---------- Forwarded message ---------- Date: Tue, 20 Jul 1999 04:34:21 -1000 From: Gerard Greenfield <gjg at PACIFIC.NET.HK> Reply-To: Discussions on the Socialist Register and its articles
<SOCIALIST-REGISTER at YORKU.CA> To: SOCIALIST-REGISTER at YORKU.CA Subject: Vietnam: The collapse of nationalised coal production
INTERNATIONAL VIEWPOINT July 1999
Vietnam
The collapse of nationalised coal production
Over 86,000 miners face unemployment because their state-owned employer has decided to "rationalise" production
Gerard Greenfield
On 4 June the state-owned Vietnam Coal Corporation (Vinacoal) announced that an "unexpected" surplus stockpile of four million tonnes of coal requires the suspension of coal production and "temporary" pit closures until the end of the year.
A day after Vinacoal called a halt to production, miners at the larger state-owned mines were told that production stoppages would be rotated through the mines until December. Miners at many of the smaller state-owned mines were simply told to take "unexpected leave."
Vinacoal's subsidiaries have allocated a total wage bill of VND 54 billion (US$3.9 million) for the duration of the stoppage, but it is already clear that this will not meet the basic needs of miners and their families.*1 Assuming that only miners on long-term contracts (numbering 70,000) are going to be paid, each miner will only receive VND 257,000 (US$18.50) per month during a three-month shutdown. If the wage bill is spread over a six-month shutdown, then miners' wages will fall below 50 per cent of basic needs.
Even before the temporary shutdown was announced, severe cost-cutting and restructuring by Vinacoal at several mine sites resulted in miners only receiving wages of VND 300,000 (US$21.55) per month, with some as low as VND 100,000 (US$7.20) per month.*2
Over the past six years, miners' wages have been irregular, and thousands of miners at medium- and small-scale mine sites were without wages for periods of up to three months. In one case, over a hundred miners working at a state-owned shaft mine in Ha Tu district went without wages for three months and were eventually forced to sell everything at the site to survive.*3
The current industry-wide stoppage is on a much greater scale, involving the immediate suspension of 16,000 miners on short-term contracts. These miners will not be eligible for any wages during the shutdown.*4 The Vinacoal Trade Unionwhich claims to represent all 86,000 miners, since independent trade unions are illegalsupports the management's view that it was necessary to "eliminate the positions of 15,000 short-term and seasonal workers to improve efficiency and production."*5
This is nothing new for Vietnam's official unions. Less than a decade earlier the union (functioning as part of the Ministry of Energy) accepted the replacement of permanent employment with contracts, bringing and end to job security for mining industry workers in the state sector.
In several of the medium- and small-scale mines under Vinacoal's control, the suspension of short-term contract workers may involve the majority of miners.
Not surprisingly the Vinacoal Trade Union agreed to the "temporary" production stoppage announced at the beginning of June. Trade union officials also reiterated the management's view that only 50,000 out of the 86,000 miners currently employed are needed, making 36,000 miners effectively "redundant".*6
This paves the way for the Government and the IMF/World Bank's long-standing plan to dispose of surplus labour in the coal mining industry and impose more far-reaching labour market deregulation. Nearly 20,000 of the 70,000 miners on long-term contracts will be officially declared redundant over the next few months and will be laid-off permanently.
Vinacoal's managers and Party-state officials obviously see the six-month production stoppage as a temporary measure that will fall short of resolving the problem of excess capacity and over-production. Yet it was the creation of Vinacoal as a commercialised state-owned conglomerate, and its drive for an export-oriented expansion of coal output over the last four years which led to the crisis in the first place.
Formed in 1995 through a merger of dozens of state-owned coal mines, coal processing, trading and engineering companies at both local and national levels, Vinacoal is presented as a model of Vietnam's successful transition to a "socialist commodity economy", combining state ownership with profit-maximising, export-oriented competitiveness and integration into regional and global networks of transnational mining and finance capital. As Vinacoal's director, Nguyen Van Kiem, declared at the end of the conglomerate's first year of operations, the objective is to constantly increase productivity and output for the sake of profit, not jobs.*7
Within its first twelve months of operation, Vinacoal increased coal production in the Quang Ninh mining districts from five million tonnes per annum to 9.3 million tonnes. Vietnam became the world's largest exporter of anthracite coal. Nearly one-third of all anthracite shipped to the world market in 1997 was exported from Vietnam.*8
Based on this "success" (through which a million tonnes of surplus coal was stockpiled), Vinacoal was given direct management of its subsidiaries' mines in 1997. This allowed this fraction of bureaucratic capitalists to bring about further changes in production arrangements and the labour process. These changes intensified market reforms forced on the miners since 1981-83, involving the introduction of piece-rate wages, the replacement of regular workers with seasonal and short-term contract workers, and increased managerial power, including the authority to hire and fire workers.
