Of all the corporate baubles that the late Armand Hammer amassed over the course of his long career, a company centered on a yawning black open-pit coal mine in the wilds of northeastern China was said to be closest to his heart.
Island Creek of China Coal Ltd. -- known colloquially in China as Ping Shuo, for the city that the Chinese built near the mine to house 15,000 foreign and Chinese workers -- is the most ambitious and expensive U.S. investment in China, worth at least $750 million, or 23 times more than most U.S. companies have invested there.
Mr. Hammer, chairman of Los Angeles-based Occidental Petroleum Corp., who died Monday at age 92, agreed to build the mine in the early 1980s at a time when coal prices were plummeting and his own company was laying off thousands of workers to cut costs.
He did it, he said in articles published at the time, because he felt the struggle for market reform under way in China then signaled "an economy on the verge of growth and development."
But that was before the massacre of pro-democracy demonstrators in Beijing in June 1989, the subsequent fall-off of Sino-U.S. business, the decline of the U.S. economy this year and Occidental's own mounting debt load.
Now there are rumors in the financial community that Ping Shuo may be among the first holdings to be put on the auction block by Ray R. Irani, the new chairman and chief executive officer of Occidental, commonly referred to as "Oxy."
"Everybody in the China trade's been saying for months that Ping Shuo was Hammer's baby and that Oxy would sell it as soon as he was gone," said a member of a key China-watching organization. The person refused to be identified out of fear of angering the Chinese government, now hypersensitive to any comment its leaders consider critical of their economy.
Taking on projects the established financial community considered romantic dreams was part of the Armand Hammer legend.
A flamboyant man who used the title "Dr." because he had a medical degree -- although he never practiced medicine -- Mr. Hammer made millions in the 1920s trading with the Soviet Union as it struggled to regroup after the Revolution of 1917.
Legend has it that in 1984, when negotiations between Occidental and Chinese coal ministry officials broke down over Ping Shuo, Mr. Hammer flew to Beijing to consult personally with former Chinese leader Deng Xiaoping. A contract to develop the mine was signed by Occidental and three Chinese agencies in June 1985.
Situated on a stark, dusty plateau in China's Shanxi province, Ping Shuo has workers who are among the most highly paid in China and equipment that is the most modern in the coal industry.
Each of its 107 behemoth coal trucks, for example, costs almost $1 million.
Construction of the mine and its outbuildings, however, ran more than a year behind schedule, and Ping Shuo's operation since its official opening in August 1987 has been plagued by labor difficulties, transportation bottlenecks and diminishing markets for its coal.
Ping Shuo "has been a tremendous black hole for Oxy," said another expert on China trade, who also asked not to be identified because of fear of annoying the Chinese.
Even if Mr. Irani does put the mine up for sale, buyers may be hard to find for a project that reportedly carries as much as $300 million to $400 million in debt, some China experts said.
The Chinese government, which now has foreign currency reserves that run as high as $20 billion, might be an interested buyer, but "this is not a good time for them to do something like that," said Dr. Kim Woodard, director for China and East Asia for A.T. Kearney Inc., a Chicago-based consulting company.