After a deadly accident on Wednesday that claimed the lives of at least two employees and left more than 53 others missing, local officials in many of China's main mining regions issued urgent orders for coal mines to conduct safety inspections.
Wednesday's disaster has a murky backstory. On Thursday, Chinese state media outlet CCTV reported that the collapsed Inner Mongolian mine had previously operated as an underground mine before closing and reopening as an open pit mine in 2021.
The governments of numerous provinces, including Inner Mongolia, Shanxi, and Shaanxi, have issued directives for coal miners, particularly those operating open-pit mines, to immediately conduct safety checks and local authorities to conduct inspections.
"We must severely crack down on all kinds of violation of laws and regulations, giving them punishment or shutting them down to correct the problems," Dongsheng government in Inner Mongolia said in a statement on Thursday.
A 900,000-ton open-pit mine in Inner Mongolia collapsed just 10 days before the annual assembly of parliament, during a time when there was intense pressure to increase domestic coal production.
To increase supply and slow rising energy prices, Beijing has been pressuring coal miners to increase output since late 2021.
It is expected to have approved 260 million tons of new coal mining capacity in 2022, bringing overall capacity to 5.05 billion tonnes, after reopening dozens of mothballed mines.
Due to overproduction and lax safety regulations, China's coal mines are some of the most dangerous in the world.
With the Chinese national parliament convening on March 5, traders anticipate a series of stringent safety checks in the coming weeks.
"The accident occurred just as the major national event approaches, which will trigger a large scale of safety inspections across the country and to some extend reduce short-term coal supply," analysts from Guojin Futures said in a note.
Coal is essential to energy security and economic activity, thus they don't expect supply to be drastically reduced.
In northern Chinese ports, the price of thermal coal with a heating value of 5,500 kilocalories increased to 1,100 yuan ($159.84) per ton on Wednesday, up from a year-low price of 980 yuan per ton the week before.
On Thursday, the price of the most actively traded Dalian coking coal futures shot up by about 6%, to a record high of 2,085 yuan per ton not seen since mid-June.