In the next two years, Vinacoal moved closer to the "disposal of surplus labour" which the IMF and World Bank had been pushing since the mid-1980s. In fact, the World Bank was already extensively involved in technical projects advising the Vietnamese Government on privatisation and deregulation of the coal mining industry, as well as funding projects in Quang Ninh Province through the United Nations Development Programme (which the World Bank used as a 'front' before the US economic embargo was lifted). This created the conditions for the entry of transnational mining capital through joint ventures and production contracts with Vinacoal and its subsidiaries.
Japan is the largest importer of anthracite from Vietnam. Bilateral aid and loans were extended through the Japan International Cooperation Agency (JICA) and Official Development Assistance (ODA) to support the interests of Japanese trading companies and heavy industry. This combination of technical assistance and soft loans for "development" led to the acquisition by Sumitomo Corporation of a long-term contract with Vinacoal's Hon Gai Coal Company to export coal to Japan. This gave Sumitomo control over more than half of Vietnam's coal exports to Japan.*9 By providing exaggerated estimates of Japan's coal import needs and encouraging the expansion of coal output, Sumitomo ensured that excess stockpiles of coal would force Vinacoal to lower the price of coal exports.
By the end of 1997 there was a stockpile of two million tonnes of coal,. But Vinacoal continued to increase production and formed joint ventures with foreign mining companies from Canada and Japan to create new coal mining capacity. At the same time, Vinacoal's Coc 6, Sao Son and Deo Nai mines all increased coal output, in the drive for higher profits. This involved a combination of cost cutting and increasing the pace and intensity of work, which led to dozens of accidents and fatalities.
Although Vinacoal's declared turnover was US$200 million in 1998, working conditions and health and safety continued to deteriorate in the state-run mines up until the shutdown. At least 110 miners were killed or injured in accidents in 1996 and 107 in 1997. On January 12, 1999, 17 miners were killed in an explosion in a state-owned underground mine in Dong Trieu. In response to several more deaths at the Mao Khe mine a month later, Vinacoal's subsidiary paid the equivalent of US$3,600 in compensation to each of the families of the dead miners and promised US$500,000 for the improvement of safety at the mine. But because of the new austerity measures, this money never arrived.*10
Despite the clear signs of over-production since 1997, Vinacoal announced as recently as January, 1999, that it would increase production to 11 million tonnes/year in 2000, 16 million tonnes/year in 2002, and 20 million tonnes/year by 2020. Under this rapid expansion, coal would be "mined at a profit" and oriented towards exports rather than the "less profitable" domestic market.
The export-oriented over-production that followed was partly driven by Vinacoal's access to loans from transnational banks, which led to debt-financed expansion. This included a US$30 million loan in 1997 from six overseas banks in a consortium led by US-based Citicorp. Faced with debt repayment obligations of eight per cent interest over five years, Vinacoal was then compelled to announce a new target of 12 million tonnes/year by 2000.*11
The Party-state's strategy of industrialisation is based on the combination of foreign capital, fractions of capital emerging from within the Party-state apparatus and a low-wage strategy of accumulation. Within this context, the formation of Vinacoal consolidated the wealth and power of particular fractions of capital in the ruling class and reasserted their power over local fractions of capital in Quang Ninh which were forming direct linkages with transnational capital. State intervention and recentralisation under Vinacoal served to redirect these linkages with transnational capital though the central Party-state apparatus and its emergent bourgeoisie. The resulting joint ventures and production contracts between Vinacoal and foreign mining capital required the opening of new mine sites as well as the expansion of existing mines. This led to massive over-production.
In a joint venture formed in 1991 between Uong Bi Coal Company and PT Vietmindo Energitama from Indonesia, a new shaft mine was opened to extract and export coal to Japan. The US$27 million project received a 30 year licence, but was briefly stalled because of public protest over the illegal acquisition of collective agricultural land by the company. However, the intervention of Vinacoal (which Uong Bi Coal Company merged into after 1995) and local authorities to protect the interests of PT Vietmindo meant that the excavation went ahead anyway.
