Exclusive Reports Tell Tale of Corruption and Indifference in Xinjiang Coal Mining Regulation

From ToxicLeaks

Reports obtained by Toxic Leaks from within the People’s Republic of China’s Xinjiang Uyghur Autonomous Region (“Xinjiang”) show an alarming laxity, if not outright corruption, on the part of local officials in administering the area’s mining laws. Two on-site reports, one from April and the other from May, tell the story of two local coal-mining companies and their open and notorious mining operations, both of which are completely at odds with the amount and nature of mining for which the two outfits have licenses. Both reports tell a pathetic tale of political corruption and manifest indifference, if not open hostility, to the environmental degradation caused by rampant and unregulated coal production.

In the first report, investigators examined Xinjiang Beishan Mining Industry Co., Ltd.’s operations and found that the mine, licensed by the government to produce 400,000 tons per annum, is producing significantly more. While advertising in the local newspaper indicates that it produces six million tons each year, investigators discovered that Beishan Mining applied for financing indicating a six-million-ton output as well.

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Beishan Mining represented the higher tonnage to provincial authorities, but provided a false address for the firm’s headquarters. Permits on site indicate that the mine is authorized for no more than 400,000 tons per year, but managers admitted to investigators that the mine’s output is closer to 30 million tons. When confronted with the disparity between the amount licensed and the amount pulled from the ground, a manager told investigators that licenses are all-encompassing and can be up to tens of millions of RMB, neither of which are true statements.

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The second investigation, dated May 2016, is of Xinjiang Jimusaer Dacheng Energy Technology Development Co., Ltd. Investigators discovered that Dacheng Energy own and operate a 200,000 sq. km. coal mine with a yearly output of up to 900,000 tons, despite the fact that such an operation is well outside the scope of business the firm indicated on official documents in which it would be engaged. Furthermore, investigators discovered that Dacheng Energy had only an exploration license; the firm had no official permit to extract coal in any volume.

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Dacheng Energy has obtained a probing silence (T65120080501007105) but there is no record related to its mining license.

When queried by investigators about this situation, managers on site claimed that they had probing licenses, but no mining license, and said that production was stopped upon the arrival of inspectors. On-site managers went on to explain that none of the top five coal-producing operations in the area had bothered applying for licenses, and that the local government tipped them off when inspectors were in the area, as mining companies were some of their best sources of revenue.

While China’s government has made half-hearted attempts at cracking down on environmental fraud by coal producers and heavy industry, reports indicate that firms indiscriminately continue to find ways to severely damage the air and land around them while failing to meet environmental standards. Actions by private coal miners have done much to undermine commitments made by the government in Beijing to clean up the country’s rampant environmental depredation. In December 2015, China committed to cut carbon emissions by between 60% and 65% per unit of GDP over the next fifteen years, and to double the country’s use of non-fossil fuels for power generation. The government also pledged to reduce coal-intensive steel production by up to 150 million tons, and drop coal production by 500 million metric tons, while limiting the growth of capacity of both sectors as well. Earlier this spring the government dropped operating days for the country’s coal mines from 330 per year to 276. However, as shown by these exclusive reports, it remains to be seen what improvement, if any, these reforms will make while private industry contemptuously turns a blind eye to the laws already on the books.