Spate of Disasters

"Asian thermal prices, including seaborne and Chinese domestic, are receiving strong support from a supply shortage in China, created by a spate of mine disasters in recent weeks," said Heap. "China's coastal utilities are desperately seeking imports, while coal marked for exports is being increasingly diverted to the local market."

Prices of coal exported out of Newcastle in Australia have jumped $8 a ton to $50 a ton in two weeks, he said. Chinese imports of coal have risen by 92 percent so far this year to 7.7 million metric tons.

China uses coal to generate two-thirds of its electricity and mines producing less than 90,000 tons a year accounted for 37 percent of the nation's total 2005 output, said Feng Zhang, a Hong Kong-based analyst at JPMorgan Chase Co.

"Closure of small coal mines will be carried out because of the high mortality rate and low efficiency, which causes an awful waste of resources," he said. "But the government has to carry out the closure in a gradual manner to ensure coal prices don't surge because of the loss of production from smaller coal mines."

Mergers, Shutdowns

The government is pursuing a target of shutting all mines with annual production capacity of less than 30,000 tons by the end of next year and has ordered small producers to merge with larger ones.

Some owners who defy decrees to close down rename their pits to evade detection, others flee from police when there are casualties underground. After a Nov. 26 blast that killed eight at a pit in the southeastern province of Jiangxi, five of the mine's six owners fled before police could detain them, Xinhua reported.

Smaller operators and local authorities want to get their share of profit from producing the fuel, the China Labour Bulletin's Zhang said.

"There's a conflict of interest between local and the central governments," he said. "It will be very difficult for the central government's policy to be implemented at the local level."

China's domestic coal prices may rise next year because of increasing output costs, partly as mines invest in better safety measures, the China Coal Trade & Development Association said this week. Production costs may increase by between 30 yuan ($3.8) and 80 yuan a ton, Yang Xianfeng, secretary general of the association, said in Shanghai. That's as much as almost 40 percent of current selling prices.

The world's deadliest coal mine accident took place in northeastern China in 1942 when 1,549 miners died.

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