Banks dig­ging deep to help re­vamp Shanxi coal sec­tor

China Daily (USA) - - BUSINESS - By JIANG XUEQING jiangx­ue­qing@ chi­

Banks in north­ern China’s Shanxi prov­ince are ac­tively im­ple­ment­ing credit poli­cies de­signed for the busi­ness cir­cum­stances of each in­di­vid­ual coal min­ing com­pany — to help drive an ag­gres­sive trans­for­ma­tion and up­grad­ing of the sec­tor.

The di­rec­tor of the China Bank­ing Reg­u­la­tory Com­mis­sion’s Shanxi of­fice, Zhang An­shun, said on Tues­day that 21 coal mines in the prov­ince would be closed in 2016.

He added that the gov­ern­ment would take “co­er­cive mea­sures” to stop unau­tho­rized pro­duc­tion and con­struc­tion work at an­other 16 coal mines.

The coal mines, owned by the seven big­gest State-owned coal min­ing groups in Shanxi, had a to­tal of 4.96 bil­lion yuan ($743 mil­lion) in out­stand­ing loans.

Zhang added that coal com­pa­nies that proac­tively cut ex­cess ca­pac­ity and still main­tained out­put, de­spite fac­ing de­te­ri­o­rat­ing per­for­mance and liq­uid­ity dif­fi­cul­ties, would con­tinue to re­ceive the sup­port of banks in the form of re­newal of their loans.

Up to now, bank­ing in­sti­tu­tions have re­newed 41.8 bil­lion yuan in loans for 109 coal min­ing com­pa­nies in Shanxi. Each of the com­pa­nies has set up a cred­i­tors’ com­mit­tee.

Ac­cord­ing to the CBRC, a cred­i­tors’ com­mit­tee is a tem­po­rary or­ga­ni­za­tion es­tab­lished by at least three bank­ing in­sti­tu­tions that are cred­i­tors of a com­pany that has dif­fi­culty in re­pay­ing a large amount of debt.

Mem­bers of the com­mit­tee form a joint credit man­age­ment mech­a­nism for the com­pany and take con­certed ac­tion in help­ing it go through hard times and to dis­ci­pline its spend­ing.

“Banks will con­tinue to sup­port ra­tional credit de­mands from high-qual­ity coal en­ter­prises, es­pe­cially provin­cial coal min­ing groups, rather than re­call­ing loans in ad­vance and stop­ping lend­ing to them,” Zhang said.

As of Tues­day, banks have pro­vided the 109 coal min­ing groups with ac­cu­mu­lated fi­nanc­ing to­tal­ing 215.4 bil­lion yuan, up 5.4 bil­lion yuan from the start of the year.

Banks also granted 1.32 bil­lion yuan to these com­pa­nies for debt re­struc­tur­ing, and the loan bal­ance for merg­ers and ac­qui­si­tions of coal com­pa­nies reached 2.87 bil­lion yuan.

Song Zuo­jun, vice-pres­i­dent of the Shanxi branch of China Con­struc­tion Bank Corp, said the CCB listed 22 coal en­ter­prises in the prov­ince, in­clud­ing Shanxi Cok­ing Coal Group Co Ltd, as com­pa­nies with high-qual­ity pro­duc­tion ca­pac­ity.

Apart from re­new­ing ma­tur­ing loans to Shanxi Cok­ing Coal Group, the CCB also of­fered 245 mil­lion yuan of new loans and 500 mil­lion yuan of wealth man­age­ment prod­ucts to the group. Both were medium and long-term credit prod­ucts es­pe­cially de­signed ac­cord­ing to its pro­duc­tion cy­cle.

Deputy di­rec­tor of theCBRC Shanxi of­fice, Wang Zhi­gang said that China’s eco­nomic down­turn caused com­pa­nies to ex­tend pro­duc­tion at high lev­els and dis­rupted pay­ments by cus­tomers for their prod­ucts, forc­ing the coal firms to ap­ply for fre­quent loan re­newals.

out­stand­ing amount of loans of seven ma­jor coal min­ing groups in Shanxi

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