China's small coal mine policy in the 2000s: A case study of trusteeship and consolidation

China has been trying to improve the safety and environmental performances of small coal mines (SCMs) in 2000s through measures of trusteeship and consolidation. The question whether such policy and practice can sustain small scale mining is interesting academically and important practically for China and the world. This paper finds that the Chinese SCM policy has been switched from encouragement to restriction for legal SCMs and from privatization to nationalization in some provinces in the past 10 years. Legal SCMs face pressure to be expanded continuously and to be absorbed or consolidated by large coal mines, which often are state owned. Unexpectedly, financial resources may not be a big constraint nowadays due to availability of private equity investment resources. The paper argues that both the trusteeship and consolidation approaches may only be able to sustain SCMs in the short run. A more sustainable measure is to establish a stable, transparent and inclusive legal and fiscal framework. This paper concludes that those trusteeship approaches may be applicable to restructuring small scale mines in other countries; however, the consolidation practice in China's is unique and thus may not be applicable to others.