And up to one-third of all of China's coal mines could be shut down permanently by the end of the year after a nationwide inspection, the China Daily quoted Li Yizhong, director of the State Administration of Work Safety, as saying Friday.

"We will give them one [last] chance by suspending production to root out unsafe practices," Li was quoted as saying.

China's mining industry is the deadliest in the world, with accidents claiming 2,700 lives in the first half of 2005 alone.

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Another 700 died or were missing in the six weeks up to August 15.

The Guangdong provincial government had allocated a special fund to compensate owners of the 253 mostly private coal mines and help thousands of miners find new jobs, the newspaper said without elaborating. "Coal mining will soon cease to exist as an industry in ... Guangdong province," it said.

Guangdong produces about eight million tonnes of coal a year, accounting for less than 0.5 percent of the country's total production. The province consumes about 80 million tonnes a year.

"The impact will not be big," said an energy official at Guangdong's policymaking Development and Reform Commission.

The provincial government had announced earlier this month the closure of 112 coal mines for lacking production or work safety licenses after flooding at a mine in Xingning in Guangdong in August killed 123 miners.

That mine was operating in violation of local government orders to shut down for inspections after flooding at another Xingning pit in July left 16 dead.

Zeng Yungao, chairman of the Daxing Colliery, site of the August accident, was arrested on September 12, Xinhua News Agency reported Friday. Sixteen others, most of whom were officials with the local government or colliery, were also arrested, Xinhua said, quoting a prosecutor. It gave no further details.

The government would shut the remaining 141 mines soon, the China Daily said, adding that the shutdowns would be "permanent."

Zhang Dejiang, Guangdong's Communist Party boss, has vowed to prevent mine accidents with an "iron fist."

Officials have denied media reports of clashes between authorities and angry mine owners protesting against closures.

A spokeswoman for the provincial government said she had no knowledge of a permanent shutdown of all coal mines.

Guangdong had closed down some coal mines permanently and ordered others to stop production for safety checks, she said.

An official at the provincial work safety watchdog declined to comment. REUTERS