33China Coal[1]

TOWARD A SUSTAINABLE COAL SECTOR IN CHINA JUNE 2004 Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) Contents Acknowledgments ......................................................................................................xi Abbreviations and Acronyms ..................................................................................xiii Foreword.................................................................................................................. xvii Executive Summary..................................................................................................xix Institutional framework.................................................................................... xix Key Issues........................................................................................................ xx Safety and Health ................................................................................ xx Environmental Protection..................................................................... xx Restructuring and Rationalization........................................................ xx Supply Shortages ................................................................................ xxi Investment in Coal Mining .............................................................................. xxi International Comparison................................................................................xxii Australia ..............................................................................................xxii United States.......................................................................................xxii Japan and the United Kingdom ..........................................................xxii Conclusions and Recommendations .............................................................xxiii 1. Review of The Institutional And Regulatory Framework ....................................1 Administrative Organization of the Coal Mining Sector.....................................3 State-Level Administration .....................................................................3 Provincial and Local Government-Level Administration .......................5 Assessment of the Current Coal Sector Administrative System...........5 Approval Procedures for Coal Mine Development ............................................6 Acquisition and Transfer of Exploration and Mining Rights ..................6 Approval of Land Use for Coal Mine Construction................................7 Approval of Coal Mine Construction ......................................................8 Standards for Coal Mine Design..........................................................10 Supervision and Monitoring of Coal Mining Operations ..................................11 iii Coal Production and Marketing Controls.............................................11 Coal Mine Safety and Health Supervision...........................................12 Supervision of Small Coal Mine Operations ........................................13 Fiscal Aspects..................................................................................................14 2. Key Issues ............................................................................................................17 Safety and Health in coal Mine ........................................................................17 Safety Regulation of Small Mines........................................................19 Community and Occupational Health ..................................................20 Environmental Protection.................................................................................21 Environmental Impact of Small Mine Operations ................................23 Weaknesses in Coal Mining Sector Environmental Protection...........24 Cleaner Coal Use.................................................................................25 Restructuring and Rationalization....................................................................26 Consolidation and Transformation of Small to Large Mines ...............27 Local Economic and Social Impact......................................................29 Mine Closures ......................................................................................30 Rationalization of Labor .......................................................................34 Full Private Ownership.........................................................................34 Supply Shortages .............................................................................................35 3. Investment in Coal Mining..................................................................................37 Investment Needs ............................................................................................37 Domestic and Foreign Investment in the Coal Sector.....................................38 Domestic Funding for New Coal Mine Projects...................................38 Foreign Investment in Coal Mining in China .......................................39 Barriers to Investment......................................................................................41 Incentives and Factors Impacting the Investment Climate .............................44 Power Sector Reform and Development.............................................44 Rail Transport.......................................................................................45 Coalbed Methane Recovery and Utilization ........................................46 4. International Comparison ...................................................................................49 iv Perspectives.....................................................................................................49 Technological Background ..................................................................49 Coal Mining Sector Administration ..................................................................51 Coal Resource Administration .............................................................52 Approval Procedures for Coal Mine Exploration and Development ...53 Safety and Health ............................................................................................53 Environmental Protection.................................................................................54 Mine Closures ..................................................................................................55 Promotion of Investment..................................................................................55 5. Conclusions and Recommendations ...............................................................57 Enforcement of Laws and Regulations............................................................58 Coal Sector Rationalization .............................................................................60 Improvement of the Investment Climate..........................................................62 Issues for Further Discussion ..........................................................................64 Annex 1 : Regulations and Documents Pertaining to Coal Mining in China......67 Administration of Coal Resources, Reserves, and Exploration ......................67 Acquisition and Transfer of Exploration and Mining Rights ............................68 Major Documents Required for Approval of Coal Mine Construction .............70 Current Coal Mine Design Standards In China...............................................72 Acquisition of a Coal Production License........................................................73 Laws And Regulations Relevant To Coal Mining Safety And Health .............74 Environmental Laws, Regulations, and Policies .............................................78 National Legislation and Policies .........................................................78 Special Legislation and Policies Targeting the Coal Industry.............79 Major Documents Concerning Closing And Bankrupting Of State-Owned Enterprises ...........................................................................................79 Regulations And Documents Concerning Small Mine Closures.....................81 Reporting And Approval Procedures For Share Issuing In China ..................83 Reporting of Share Issuing ..................................................................83 Approval Procedures for Share Issuing...............................................84 v Review and Approval Conditions for Share Issuing............................85 Taxes and Exemptions Applicable to Foreign Investors.................................86 Other Tax Incentives ............................................................................86 Annex2 : Current Coal Sector Administrative Practice.........................................89 Duties of Provincial Land and Resources Bureaus.........................................89 Shanxi 89 Shandong .............................................................................................89 Principal Duties of Coal industry Management Bureaus.................................90 Shanxi 90 Shandong .............................................................................................91 Approval Procedures in Shandong—Exploration Rights ................................92 Transfer of exploration rights ...........................................................................93 Defining Extent of Mining Area ........................................................................93

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