A Study Of Full Costing Of Coal Products And Its Compensation Mechanism

Coal, the most important natural resource in our country, accounts for70%of the primary energy production and consumption. Thus, the healthy and sustainable development of the coal industry has direct bearings on the healthy and smooth development of our national economy.Presently, burning issues concerned with the economic functioning of the coal industry are as follows:enormous waste of the coal reserves, the inadequate fund supply for coal mining enterprises, lack of investment in safety measures, the status quo of severe risks in safety, the insufficient governance of the ecological environment of the coal mine areas, and the difficulty of exhausted coal mines’transforming to other industries, all of which result from the lack of full costing accounting system of our coal resources. As a consequence, there has been no compensation for the coal resources mined, and accordingly, sustainable development of the coal industry is in jeopardy.In order to facilitate the sustainable development of the coal industry in our country, the present research studies the composition of full costing of coal products and its compensation mechanism. Based on the analysis of the special features of mining resources and their production processes, under the framework of grand circulation cost theory, modern resource and environment economy theory, property right and welfare economy theories, this study uses the standard and empirical study methods, comes to the following conclusion:1. Full costing of coal products under the sustainable development mode should comprise of production costs (geological exploration, production costs, safety costs and developmental costs), non-production costs (resource costs and environmental costs) and "additional costs"(exiting costs), i.e., seven types of costs in three categories.2. The presently used cost keeping system in the coal enterprises is that of non-full costing. This system only accounts the production costs of coal products, thus it has left out not only the costs of coal resources, environment destruction, geological exploration, but also the costs of safety and development, which ought to be accounted as production costs, but have now been separately listed. In addition, no costs for transformation to other industries have been calculated or set aside. Since non-production and additional costs have not been fully accounted, or even accounted at all, a series of problems have arisen, such as the succession of minable reserves, environmental, safety, developmental issues, as well as the transformation of coal-reserve exhausted areas. This has formed a serious threat to the sustainable development of the coal industry.3. The depletion of the coal resources, namely, the resource costs of coal products, can be compensated in the form of "depreciation" of the coal resources. To build a resource cost model of the coal products (or a model of the depletion of the coal resources), Marx’s rent theory, time value of the capital and users’ cost theories can be used. Since the owner of the coal resources is the state, therefore, the state should collect the costs of the resources in the form of "royalty" or "fee."4. The environmental costs of coal products should be compensated in the form of environmental taxes or fees collected by the government. Because of the negative externality nature of the coal environmental costs and the public property nature of the environmental control, the government can levy "Pigovian taxes" and come to "Coasean deals" with the coal enterprises to help the latter to internalize the costs in the environmental control process. Ultimately the environmental costs can be compensated through the selling of coal products.5. The geological exploration compensation can be realized through the trading of mining rights on the market. The costs of geological exploration are converted from the labor invested in it, thus such costs can be regarded as part of the initial investments into the mineral resource mining process. These costs can be accounted into the mining costs through depreciation and can be compensated through the selling of coal products.6. Under the market economy conditions, the industry-specific costs associated with coal enterprises demand that fund source channels be established. These costs incurred due to the special features of coal production, namely, the incurrence of safety costs to ensure safe production, developmental costs for the purpose of the extension and expansion of coal mines, as well as the costs for exiting and transforming into other industries because of the exhaustion of the coal mines. The exiting and transformation of exhausting coal mines is social systematic engineering in any sense, so after the state collects the compensation for resource costs (or user costs), it should provide subsidies for the enterprises in the exhausting resource industry to help them solve their fund source problems.