The Great Coal Migration

The country’s economic growth has long been fed by coal, but its eastern cities are choking on the smog. Now the government thinks it has a solution: Move the power plants inland.

At the vast industrial complex of Ta Shan, in northern China, the coal miners’ afternoon shift change happens between 2 p.m. and 3 p.m. Miners masked in black grime pile into the back of a pickup for the ride back to the barracks—a low narrow building with a group shower and a changing room, where soiled towels hang from banged-up metal locker doors. Wearily they shed their work clothes, shower, dress, and mount aged scooters for the long ride to their housing towers. Outside a gang of eight laborers toils at the bottom of a pit, installing a new sewage line. Everything is covered in fine black grit. Smog blankets the sky, and the sun is just a rumor.

The Ta Shan mine is part of the “Ta Shan Circulated Economic Park,” a conglomeration of industrial facilities about 20 miles south of the city of Datong, in Shanxi Province, China’s coal heartland. The Economic Park, in turn, is contained within the even bigger Jinbei coal cluster that stretches across much of northern Shanxi. Owned by Datong Coal Mine Group (“Tongmei” in transliterated Chinese, which loosely means “Unity Coal”), the Park comprises coal and iron mines, the Ta Shan Power Plant, which includes a pair of 600 megawatt coal-fired boilers, a methanol plant, a sewage treatment plant, chemical plants, its own railway, and a factory to make bricks from gangue, the nonflammable material that encases coal in ore.

This vast industrial complex represents the Chinese government’s long-term energy strategy. In response to the country’s environmental crisis, the central government plans to consolidate its far-flung coal industry, creating enormous “coal bases” like Ta Shan, where, in theory, pollution can be contained, waste can be recycled, and miners’ lives can be safeguarded. The problem with this vision is that, like Tongmei’s glowing description of Ta Shan, it doesn’t capture the full environmental havoc that these coal clusters will wreak, both on the surrounding areas and on Earth’s climate.

China’s economic miracle has been fueled by coal. The black mineral provides around three-quarters of the country’s primary energy, and China burns nearly as much coal every year (more than 4 billion tons) as the rest of the world combined.

China is the world’s largest producer and consumer of coal, and in recent years it has provided a coal-hungry market for imports from Australia, Indonesia, and, potentially, the United States, where big coal producers like Peabody Energy and Arch Coal are looking to Asian markets to replace dwindling demand in their home market.

But China’s insatiable appetite for coal has brought on environmental, economic, and public health costs that are no longer supportable. The big eastern cities like Beijing, Shanghai, and Hangzhou are plagued with crippling smog that, according to a study sponsored by Greenpeace, causes 250,000 premature deaths every year.

As dire as the environmental crisis has become, the business emergency facing China’s unruly coal industry is equally troubling to coal producers. Economic growth has cooled, as worldwide demand for steel flattens and the government tightens controls on easy money. Slower industrial activity means less demand for power, but China’s coal producers—which include gigantic, mostly state-owned mining conglomerates like Tongmei and Shenhua Group, as well as an untold number of small, independent, often unlicensed mines—have not adjusted their output accordingly.

Prices, naturally, have suffered. Coal spot prices at Newcastle, Australia, the world’s largest thermal coal exporting terminal, dropped from a monthly average of $142 per metric ton in January 2011 to under $80 in March 2014.

But even as domestic supplies outstrip demand, imports to supply the coastal cities continue because transportation routes from the interior are constricted. China’s coal industry is faced with a period of restructuring and modernization unseen since the economic reforms that followed the Cultural Revolution.

That power generation is not vanishing, though; nor is it, for the most part, being taken over by clean energy sources, even though China is now the world leader in investment in renewable energy. It’s merely being moved west, to “mine-mouth plants” like the ones at Ta Shan.

Ultimately the planners in Beijing cannot have it both ways: either coal production and consumption must be limited, or the industry will continue clanking along like the conveyors at An Tai Bao, producing coal for which, at least for now, demand is shrinking. Coal-to-gas conversions and chemical processes, at clusters like Ta Shan, will soak up some but likely not all of the excess capacity. In Shanxi province, coal has a momentum of its own, and Beijing is far away.

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