In another joint venture, Cavico International Ltd from Canada set up a US$22.4 million project with Vinacoal to exploit the Nui Beo coal mine for a period of 28 years, during which it plans to extract and export 29 million tonnes of coal. Cavico holds a controlling share of the project and will provide most of the investment funds, while Vinacoal is providing US$8.5 million in equipment and onsite facilities, as well as linkages to political power and the support of the Party-state. Given the scale of coal exports planned under this project, it is clear that this joint venture with transnational mining capital requires the closure and destruction of state-owned mining capacity so that Cavico can fill a proportionately larger share of total coal exports.*12
The production stoppage at the state-owned mines does not apply to mines operating under joint ventures or production contracts with foreign capital. In effect this stoppage and the possibility of the permanent closure of several state-owned mines will give foreign mining companies operating in Vietnam a larger share of the coal export market, and eventually the domestic market.
In April, the ASEAN Energy Cooperation meeting (chaired by the director of Vinacoal) created the ASEAN Forum on Coal (AFOC) for multilateral cooperation in coal mining and trade. In the context of seeking greater integration of the Vietnamese economy into networks of regional capital, one of the primary objectives of AFOC will be to oversee privatisation and deregulation of the coal mining industry and "greater private sector participation in coal mining and utilisation through joint ventures."*13
Another important factor underlying over-production and the coal stockpiles that led to the production stoppage and 'temporary' mass layoffs is the involvement of Communist Party officials, high ranking military officers and state-owned coal company managers in illegal coal mining or "bandit coal mining" (than to phi) over the last seven years.*14
Under market reforms, Party-state bureaucrats and managers broke down the Quang Ninh miners' collective resistance to an increasing rate of exploitation by encouraging the proliferation of bandit mines in and around state-owned mines. Bandit mines involved little expenditure on infrastructure and exploited cheap labourunskilled rural workers displaced from the countryside, child labourers, and retired miners forced back into work by inadequate pensions. This had the effect of shifting production away from state-owned mines, leaving miners without work and consequently without wages. By operating illegal mines within state-owned mines, the emergent capitalists in the Party-state apparatus achieved a de facto privatisation, consolidating their managerial power and control, and rendering ineffective miners' collective power.
In one of the oldest mines, run by the Hong Gai Coal Company, the director attempted to impose an economic rationalisation programme involving the reduction of the workforce from 13,500 to 7,000, but pulled back in the face of collective protest. The response was to withdraw from production altogether, focusing on trading and financial activities, while buying coal from the illegal bandit mines. This included the largest coal mining companies under Vinacoal, like Hong Gai Coal Company, which regularly makes up a third of its stated output with coal bought from bandit mines. Therefore at the same time that Vinacoal was praised by the central Party-state leadership for doubling coal exports, it only employed 10,000 of the estimated 70,000-90,000 workers in the industry.*15
Economic decentralisation and market reforms in the early 1990s, led high-ranking military officers in Quang Ninh to expand their business activities into bandit mining, employing 7,000 soldier-labourers in over 20 coal mines. Even the mines operated by the "coal militia army corps" which were established in 1968 during the massive US bombing of North Vietnam were appropriated by high-ranking officers as their 'privately owned' coal mines.*16
Although it was claimed that the formation of Vinacoal would reestablish state control in the mining industry and bring an end to bandit mining, Vinacoal simply centralised the purchase of coal from bandit mines and encouraged their expansion. The 1995 Prime Minister's directives No.381 and No.382 banning all forms of bandit mining did not stop the expansion of bandit mining. In fact, the Prime Minister's directives were used by the managers of Vinacoal and its subsidiaries to order the closure of those mines operated by local Party officials, military units, criminal gangs and private trading companies that refused to sell their output to Vinacoal.
Meanwhile, the directors of state-owned coal companies under Vinacoal expanded their bandit mines and increased output, particularly for export to China and Japan. Over one million tonnes of illegal coal is exported to China every year, equal to a third of the total amount of official anthracite exports.*17 Probably about half of official exports come from bandit mines.
Two of Vinacoal's largest subsidiaries, the Hong Gai Coal Company and Quang Ninh Coal Company, operated over 300 bandit mines. One of Hong Gai Coal Company's subsidiaries, Suoi Lai Coal Enterprise, operated 27 bandit minesover 70% of its coal output came from bandit mines. When miners reported that the director had bought 6,000 tonnes of black market coal to substitute for their own work, the People's Committee merely confiscated VND 10 million from the enterprise and issued a warning - the effect of which was "like a mosquito biting wood." *18 Miners were not compensated for wages lost during stoppages caused by the substitution of their own output with black market coal, and no changes were made to the system of management and control.
