In China's gold capital, soaring prices do little to lift miners

ZHAOYUAN, China — As flames swept through the Luoshan Gold Mine late one afternoon in August 2010, men began dropping dead. By the next day, 16 people had died, most of them from choking to death on smoke and fumes.

The Chinese government made its usual announcements: The incident was caused by poor wiring, management of the state-run mine had been questioned and other operations in the area were suspended briefly for safety inspections.

But a year later, with the price of gold hovering at near-record levels, locals say that not much has changed down in the mines of Zhaoyuan.

"The conditions are not safe at all. Stones fall from overhead all the time," said Ji Mingxing, 44, who'd just finished his shift blasting rock.

From the outside, China's recent emergence as the world's largest producer of gold is one more step in its economic expansion.

The nation's output from an industry dominated by state and joint-venture companies has jumped from about 108.4 tons in 1995 to more than 340 tons last year, worth about $20 billion at current prices.

The Shandong Zhongkuang Group, the state company that owns Luoshan Gold Mine, reported a climb in pretax profits from about 636 million yuan in 2006, about $99.6 million at today's exchange, to almost 2.1 billion yuan last year, some $328 million, according to its website.

However, the men who work the myriad of mines in the area say that while skyrocketing gold prices have upped their salaries, a combination of inflation and a sense that neither the government nor big business cares much about their welfare has them worried.

A visit to Zhaoyuan, which advertises itself as "China's Capital of Gold," suggests a troubling disconnect between the staggering wealth that's being created in China and those who toil literally at the bottom.

This corner of coastal Shandong province, where apple orchards sit in the moody shadows of Luoshan Mountain, with its thick veins of gold, and the surrounding areas were responsible for more than 14 percent of China's gold production in 2010, according to figures posted by the Zhaoyuan government.

Yet interviews here, 280 miles southeast of Beijing as the crow flies, point to a central challenge for the nation's leadership: ensuring that living standards for average Chinese continue to rise quickly enough to offset frustrations with issues such as income inequality and minimal workers' rights.

"We live next to a mountain of gold, but we are very poor," said Qu Haocheng, 48, who pushes carts in a nearby mine and keeps a red and gold package of Taishan Cigarettes in his pocket.

Qu allowed that his salary had increased from about 1,800 yuan a month in 2006, $282 at today's rate, to some 3,000 yuan a month, or $470.

Hasn't that made life easier?

"The working conditions haven't gotten any better," Qu said, with bitterness in his voice.

Hearing that a reporter was visiting, Qu's neighbor dropped by to show a petition she'd filed with the city government, and a complaint signed by about 180 people.

An accident in July at a plant related to gold refining spewed a sulfurous cloud that killed livestock and hospitalized more than half a dozen people, Wen Cuiling said. After Wen helped lead a demonstration of people demanding compensation, a village official visited her son and threatened to have their house burned down if she didn't stop making trouble, said Wen, a 57-year-old farmer.

Multiple attempts to reach Zhaoyuan officials for an interview about gold mining in the area were unsuccessful.

A man who answered the phone at the Zhaoyuan Communist Party propaganda department, who gave only his last name of Gao, referred McClatchy to a city government office. When told that no one in that office had answered the phone in two days, Gao said they were busy.

Asked what the government office's fax number was, Gao said the fax machine was broken. Asked what his own fax number was, Gao said his also wasn't working. After further conversation, Gao gave a fax number, later confirmed that he'd received the interview request and said, "If you don't hear from us, don't contact us anymore."

At a small restaurant down the road from a cluster of mines at the base of Luoshan Mountain, Jiang Daiwen was recently slurping a bowl of lamb soup across the table from his friend, Ji Mingxing.

"I'm very scared of working in there. I'm scared the mine will collapse," said Jiang, a 46-year-old miner with a thin mustache, muddy boots and headlamp slung around his belt.

The owner of the restaurant, which he runs in the courtyard of his house, at first yelled at customers not to speak with a Western reporter. After listening to the conversations, though, Li Chunhai leaned over to say, "There are only a few people who control the mines here. They make billions a year. The common people who live here are suffering."

Jiang said his pay for a day's work had gone up from 80 yuan in 2005, about $12.50 at current exchange rates, to 100 yuan, roughly $15.60. It's a good raise, he said, though it comes against the backdrop of a steep increase for everyday goods. The meal in front of him cost 12 yuan five years ago and is now 20 yuan.

Ji, wearing blue pants torn at the bottom and a dusty camouflage jacket, spoke up to add a detail: "If we get killed in the mine, our families get paid 600,000 yuan," about $94,000.

How did he know that?

"Other people have been killed," Ji answered.

Among the dead at the Luoshan Gold Mine on Aug. 6, 2010, was a 30-year-old man with the surname of Teng. The son of corn farmers, the husband of a schoolteacher and the father of a 2-year-old boy with chubby cheeks, Teng had worked in the mines since he was a teenager.

"Nobody from the company came to tell me that he was dead, I had to go to the mine to find him after I heard there had been an accident," said Teng's 61-year-old mother, who along with his widow agreed to an interview on the condition that neither their names nor Teng's full name be used.

After being turned away from the mine, Teng's mother and his wife drove to the hospital just in time to see bodies being carried into the building. After his mother collapsed amid loud sobs, she said, she and her daughter-in-law were driven to a hotel by a group of men and held there for four days until they signed a contract agreeing to accept 514,000 yuan in compensation, about $80,560.

"They said that if we didn't accept it, we would get nothing," said the mother, who alternated between kneading a tissue in tight circles in her hands and lifting it to wipe away tears. "After we signed the contract, his body was cremated and we got his ashes."

Teng's 31-year-old wife, in a black cotton dress with a white flower print, said she didn't bother reading the agreement.

The mine bosses had made it clear that they didn't have to answer for what had happened.

"They never gave us an explanation," the widow said.


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