State television -CCTV - reported that six people were injured in the blast in the remote mountainous Hunan province Friday afternoon that also left two missing.
A man surnamed Hu with the Hunan provincial work safety bureau said it was a privately run illegal mine and police were investigating where the explosives came from. He would not give more details, saying the explosion was still under investigation.
A CCTV report said one shareholder of the mine is already "under police control" and authorities are seeking the other owners.
Police are investigating whether the explosives were stored illegally in the warehouse at the Daling mine in Yongxing county, the report said.
Television footage showed the building was almost flattened by the blast, with a truck 50 meters away bent out of shape.
Large, state-run mines tend to have safety records approaching those of developed countries, while smaller mines have little or no safety equipment and weak worker training. Unlicensed, unregulated mines account for almost 80 percent of China's 16,000 mines, according to government figures.
Beijing has promised for years to improve mine safety, but China's mining industry remains the world's deadliest.
A blast at the Tunlan coal mine in northern China's Shanxi province killed 77 people in February, China's worst industrial accident in a year.
The explosion wave break the glass on windows nearby.