Qingdao metals fraud probe focusing on Decheng Mining
Sep-04-2014 By : fcccadmin
China’s investigation of whether metals stockpiled at Qingdao Port fall short of collateral obligations used to secure loans is focused on Decheng Mining, said two bankers assisting with the probe. Decheng’s owner, Chen Jihong, has been detained by public security authorities amid the investigation at Qingdao and a separate probe in Gansu province. Investigators are trying to determine if Decheng used the same batches of copper and aluminum stored at the port as collateral to secure multiple loans. Any findings of wrongdoing at Qingdao risks undermining a broader practice in which traders in China use commodities from iron ore to rubber to get funding. Analysts at Barclays and Goldman Sachs Group have said the probe may weigh down the price of copper. The probe may also affect metals stockpiles at Qingdao held by Citic Resources. The amount of metal involved in the probe was about 20,000 tons of copper, almost 100,000 tons of aluminum ingots and about 200,000 tons of alumina, Reuters said. Several lawsuits related to the matter have been launched.
Output boom expected from Chinese mining projects in Latin America
By : fcccadmin
China’s mining projects in Latin America will see an output boom over the next several years, but the country’s investment in the region’s resources industry will slow down, analysts said. Chang Xingguo, Project Director of International Minerals and the Finance Department of the China Mining Association (CMA), said China has invested in many copper and iron ore projects in Latin America since 2005, when commodity prices were high. “Those projects will gradually start production this year,” Chang said. Most of the investments in the region are copper mines in countries such as Peru, a major copper producer, and Brazil. Chang said that when copper projects start operation in the next several years, China will likely have a bigger say in the international cooper market. China has about 23 overseas cooper projects with a total reserve of about 59 million metric tons, according to data from the China Mining Association. Those projects have an overall annual production capacity of 1.7 million tons, but the operation timetable is uncertain due to factors in foreign countries such as environmental issues, approvals from both authorities and local communities and infrastructure construction. Wei Zengmin, Analyst with industrial consultancy Mysteel, said investment in Latin American refining plants and steel mills will become more common in the future. Globally, China’s outbound mining investment has been increased rapidly in the past 10 years, reaching CNY20.2 billion by the end of 2013 while the figure was only CNY1.8 billion in 2004. Those figures include investments in the energy sector. China’s demand for iron ore, copper, aluminum and nickel will continue to increase, and CRU predicted that China’s reliance on foreign supplies of raw materials will not decline in the next 10 years, the China Daily reported.
Nickel deficit narrows as China increases pig iron output
By : fcccadmin
Sumitomo Metal Mining, Japan’s top nickel producer, cut its 2014 forecast for the metal’s global deficit by 43% as China produces more-than-expected volumes of nickel pig iron, a cheaper alternative. Demand will exceed supply by 17,000 tons, down from the company’s April estimate for a 30,000 ton deficit, said Hiroshi Sueta, Tokyo-based General Manager of nickel sales and raw materials. The market last year had a 109,000 ton surplus. “The pace of the drop of ore inventories in China was slower than we had expected earlier because of a jump in imports from the Philippines,” Sueta said. Nickel pig iron is a low-quality alternative for refined nickel in the production of stainless steel. China’s stockpiles of nickel ore, which is used to make nickel pig iron, have dropped this year to slightly more than 20 million tons from 25 million tons at the end of 2013, Sueta said. The company earlier forecast that China’s nickel pig iron output would begin falling this summer as inventories declined following Indonesia’s ore export ban. Sumitomo Metal raised its 2014 estimates of China’s nickel pig iron production to 430,000 tons, about 2% higher than its forecast in April. China produced 450,000 tons in 2013, the firm’s data showed. China’s nickel-ore imports from the Philippines rose 12% in the first six months of 2014 from the same period a year earlier while its imports from Indonesia plunged 47%, according to China’s General Administration of Customs.
Tangshan mill closure reflects wider problems in Chinese steel industry
By : fcccadmin
The Xinming Steel Pipe plant in Tangshan, a polluted industrial city that produces more steel a year than the entire United States, shut down in July, leaving more than 400 workers and a host of creditors unpaid. If discussions with creditors fail, bankruptcy proceedings could be launched. The turmoil at the firm shows how huge overcapacity is pushing scores of similar steel enterprises to the brink of bankruptcy. Unlike in the past, however, provincial governments are now unwilling or unable to bail them out. China’s steel industry with huge debts and at least 200 million tons of excess production capacity – far more than either the U.S. output of 87 million tons or the European Union’s 166 million tons. China is estimated to have a steel production capacity of more than 1 billion tons. Tangshan, 170 km east of Beijing, produces 100 million tons of mostly low-end steel used in construction every year and has been at the center of a campaign aimed at closing obsolete and polluting steel works. Hebei Governor Zhang Qingwei said in March that at least 16 mills had shut in the province because they had been unable to pay their bills. The steel industry is also in trouble in other provinces. Xilin Iron and Steel in Heilongjiang province and Highsee Steel in Shanxi province are also struggling with heavy debt, the South China Morning Post reports.
Baosteel, China’s leading steelmaker, has estimated national crude steel output last year at 822 million tons, nearly 6% above official data, suggesting the country’s supply glut is worse than previously estimated. The figure given in a speech by Xu Lejiang, Chairman of Baosteel’s parent, would take the annual growth rate for steel output last year from 7.5% to more than 13%. The government has stepped up efforts to crack down on the bloated sector, restricting new capacity growth and forcing outdated and polluting capacity to close, but new plants have continued to go into operation. Xu said China’s official steel capacity levels reached 1.106 billion tons last year, putting utilisation rates at 74.3%. Total capacity has now risen to 1.14 billion tons. The 88 members of the China Iron and Steel Association (CISA) had a total capacity of 842.93 million tons last year, and produced 663.8 million tons of crude steel. Smaller, non-member firms had a total capacity of 263.29 million tons and produced 158.17 million tons, putting their average utilisation rate at just 60%. Xu said Chinese steel mills would continue to struggle in the second half of the year amid financing difficulties, rising environmental compliance costs and higher tax rates.
Zijin to move focus from gold to copper
By : fcccadmin
Zijin Mining, China’s largest gold processor, will counter falling gold and base metal prices by boosting output, improving downstream operations’ efficiency and seeking acquisitions. President Wang Jianhua said he was not optimistic that non-ferrous metal prices would see any significant rise in the second half of the year, given relatively weak global demand. The company’s Zijinshan mine, which accounted for 32% of output from its own mines, saw output fall 4.2% year-on-year in the first half. “In the next few years, Zijinshan will undergo a transitory period towards copper mining, but the profitability of copper does not necessarily have to be less than that of gold,” Wang said. Zijin posted a 1% year-on-year rise in first-half net profit to CNY1.1 billion. Excluding investment income, assets impairments, and gains and losses on the value of its assets, underlying pre-tax profit dropped 22.9% year-on-year to CNY1.79 billion. Gold contributed 38.4% to Zijin’s operating profit in the first half, down from 55.8% in the same period last year, while copper contributed 39.4%, up from 32.9%. The contributions of iron ore, zinc and other metals also rose. Gold processing turned in a profit of CNY13.5 million, compared with a loss of CNY261 million in the first half of last year, while the loss on copper refining narrowed to CNY78.8 million from CNY278 million. Zijin has not changed its 34 ton full-year gold output target for its own mines, set early this year, or the 140,000 ton target for copper output, the South China Morning Post reports.
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