By Chuin-Wei Yap

BEIJING -- A deadly quarry collapse in northeast China this week reflects a surge in dangerous mining activity across the country as coal prices soar, following a government warning that the rally poses increased casualty risks.

The warning, in a report in early November, came as informal data have shown sharp increases in colliery casualties this year, with November the deadliest month so far.

On Tuesday, 22 workers were trapped when a shaft caved in at Qitaihe City Jingyou Coal Mine, a desolate outpost in China's northeast, state-run Xinhua News Agency quoted rescue workers as saying on Wednesday. The cause wasn't immediately known, nor was it clear whether any of those trapped had survived.Last week, a coal-mine fire in neighboring Liaoning province killed 26 miners.

The Work Safety Committee of the State Council, a government agency, also said it would step up surprise inspections, including at night, to counter "illegal practices" at mines that put lives at risk.

"As coal prices go up, mines tend to go beyond the usual safety limits to get at the more dangerous coal, and accidents increase," said Keegan Elmer, a researcher for the Hong Kong-based watchdog China Labour Bulletin.

In its postmortem of an Oct. 31 coal-mine explosion in the central city of Chongqing, issued in November, the work-safety committee, which oversees industrial safety, said the miners had crossed into prohibited areas to dig for coal, which led to an excessive accumulation of combustible gas.

The committee also warned that the yearlong price rally had triggered a "strong rush" into closed mines to revive production, risking moreaccidents.

"All jurisdictions have to crack down on illegal practices at coal mines such as fake closures and fake blueprints, and mines that say they're shutting down in the daytime only to restart production at night," the committee said.

The rally in coal prices was largely the product of a government campaign to massively reduce mining capacity as part of efforts to reduce state overinvestment, underused factories and heavy corporate debt. Beijing wants to close 500 million tons of coal capacity in the five years to 2020 -- half of which the government said it had already forced through by the end of October.

The vigor of the campaign slashed the supply of thermal coal, doubling prices this year to 604 yuan ($88) a ton this week, 61% higher than the start of the year, according to an industry price index.

Coal officials say the price boom has put thousands of miners back to work. But China's state economic planners appeared caught off-guard by the steep rally.

Economic data indicate that by midyear, Beijing was calling for rejuvenating state investment to juice macroeconomic growth, which in turn relies on ramping up electricity output -- largely fueled by coal.

As late as September, the National Development and Reform Commission -- the approving authority for infrastructure and industrial projects -- was urging coal mines to increase their output to meet a shortfall in supply.

In that month alone, the NDRC called four conferences with local governments and coal companies, according to industry and official websites including that of the government of Qitaihe, where Tuesday's accident occurred.

Commission officials wanted to discuss having mines produce between 200,000 to 500,000 tons more coal a day to meet the shortfall, Qitaihe said in a statement. Qitaihe and NDRC officials didn't immediately respond to calls for comment.

Aspart of its efforts to maintain momentum on capacity cuts, the NDRC limited the number of days mines could operate to 276 a year, a Ministry of Land and Resources report in September said. Then, when the supply crunch hit, it lifted that limit for 74 designated companies to 330 days.

It wasn't immediately clear if the Qitaihe mine was among the 74 chosen.

Meanwhile, the State Council, which serves as China's cabinet, last week said it would press ahead with capacity cuts, "while paying more attention to price changes." It said it had "put in place measures to curb prices," but didn't elaborate.

--Kersten Zhang contributed to this article.

Write to Chuin-Wei Yap at chuin-wei.yap@wsj.com

(END) Dow Jones Newswires

November 30, 2016 12:20 ET (17:20 GMT)

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