Coal miners in northern China’s coal-rich Shanxi province are in crisis, with large groups in meagre profit and small ones on the verge of shutdown, as coal prices fell to the lowest since the financial crisis in 2008.&nbsp;<br /> <br /> "Coal prices have dropped earlier, quicker, and deeper than we expected; coal producers are facing mounting challenges," the Shanxi Department of Coal Industry said in a recent statement regarding operations of the province’s coal industry during the first quarter.<br /> <br /> Official data showed that Shanxi Coal producers made a dismal profit of 5.72 yuan/t on average in the first three months, plunging 69.92% from the year before, while total net profit tumbled 86.64% to 804 million yuan.<br /> <br /> Other operating results are also discouraging: average selling price dropped to 401.14 yuan/t, down 22.68%; total revenue was 94.66 billion yuan, down 21.3%; taxes and fees submitted dropped to 22.88 billion yuan, down 14.96%, data showed.<br /> <br /> On the one hand, coal producers are hampered by falling prices and shrinking demand, on the other hand the rise in rail freight rates and other expenses for maintaining existing market shares and expanding to new markets are eating into the already paltry profit margin.<br /> <br /> Many large producers were forced to take massive loans to finance production expansions and cover the shortfall in cash flows. By the end of March, Shanxi’s top five key state-owned coal groups (including Datong Coal, Jincheng Anthracite, Yangquan Coal, Lu’an Group and Shanxi Coking Coal) reported a 75% debt-to-asset ratio on average, according to official data.<br /> <br /> To help alleviate mounting pressures faced by coal producers, Shanxi governor Li Xiaopeng pledged at a meeting on April 22 to deepen the implementation of the “20 coal measures” unveiled by the government last July.<br /> <br /> These measures include the suspension of two coal-related levies -- environmental recovery fund (10 yuan/t) and mine transformation fund (5 yuan/t), halving of the serve fee for coal transactions at the China Taiyuan Transaction Center, as well as medium and long-term measures.<br /> <br /> The provincial government will also suspend approval of new open pit mines, while local authorities are asked to step up efforts to remove arbitrary fees and taxes imposed on coal miners and carry out the reform of coal resource tax levied from volume-based to value-based in accordance with the central government’s plan.<br /> <br /> <p> Additionally, officials from Shanxi Department of Coal Industry revealed that the government is planning to eliminate taxes and fees not approved by provincial authorities and above; this would save coal mining companies 5 billion yuan.&nbsp; </p> <p style="text-align:center;"> <img src="/upfiles/news/image/20140506/20140506152226_2717.jpg" alt="" /> </p>