China’s coal westward movement:

Black gold fever on the plateau

The headquarters of the Muli opencast coal mine owned by the Kingho Group is located

between the huge mounds of opencast mine and the Qilian Mountains. The picture was taken

on 20th June, 2014. ©Wu Haitao/Greenpeace

1. Summary

Greenpeace investigations have found that a number of Chinese coal companies have been digging up alpine meadows more than 4,000 meters above sea level for quality coal, in violation of laws and regulations. The investigations have also found that some coal mines have extended into a nature reserve. The massive opencast mining cuts off the pathway for glacial melt water to feed rivers and lakes in a vast arid area where glacial melt water is of the utmost importance as a water source.

China plans to satisfy its increasing energy demand by boosting coal output from its arid northwest. 13 out of a total of 16 mega coal projects approved by the central government are located in the north or west of the country, 5 of them in the Yellow River Basin. The plan poses a huge threat to northwestern China's fragile ecology, and risks exacerbating its already wrenching water scarcity. If this plan goes ahead, China will be tied to a nexus between energy and water.

This opencast coal mine is owned by the Kingho Group in Muli. Opencast mining has left a

huge pit on the alpine meadows beside the snow Mountains of the Qilian Mountains. The

picture was taken on 21st June, 2014. ©Wu Haitao/Greenpeace

2. Digging black gold at the water-source of the mother river

The Muli Coalfield in the source area of the Yellow River and the alpine meadows on the

Qinghai-Tibet Plateau

The glaciers on the Qilian Mountains are the origin of water for the vegetation, animals and humans living in Qinghai, a Chinese province situated on the northeastern corner of the Qinghai-Tibet Plateau. Southward, three major rivers1 originate from the mountains, two contributing to the Qinghai

1 Shule River, Buha River ( runs into Qinghai lake), and Datong River (runs into the Yellow River)

Lake, China’s biggest salt-water lake, and the Yellow River, China’s 2nd longest river, respectively. Northeastward, numerous rivers and creeks flow from here, enabling irrigated agriculture in the Gansu Corridor (Hexi Corridor) communities. The integrity of the landscape in this region is vital to the maintenance of the hydrographic systems in the wider area, including that of the Yellow river.

The Qilian Mountains National Ecological Functional Zone2 in northeastern Qinghai is slated by the State Council and Qinghai’s provincial government as a critical establishment to protect the alpine wetland, meadows, permafrost and glaciers, and the species depending on them. Standing at the core of the zone is the Qinghai Qilian Mountains Nature Reserve, covering 79.4 km2. According to China’s Nature Reserves Management Regulations, development or construction activities are strictly banned in the core and buffer zones of all nature reserves. Furthermore, regulations issued by the State Council and the Qinghai Provincial government stipulate that development and construction activities in ecological functional zones should be either banned or strictly limited in scale.

However, large reserves of quality coal are buried beneath the fragile alpine meadows. In fact, 3.54 billion tons, or 87% of Qinghai province’s total proven coal reserves are found in the Qilian Mountains National Ecological Functional Zone.

At altitudes between 4100m and 4300m, the Muli Coalfield Mining District (木里露天煤矿 hereinafter referred to as “the Muli Coalfield”) is no stranger to the Qilian Mountains Ecological Functional Area. Development of the coalfield started in 2003, when governments at various levels in Qinghai Province took measures to attract businesses and investors to explore its coal reserves. Many coal companies are operating here on a large scale, including Kingho Group, Qinghai Yihai, Qinghai Coking Coal, Aokai Group, and China Railway Group Limited, etc, with Kingho being the leader in operational scale. Coal from this area is transported to two industrial parks for coal-to-chemicals production. Official figures from 2013 shows that the Muli Coalfield consists of four major opencast coal mines3, stretching an area of 42.6 km2 (based on GIS data for 2013), with its planned operation area projected at 112.6 km2 .

2 The full title is the “State Key Ecological Functional Zone – the Qilian Mountains National Ecological Functional Zone for Glacier and Water Source Conservation”. 3 The four mines are the Duosuogongma Coal Mine, the Hushan Coal Mine, the Jiangcang Coal Mine, and the Juhugeng Coal Mine.

The logo of Qinghai Kingho Group Muli Coal Mine. The picture was taken on 20th June,

2014. ©Wu Haitao/Greenpeace

Greenpeace investigations found that the Muli Coalfield has been operating in clear violation of laws and national and provincial regulations. Two of the Muli Coalfield’s four mining areas have been operating in large scale in the ecological functional zone, causing irreversible damage to the alpine meadows and permafrost. The other two mining areas, although not in operation yet, have facilities already set up within the buffer zone of Qinghai Qilian Mountains Nature Reserve.

A review of the environmental impact assessment report for the Muli Coalfield, conducted in 2010 by a group of independent environment protection experts, highlights the contradiction between mining projects and protection of Nature. In 2011, the Ministry of Environmental protection suggested local authorities to ban mining activities in two of Muli Coalfield’s mining areas overlapping the nature reserve, and to closely monitor the geographical scale of the coalfield.

However, in contrast to expert opinions, the MEP directive, national and provincial regulations and laws, coal mining has been expanding in this area that is supposed to be strictly protected. A complete coal industry chain is now in place to sustain and profit from the coal mines. Kingho Group, a private mega coal company and the biggest coal company operating in the area, has built a coal chemical plant about 145 km away - the Kingho Coalification Industrial Park for Circular Economy (hereinafter referred to as the Kingho Coalification Industrial Park) for coking. Strategically located in the vicinity of the Qinghai-Tibet Railway, the industrial park processes coal transported via exclusive coalers. Resembling the architectural style of ancient Chinese palaces, the grand industrial park is also the world’s highest coking project by altitude (3700 m above sea level), standing at what was originally a piece of alpine wetland.

