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Coal industry predicts China will limit miners' workweeks again soon

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Coal industry predicts China will limit miners' workweeks again soon

Overworked miners and overused equipment will likely drive China to cut back coal miners' workweeks again in the near future, according to a coal executive.

George Dethlefsen, CEO of Corsa Coal Corp., said at the 2017 Coaltrans conference in Miami on Feb. 2 that right now the mines in China are working at around 6.5 days a week.

Given that China controls about half of the global demand and production for metallurgical coal, he said, the country has control over pricing of the commodity similar to that of OPEC over the price of oil. When producers there were suffering from low prices, the government stepped in to fix things.

"The Chinese miners were losing money, like everyone else in the West," he said, adding that the reduction of working days was a backdoor bailout of Chinese banks that had invested money in coal companies. When they cut the working days, it drove up prices.

Nonetheless, he said he believed China was likely to drop down to something around a 5.5-day workweek on average again in the spring.

Jeremy Sussman, head of U.S. Equity Research, Clarksons Platou Securities, agreed at the conference. "The Chinese will likely return to a restricted work schedule," he said.