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Hammer, Chinese Officials Open Largest U.S.-Chinese Joint Venture

September 10, 1987

ANTAIBO, China (AP) _ Chinese officials and Armand Hammer, the American industrialist who has dealt with the Communist world since Lenin’s day, opened a coal mine Thursday that is the largest joint U.S.-Chinese project to date.

Thousands of Chinese workers and their families attended the ceremony at the Antaibo coal mine in northern Shanxi province, China’s coal heartland.

Hammer’s Occidental Petroleum Corp., based in Los Angeles, has invested $200 million in the $650 million project to develop the biggest and most modern open-pit coal mine in China.

Other U.S. companies, cautious about making such large investments in China, are watching the venture closely.

″Of all the things I’ve done, I’m perhaps proudest of this achievement here in China,″ said Hammer, 89. ″I think that I have shown that the open- door policy of Deng Xiaoping can work successfully.″

Deng, the top Chinese leader, visited the United States in 1979 and invited Hammer to invest in China. Within months, the industrialist flew to Peking to discuss both the mine project and oil exploration.

The American made his fortune in the 1920s mining Soviet asbestos under a deal worked out with Vladimir I. Lenin, the first Soviet leader, and has done business with the Kremlin regularly since.

Antaibo, expected to produce 15 million tons of anthracite coal a year, is in an arid valley about 230 miles southwest of Beijing. Mud-brick homes of peasants dot the landscape.

Hammer brought several dozen guests to the ceremony, including Abigail Van Buren, who writes the ″Dear Abby″ syndicated advice column.

As they watched from a vantage point more than 300 feet above the mine floor, a section of the pit was blasted out by nearly 130 tons of explosives.

Shortly afterward, Vice Premier Li Peng pushed a button to begin automatic loading of the first railroad car of coal from the mine, which covers more than seven square miles.

Shanxi is China’s main coal-producing region. Both underground and open-pit mines operate near Antaibo, whose development has run a rough course.

Plummeting coal prices in the early 1980s caused the other American partner, Peter Kiewit Sons of Omaha, Neb., to withdraw. The Bank of China provided replacement financing.

Coal now sells for about $20 a ton on world markets, down from more than $50 in 1979.

At a news conference in a new hotel near the mine, Hammer said his acquaintance with Deng had not meant special treatment for Occidental.

″We had all the difficulties one would expect,″ he said. ″Many people said I would fail. They said I was attacking the impossible, but it worked. You saw it today.″

Although the current coal market is the worst he’s ever seen, Hammer said, he called it a ″temporary condition.″ He said Occidental plans to discuss the possibility of two more open-pit joint ventures near Antaibo.

″We’re using up oil faster than we can find it. The only practical alternative we have for heating is coal,″ Hammer said, predicting that coal prices will double in five years and quadruple in 10.

China’s minister of coal mining, Yu Hongen, said contracts to buy Antaibo coal had been signed with companies in Hong Kong, Japan, Finland and Southeast Asia. He would not discus prices.

Engineers from Hammer’s company will direct mine operations for the first 10 years, their Chinese partners for the next 10 and Occidental for the last seven years the mine is expected to produce coal.

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