Recently, the Shanxi Provincial Party Committee and Provincial Government officially issued the "Opinions on Deepening the Reform of the Coal Management System," aiming to carry out a comprehensive and in-depth reform of the existing coal management system. What changes will this large-scale, far-reaching reform bring to Shanxi’s coal management system? Implementing the bidding, auction, and listing system will help curb the breeding ground for corruption.

The “Opinions” clearly state that newly established coal mining rights will initially allocate coal resources (i.e., the primary market). At the same time, bidding, auction, and listing methods shall be implemented in accordance with the law, with auctions serving as the primary approach. Research should be conducted to develop specific measures for the paid use of resources retained in previously unconditionally allocated old mines. We should actively promote the integrated allocation of co-associated mineral rights and explore management approaches for the paid acquisition of mining rights to other co-associated resources.

Permit exploration and mining rights that meet statutory requirements to be traded in the secondary market (i.e., transactions following the primary market). The transfer of mining rights shall be conducted in accordance with the law and publicly disclosed through methods such as sale or contribution of rights for equity. We must strictly adhere to market transaction rules, improve the mining rights trading platform, and rigorously enforce entry requirements for trading entities as well as standardized transaction procedures. Where one party to the transaction is a state-owned enterprise, the “bid, auction, and listing” procedure must be implemented. “The ‘bid, auction, and listing’ process in the primary market is the key to this reform and constitutes the foundational, pivotal work for perfecting the secondary market for mining rights,” said Pan Yun, deputy director of the Shanxi Academy of Social Sciences. In the past, the initial allocation of coal resources was largely dependent on administrative approvals by relevant authorities, resulting in resource prices that were severely mismatched with market prices—far below market levels. It was akin to purchasing resources at “cabbage prices” only to reap profits from “selling powdered white goods.” This practice led companies not to seek out markets and assess supply and demand, but rather to chase after government departments, approach officials, and secure approvals—thus creating vast opportunities and fertile ground for corruption. To innovate mechanisms and restore the market-oriented status of coal enterprises, the “Opinions” clearly stipulate the complete abolition of administrative authorizations previously delegated to enterprises for managing the road transportation and marketing of coal and coke; the complete elimination of road transportation and marketing documents for coal and coke; and the dismantling of provincial-level management stations, business offices, highway checkpoints, and inspection points for coal and coke. Furthermore, centralized management of railway transportation plans will be abolished, with enterprises directly submitting transportation requests to railway authorities.
Meanwhile, establish a coal regulatory information platform and innovate information management mechanisms. Build a public information service platform that integrates comprehensive data on coal production, transportation, sales, inventory, and prices, and develop mechanisms for data transmission and sharing to achieve interconnectivity and interoperability.

Mr. Chen, who sells coal mine pipes, shared a “bizarre” story. The fact is that the power plant is located very close to the coal mine, yet the mine cannot sell coal directly to the power plant. Although the power plant and the mine have already agreed on a price, both parties must separately sign contracts with the local coal transportation company before the transaction can proceed. The power plant cannot pay the coal supplier directly; instead, it must first transfer the payment into the account of the coal transportation company. Only then can the coal mine settle its own payment with the transportation company. The procedures are complicated, and for each ton of coal, the mine has to pay an additional management fee ranging from several yuan to over ten yuan. Moreover, if one wants to transport coal by rail, one cannot simply apply directly to the railway authorities for a transportation plan. In addition, selling coal requires numerous and complex permits and certificates—making it extremely difficult to avoid corruption.

After this reform, these constraints and restrictions on coal-related enterprises will become a thing of the past. “In the traditional coal transportation and marketing management system, coal enterprises were not granted sufficiently comprehensive market entity status. This reform now provides them with full ‘ “Repair it,” said Pan Yun. Streamline administration and delegate power, and streamline the operation of coal-related authorities.

The “Opinions” require a comprehensive review and clearance, in accordance with laws and regulations, of all existing administrative approval items related to coal. All similar administrative approval, filing, registration, certification, and pre-approval procedures—whether self-established by relevant provincial government departments or by cities and below—must be completed by June 2015. Clear and cancel these by the end of the month. Meanwhile, all coal-related departments directly under the provincial government must, in accordance with laws and regulations, publicly disclose their respective lists of coal-related powers, clearly outlining specific administrative approval and licensing items, and defining the boundaries of their authority. Henceforth, any adjustments or additions to coal-related administrative approval and licensing items must strictly follow the prescribed approval procedures.

In addition, the “Opinions” emphasize strengthening efforts to eliminate fees and establish a tax system in the coal sector, setting up a public registry of fees and standards. No fees may be collected beyond those listed in the public registry, and any violations of fee regulations will be dealt with strictly. Furthermore, the resource tax reform policies will be fully implemented, and the tax-sharing framework at the provincial, municipal, and county levels will be further refined and improved.

“ “The coal industry has long been a hotbed and frequent hotspot for corrupt practices—a particularly severe area of corruption—and the loss of control over the exercise of power is one of the key factors driving corruption,” Pan Yun said. Effectively restraining and supervising the powers related to coal will greatly reduce the likelihood of corruption in this field.