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Lu’an Group takes tough move to cope with sluggish market

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Publish time: 22nd October, 2015      Source: www.cnchemicals.com
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Lu'an Group, one of the five top coal producers in Shanxi, planned to suspend salary but retain the job for employees, in order to cut labor cost amid worsening coal market.All management staff who worked no less than five years for the company could apply for leave without pay, which in principle, shall not be less than five years, the company said in a recent statement.Shanxi Lu'an Environmental Energy Development, the group’s listed company, posted net profit of 113.7 million yuan ($17.8 million) in the first half of the year, plunging 76.1% year on year.The group sold 14.09 million tonnes of commercial coal during the same period, down 9% on year, with combined PCI and washed metallurgical coal sales accounting for nearly half of the total, reaching 6.31 million tonnes and 101,600 tonnes, respectively.Lu’an Group cut free-on-rail price by 40 yuan/t for washed coal from its Sima and Wuyang mines, and cut price of other lean coals by 30 yuan/t, effective on October 1.As of October 20, the CCI Met Shanxi PCI index assessed the ex-washplant price of Shanxi PCI coal at 405 yuan/t, dropping 21.4% from six months ago.Besides Lu’an Group, Shanxi's another four major miners -- Datong Group, Shanxi Coking Coal, Yangquan Coal and Jincheng Anthracite -- also have announced similar measures to encourage workers to leave without pay or work in shifts. This, according to industry insiders, is expected to cut around 10% staff in total.Underground workers or 2/3 of the total staff and most ground service staff would be encouraged to work in shifts; while administrative officials would stay in positions, sources said.All of them would be paid salaries during work and living allowance during the leave period. The measure is estimated to cut labor cost by 20-30% and cut raw coal production cost by 10%, industry insiders said.