A Chinese coal mining company has announced it is laying off 100,000 workers, accounting for approximately 40% of its labor force.
The news has been reported in several regional news outlets, claiming that Heilongjiang Longmay Mining Holding Group Co Ltd. would be effecting the layoffs over the next three months. According to reports, Company Chairman Wang Zhikui explained that the job cuts were an attempt to “stop bleeding” the company. The company also plans to sell its non-coal related businesses in an effort to pay off its debts.
“Personnel is probably its largest cost,” the State media quoted Deng Shun, an analyst at Shanghai-based energy consultancy ICIS C1 Energy, as saying. “Actually many traditional State-owned coal enterprises are facing the same kind of problem. It has become more severe as the industry remains on a downward trend.”
This mass-layoff comes at a time of increased economic uncertainty in China, and is one of the largest mass layoffs in recent years. State-owned Heilongjiang Longmay Mining Holding Group was founded in 1994, and at time of writing, has around 240,000 workers on staff. According to China Daily, Longmay also cut thousands of jobs last year, at the same time as a massive restructuring effected to stay profitable — a move which failed to work, as according to reports, the company still lost around 5 billion yuan ($815 million). Furthermore, in the period of January to August, 2015, reports are that the company saw massive losses again, down more than 1.1 billion yuan, or around $17.2 million over the year before.
With continuing declines in the price of coal, Longmay had to shut down eight coking mines in northeast China earlier this year. These mines were said to be seeing poor production margins, not something that can be kept on the books during such a time.
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