Shanxi is China's biggest coal producing province, something that has turned many colliery owners into the area's nouveaux riche.

With a taste for high living, including fancy cars and big villas, these bosses seem to represent everything that is good and bad about China's economic development.

It would be easy for most Shanxi coal bosses to buy several houses in one go, said Jin Weidong, who owns a colliery in Xiaoyi, a city in Shanxi. His mine produces 150,000 tons of coal annually.

Even owners of small mines can earn 4-5 million yuan (US$500,000 -625,000) a year. Bosses of bigger mines can earn as much as 100 million yuan (US$12.5 million) a year, he claimed.

Houses are a must-buy for many of them.

"There are two reasons to purchase houses in big cities such as Shanghai and Beijing," said Jin.

"One is to buy as an investment, the other is to seek a better place for our children to be educated."

Once one buys a property in a real estate project, others often follow suit without hesitation, said Jin.

Coal bosses, even though most of them only received a primary or middle school education, have become synonymous with millionaires in Shanxi Province.

Thousands of coal bosses, including those from other regions with large coal deposits, have got on the list of the wealthiest in their hometown.

Of 31 men who qualified to be placed on China's 2005 energy rich list, 11 were engaged in the coal industry, according to Briton Rupert Hoogewerf, who compiled the list.

The richest is Zhang Xinming, chairman of Jinye Coal Group, also in Shanxi Province.

He was seventh on the list, with a personal wealth of an estimated 1 billion yuan (US$125 million), a figure that cannot be verified via income tax bureaux.

Most of the coal bosses began to make their fortunes in 2002, when the price of coal increased rapidly because of huge domestic energy demand.

Oil prices have also risen steeply in recent years, meaning many firms have switched to coal, pushing up demand further.

Since then, many private coal mines, as well as some State-owned mines, have increased their production capacities.

Some collieries have increased production by 10 times the permitted capacity, experts said.

Statistics indicate China's total coal output increased from 1.4 billion tons in 2003 to 2.1 billion tons in 2005.

At the same time, coal bosses have come under the spotlight for their alleged apathy towards frequent coal mine accidents and indifference to safety.

Colliery accidents killed more than 2,900 miners throughout the nation in the first eight months of this year, statistics from the State Administration of Work Safety show.

Many people complain it is far cheaper to compensate a dead miner's family than invest in safety equipment.

In 2004 Shanxi Province said compensation should be no less than 200,000 yuan (US$25,000) for each miner killed.

Collusion between corrupt officials and coal bosses is also blamed for the huge number of deaths, and the loss of State assets.

"Even if a boss earns 100 yuan (US$12.5) per ton, he has to use 40 yuan (US$5) to pay off local officials, who have the right to decide the fate of his colliery," Liu Hongsheng, a colliery owner in a small town in northwestern Shanxi, told reporters.

Xue Yulong, another coal boss, said his coal mine had to pay about 400,000 yuan (US$50,000) to purchase a power distribution unit from a local power supply bureau, although the market price of the machinery was only 10 per cent of that figure.

The central government announced only last week that more than 5,000 officials had admitted to illegally investing some 700 million yuan (US$87.5 million) in coal mines.

Some coal bosses said they have decided to shift their investment to other industries, while others have begun to donate money to local residents and public welfare projects with the aim of improving their tarnished images.

Qin Peng, the owner of Nanping Coal Mine in Yangcheng County in Shanxi, plans to invest 500 million yuan (US$62.5 million) in a local scenic spot to help local residents earn money through tourism.

With an annual production of 150,000 tons, Qin's coal mine is the only private colliery in Jincheng that has completely updated its plant.

It has spent money updating its power supply, transport network, and ventilation and water drainage systems, all costing 60 million yuan (US$5.25 million).

The coal mine now has a production capacity of more than 1 million tons a year, Qin said.

In order to protect the interest of State assets in the coal mining industry, Shanxi provincial government has introduced public auctions to sell off coal resources, officials said.

Proved reserves of coal in Shanxi amount to 270 billion tons, 96 billion of which have already been transferred to collieries, statistics show.

And previously, coal mine owners had to pay only low levels of taxation, reports said.

The first coal auction was held in June, with 273.4 million yuan (US$33.7 million) paid for the exploitation rights to seven coal mines bought from the Shanxi Provincial Land and Resources Department.

A total of 16 coal bosses in the province won the right to tap these coal mines, reports said.

The transfer of exploitation rights through public auction not only allows people to see who owns a mine, but also forces investors to map out long-term development plans, said Guo Xuejun, owner of Shenjiao Coal Mine in Xiangning County.

Guo's mine has invested more than 60 million yuan (US$7.5 million) in safety measures, as well as on technological innovations.

Production capacity at Guo's colliery will increase to 450,000 tons from the current 150,000 tons a year, said the boss.

"Since these resources are being purchased by colliery owners, they need to rationalize production factors, and to reduce hidden dangers," said Wei Wanghai, owner of Shiweigou Coal Mine in Liulin County.

Otherwise, our pits will be closed down or will be re-auctioned, said Wei.

"That would lead to tremendous losses and nobody wants to see that happening."

According to a government plan relating to the development of Shanxi's coal industry, the province will merge or close down every colliery whose annual production is less than 90,000 tons by the end of this year.

The Ministry of Land and Resources, the National Development and Reform Commission, and the Ministry of Finance have also decided to expand the auction system to other mining areas in the 11th Five-Year Plan period (2006-10), officials said.

But despite all these attempts to clean up the industry, some people still remain sceptical about coal bosses.

One of the most widely-seen pieces of news last year concerned a rumour that a number of coal bosses from Shanxi Province had bought 20 Hummer jeeps for cash each costing about 1.5 million yuan (US$185,000) at a limousine show in Beijing.

No one knows whether the story is true, but the willingness of people to believe the rumour shows what they think of coal mine owners.

"You can find nearly every type of luxury car in Taiyuan, including vehicles made by Mercedes Benz and Ferrari," said Ma Wangying, a city taxi driver. Most of them, he said, were owned by colliery bosses.

Source: China Daily