around 1 million workers over the next three years.

The newly announced measures follow China’s decision to halt the approval of new coal mines until at least 2019.

China’s 'war on coal' to drive labour unrest — report

Source: BMI Research.

These resolutions will inevitable trigger labour issues. Change is already in the air — protests and demonstrations doubled in 2015, to 2,774, with December’s total of more than 400 such incidents setting a monthly record, according to the Hong Kong-based China Labour Bulletin.

Since 2013, the nation’s coal sector has shed 890,000 jobs, equal to all the new jobs the same industry created during the stimulus-driven boom that began in 2007. The struggling sector currently employs nearly 6 million people.

Opportunity for renewables

According to BMI’s report, China’s renewable energy industry will stand to benefit by stepping in as a substitute for coal in the coming years. The experts forecast coal consumption to decline (- 5.0% y-o-y in 2016) after coal imports plummeted by 35% y-o-y in December 2015.

China’s 'war on coal' to drive labour unrest — report

Source: BMI Research

Clean-energy investment instead hit an all-time high of $110 billion, about equal to the investment of the U.S. and Europe combined last year, a 17% increase when compared to 2014. BMI expects the figure to surge even more over the next few years.