The panorama of the coalification park owned by the Kingho Group in Wulan County,

Qinghai Province. The picture was taken on 22nd June, 2014. ©Wu Haitao/Greenpeace

Table 1 Planned Construction Projects in the Muli Coalfield

Location Number of mines (pair)

Scale of construction(Mt/a)

Construction periods

Jiangcang District 7 13.50 2008-2035

Juhugeng District 7 9.60 2008-2035

Hushan District 1 1.20 2026-2035

Duosuogongma 1 0.60 2026-2035

Planned Project for Coal Washing and Dressing in the Muli Coalfield

Location Number of processing

Scale of construction(Mt/a)

Construction periods

Parks（Ledu、）

4 25.00 N/A

3. What does coal mining mean for the area?

The basin of the Datong River, where the Jiangcang Coal Mine is located, is abundant in

water resources. It is an important source area for the Yellow River. The picture was taken on

21st June, 2014. ©Wu Haitao/Greenpeace

The Muli Coalfield is a growing cancer on an otherwise intact alpine ecological system. Puddles of water dot the meadows and zigzagging brooks run through it. These little swamps and brooks hold the lifeblood of rivers that sustain the alpine ecological system. It is the source area for three important rivers on the Qinghai-Tibet Plateau4, namely the Shule River, the Buha River which runs into the Qinghai Lake, and the Datong River5, a tributary of the Yellow River.

The opencast coal mining over years has destroyed the alpine meadows connecting the glaciers on the mountains and the plateau, cutting off the channel for rainfall and melt water to feed into rivers. As a result, the water-holding capacity of the landscape is significantly compromised . This

4 A Canadian water source expert denoted that the Qinghai-Tibet Plateau was the source area of many rivers on which almost half a world depended. http://fm.m4.cn/2013-08/1211200.shtml 5 The Datong River is a secondary tributary of the Yellow River. In a view of length and flow, the Datong River is the main source for the Huangshui River which is an important tributary on the upper reaches of the Yellow River.

greatly increases chances of rivers running dry in times of less rainfall. According to calculations based on GIS data, coal mining has resulted in at least 42.6 km2 of alpine meadows.

Landsat 8 Satellite images showing Jiangcang Coal Mine of the Muli Coalfield in 2003 (left)

and 2013 (right).

Landsat 8 Satellite images showing Juhugeng Coal Mine of the Muli Coalfield in 2003 (left)

and 2013 (right).

During field trips to the area, Greenpeace investigators witnessed the severe damages to the watercourse of the Datong River caused by the opencast coal mining. In the Muli Coalfield, opencast coal mining in big scale was carried out in the vicinity of watercourses. In the river valley, the thin permafrost and surface soil were dug up to build highways and railways. As a result, gravel and rubbish heaped in the watercourse.

Excavators working in an opencast coal mine. In the Muli Coalfield, coal mining is mainly

carried out encroaching on the meadows between the snow Mountains and the river, so it has

caused severe damages to the alpine meadows and wetland. The picture was taken on 20th

June 2014. ©Wu Haitao/Greenpeace

So far, no evidence can be found in publicly available documents that systematic assessments have been carried out on the impacts imposed on the alpine ecological system and water resources. The projects therefore went ahead before the long-term impacts of mining were fully studied.

4. China’s coal-water nexus

As China’s economy grows, its thirst for energy - nearly 70% of which now comes from coal - worsens. The world’s second largest economy will construct 16 large-scale coal power bases, predominantly in western areas of the country over the 12th Five-Year period (2011-15). According to the plan, these bases will contribute a total annual coal output of 3.5 billion tons, making 80% of China’s current annual coal output. Coal mining is an extremely water-intensive industry, as are coal-fired power plants and coal chemical industries. With expansion across the country’s arid western areas, these water-intensive projects will inevitably trigger a serious water crisis, with one major river and the land and people that depend on it particularly under threat.

Through Greenpeace commissioned research, most of the 16 energy bases will channel water from the Yellow River or its tributaries. It is estimated that water demand created by this energy strategy will reach at least 9.975 billion m3 in 2015 – equivalent to one sixth of the annual total water volume of the Yellow River during a normal year. The study also estimates that in 2015, the water demand of coal power bases in Inner Mongolia, Shaanxi, Shanxi and Ningxia will either severely challenge or exceed the respective areas’ total industrial water supply capacity. Thus, the development of coal-related industries in these areas will take up a significant amount of water currently allocated to non-industrial uses, such as farming, drinking water and ecological conservation.

Poorly planned and unregulated coal mining activities have already resulted in controversy in some provinces. Left unchecked these mining projects will only cause more ecological disaster and social unrest in the foreseeable future.

5. What should be done?

China’s central government and the Qinghai provincial government must uphold an effective ban on all the mining activities in the Muli Coalfield, and remove any plan of mining within nature reserves. Any project approvals

against regulations must be recalled. Specified funds and working groups should be set up to protect the region and implement remedies.

Greenpeace also strongly urges China to reconsider the distribution and scale of its coal power expansion strategy, watch over the water supply situation in its mega coal power bases, and make adjustments to these ambitious plans in accordance to availability and sustainability of water resources in western China over the remaining time left in the 12th Five-Year Plan period.