Chinese coal firms creak under heavy debt, tumbling prices

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#1
Beside property developers, miner are also badly hit in China...

Chinese coal firms creak under heavy debt, tumbling prices
02 Apr 2014 06:48
[ORDOS] The Baofu highway, a road that serves the mines in China's coal-producing hub of Ordos, was largely empty on a recent visit. A few years ago, it was so clogged with trucks that the traffic jams were legendary, sometimes lasting several days.

To either side, rows of once busy restaurants are closed, and flanked by advertisements for discounted coal. At mines that are still operating, unsold coal is piled high and lacking its black sheen, having been exposed to the elements for months.

China's top producing coal province of Inner Mongolia, where Ordos is located, is in crisis.

Tumbling prices, caused by weaker demand due to slowing growth in China and a flood of cheaper imports, have forced many smaller miners out of business, while some major firms are slashing wages by up to 50 per cent to stem heavy losses.

Chinese coal prices are at 6-year lows, and miners in Inner Mongolia and elsewhere are grappling with overcapacity, sluggish demand and shrinking bank credit, industry experts said.

The troubles faced by small miners in the region are likely to be replicated across China's coal industry, posing a risk for China's financial health if there is a wave of bankruptcies.

Weng Qing An, chief financial officer at China Coal Energy , the country's No. 2 producer, said the outlook for miners across China was grim. "If coal prices continue to slide, it will be hard for many companies to survive. The whole industry will undergo a major consolidation," he told a recent results briefing in Hong Kong.
...
Source: Business Times Breaking News
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#2
My guess is a lot 煤老闆 using PRC WMP/Trusts/Shadow Banking to fund coal. I am not surprised if they overfund a bit to fund personal expenses like daughter weddings.

http://hkm.appledaily.com/detail.php?gui...e=20140402

【本報訊】中央清算政治局常委周永康勢力,四川富商劉漢等36人審判正進行如火如荼之際,另一官商勾結的重災區山西,亦拉開整治序幕。內地傳媒報道,近日有多位山西官員和煤老闆被調查,案件涉及周永康之子周濱。去年四川官場地震,曾引發「四川富豪劫」,多位重磅富豪被拘留。山西近期已出現多宗債務爆煲事件,如再發生「山西富豪劫」,恐令當地債務危機雪上加霜。

山西煤炭重鎮呂梁市,其前市長丁雪峰已於2月落馬,被帶走調查。有消息指,丁雪峰之前通過周濱買官,現時事發。

事件引起連鎖反應,呂梁首富、曾因「7,000萬嫁女」而全國知名的煤老闆邢利斌,已在3月12日被警方帶走,其153億元銀行借款和73億元信託借款的債務重整,至今遙遙無期。內地傳媒指,近日來有更多當地煤老闆被帶走,事態有擴大迹象。

山西民間借貸盛行,加上當地經濟支柱煤炭業持續低迷,當地債務風險飽受外界關注。之前另一煤老闆王平彥亦被刑事拘留,曾令建行(939)代銷的30億元中誠信託在1月一度面臨違約,引起市場震盪。
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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