Coal producers in Shanxi province, which produces about a third of China's coal, started paying a "sustainable development fund" this month to benefit miners and their communities.

The fund, approved by the State Council last year, is being piloted in Shanxi and will be administered by the provincial government.

The fund will be spent on improving safety, accident compensation, promoting energy efficiency and developing alternative industries in mining regions.

The fund, ranging from five to 40 yuan per ton depending on the coal quality, is expected to reach 12.5 billion to 15 billion yuan (US$1.61-1.93 billion) annually.

"This collection may not raise coal prices since Shanxi stopped collecting the 'energy fund', which had similar rate, this year", Guo Yuelong, a senior official with the local branch of China Power Fuel Company.

However, coal-production costs could rise by 50 to 90 yuan per ton after the central government introduces, probably this year, two more funds -- "the mine recovery guarantee fund" and "the development fund for mine transition", analysts said.

"This fund will be used to build a better monitoring system for work safety, improve working conditions, protect the local environment and help mining regions develop other industries as coal reserves are exhausted," one expert said.

Li Yizhong, head of the State Administration of Work Safety, has called for the government to increase the standard compensation of 200,000 yuan per death for coal miners' families.

In 2006, China had 4,746 people publicly-reported killed in coal mine accidents, down 20.1 percent from the previous year.

(Xinhua News Agency March 23, 2007)