Praising the success of Vinacoal's performance on November 12th, 1996 - the 60th anniversary of Coal Miners' Day - the then Communist Party General Secretary, Do Muoi, announced that, "The current industrialisation and modernisation process needs more coal and coal miners should strive to meet the growing demand of the economy." The objective was "to increase coal output and quality as well as to strive for higher labour productivity and lower product cost"as Vinacoal's commercialised, profit-oriented activities sufficiently demonstrated. Invoking the ritualistic notions of "discipline" and "sacrifice", Do Muoi then called on the miners to work harder for the sake of this goal.*19
Coal Miners' Day commemorates the mass strike by 30,000 miners at the Hong Gai and Cam Pha mines against the French coal mining companies in 1936. In contrast to the self-organisation and rank-and-file militancy of the miners which led to the strike, the event has since been reinvented by the Communist regime as part of its own nationalist-productivist project. Bound up in the Communist Party's own history from above and the capitalist goals of productivism, Coal Miners' Day and the miners' "good revolutionary traditions" are represented in terms of labour discipline, obedience and acquiescence to the increased pace and intensity of work and increased managerial control over labour.*20
The real revolutionary tradition of the 1936 strike underpinned the mass strikes of the early 1950s, the self-reliance and self-organisation in the face of massive US bombing of the mining communities in the 1960s, and continued resistance through lan cong (go-slows) and bo ve lang (desertion and returning to the village) throughout the 1970s and 1980s. It was this continued resistance to exploitation and domination in the mines by the bureaucratic ruling class that led to the first 'market reforms' in the mines in 1981-83.
After a decade of reform, go-slows and desertion as a form of resistance were demolished by the imperatives of the market. The production go-slows and stoppages that state sector miners used in the past as a form of resistance have now been turned against them. Rather than deserting, thousands of redundant and unpaid workers in state-run mines are now being transported back to their villages. Under the new coercive regime of the capitalist labour market, 'cheaper' labour is drawn to the mines from villages and towns faced with massive unemployment. As one observer noted as early as 1992, displaced rural workers and peasants begged for work in the mines, and wages were negotiated briefly: "It's easy. Labour is bargained more quickly than any other commodity. People's lives and labour are being crushed by the new exploiting class."*21
END
Original title: Miners Face Mass Lay-Offs in the Face of 'Temporary' Pit Closures
Notes
1. Thoi Bao Sai Gon, June 4, 1999. 2. Thoi Bao Kinh Te Viet Nam, June 7, 1999. 3. Minh Tam, "Than phan nguoi tho mo (The fate of miners)", Lao Dong va Xa Hoi (Labour and Society), August 5-11, 1994, pp.1;8. For further discussion, see Gerard Greenfield, "Miners and the Market in Vietnam", New Politics, No.25, Summer 1998, pp.38-45. 4. Vietnam Economic News, January 18, 1999. 5. Vietnam Investment Review, December 14, 1998. 6. Thoi Bao Kinh Te Viet Nam, June 7, 1999. 7. Viet Nam News, November 19, 1996. 8. Hoang Trung, "Coal heats up", Vietnam Economic Times, June 1996, p.28; Vietnam Investment Review, September 8, 1997; Financial Times, June 5, 1998. 9. Hoang Trung, "Coal heats up", Vietnam Economic Times, June 1996, p.29. 10. Vietnam Economic News, February 8, 1999. 11. Vietnam Investment Review, September 8, 1997. 12. Vietnam Investment Review, June 29 1998; Vietnam Investment Review, July 26, 1998. 13. Viet Nam News, April 22, 1999. 14. For a detailed discussion of "bandit mines" see Gerard Greenfield, "Miners and the Market in Vietnam", New Politics, No.25, Summer 1998, pp.38-45. 15. Do Hoang, "Quang Ninh sap xep lai lao dong (Rearrangement of the labour force in Quang Ninh)", Lao Dong Xa Hoi (Labour and Society), October 27-November 2, 1994; "Lap lai trat tu trong khai thac va kinh doanh than (To restore order in coal exploitation and business)", Quang Ninh, July 14, 1994. 16. Hoang Tuan Duong, "50 nam - mot chang duong xay dung va chien dau cua tu ve vung than (50 years of construction and fighting by the coal mining militia)", Nang Luong (Energy Review), November, 1994, pp.25-31. 17. Thuong Mai, May 14, 1996. 18. To Phan and Ngo Mai Phong, "Dang sau nhung vu mua ban tan 'to phi' o Quang Ninh (The down side of illegal coal trade in Quang Ninh", Lao Dong (Labour), April 25, 1996. 19. Viet Nam News, November 12, 1996. 20. See Gerard Greenfield, "Miners and the Market in Vietnam", New Politics, No.25, Summer 1998, pp.38-45. 21. Huynh Thai,"Than lau (Illegal coal)", Van Nghe (Literature and Art), September 19, 1992, p.15;16. __________________________________________________
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