Solid Minerals
China Bank Regulator Said to Issue Alert on Coal Mine Loans
BEIJING – China’s banking regulator ordered its regional offices to increase scrutiny of credit risks in the coal-mining industry, said two people with knowledge of the matter, signaling government concern about possible defaults.
The China Banking Regulatory Commission’s order didn’t mention concerns that a 3 billion yuan ($496 million) trust product distributed by Industrial & Commercial Bank of China Ltd. may default after the coal miner that borrowed the funds collapsed, said the people, who asked not to be identified as the matter isn’t public. Regional CBRC offices were told to also closely monitor risks from trust and wealth management products, they said.
The regulator issues such alerts for matters that it judges may pose significant risks to banks and not on a regular basis, the people said.
Analysts at Bank of America Corp. and Deutsche Bank AG are among those to say in the past week that the possibility of defaults in China is increasing as authorities take measures to rein in shadow banking and economic growth slows. Investors in the trust product distributed by ICBC met with officials from the bank yesterday in Shanghai, demanding their money ahead of the Jan. 31 maturity date.
The market is “quite worried” about the coal sector after concerns rose that the trust product distributed by ICBC may default, Rainy Yuan, a Shanghai-based analyst at Masterlink Securities Corp., said by telephone today. “Coal is a pillar industry in the economy and banks’ exposure to the sector should be quite substantial.”
Shares Fall
Shares of ICBC fell as much as 1.5 percent in Hong Kong trading and were trading 0.8 percent lower at HK$4.77 as of 1:28 p.m. local time. China Shenhua Energy Co., the nation’s largest coal miner, fell as much as 1.6 percent. The city’s benchmark Hang Seng Index fell 0.9 percent.
The banking regulator also ordered regional offices to watch for credit risks associated with changes to China’s economic structure and overcapacity in industries such as mining, the people said.
The CBRC’s media office didn’t immediately respond to faxed questions seeking comment today.
China reported this week that economic growth slowed to 7.7 percent in the fourth quarter from 7.8 percent in the previous three-month period.
Coal prices fell 16 percent last year as authorities sought to reduce the nation’s reliance on the fuel to power the economy, according to data tracked by Bloomberg. Prices fell below the break-even point for most small and medium-sized producers last year, forcing them to reduce output, Helen Lau, an analyst at UOB Kay Hian Ltd. in Hong Kong who covers the coal industry, said by phone.
“As a result of output cuts, they don’t have much cash flow and thus they can’t repay loans and debt,” Lau said. “The fact government is giving warnings and not bailing out defaults will be good for industry consolidation, indicating it is letting the market shoulder the burden of its own risks.”
Business
Nigeria set to boost Naira value and foreign reserve with local gold production, as Tinubu receives gold bar
IN a significant move to strengthen Nigeria’s economy, President Bola Tinubu received a symbolic gold bar on Sunday from the Minister of Solid Minerals Development, Dele Alake.
This gesture marks the commencement of the National Gold Purchase Program (NGPP), aimed at boosting the naira’s value and enhancing the country’s foreign reserves.
Minister Alake expressed gratitude to President Tinubu for his support of reforms in the solid minerals sector.
He highlighted that the NGPP, which involves sourcing gold from artisanal and small-scale miners and refining it to meet the London Bullion Market Association’s Good Delivery Standard, will substantially contribute to Nigeria’s economic stability.
Alake stated “This initiative will significantly increase our foreign reserves and strengthen the naira. The refined gold will be supplied to the Central Bank of Nigeria, marking a crucial step in our economic strategy.”
The presentation also underscored the first commercial transaction under the NGPP, establishing a centralized gold purchasing system that integrates small-scale miners, cooperatives, and production units across the nation.
This program is expected to provide a structured market for gold, fostering economic growth and stability.
He said, “The successful completion of the first commercial transaction clearly demonstrates the National Gold Purchase Program’s effectiveness. It has increased the nation’s foreign reserves assets and shown that using the Nigerian Naira to purchase a liquid asset traded in United States Dollars, such as gold, is a viable strategy. This transaction has also underscored the potential of the National Gold Purchase Program to enhance fiscal and monetary stability.”
Alake added that the initial commercial transaction under the program resulted in a +US$5 million boost in Nigeria’s foreign reserve assets.
The transaction involved refining over 70 kilograms of gold to meet the London Bullion Market quality standard and aggregating locally mined gold, thereby infusing approximately NGN6 billion into the rural economy.
President Tinubu expressed appreciation for the Ministry’s accomplishment in advancing the government’s goal of economic diversification by acknowledging and displaying the symbolic gold bar
Solid Minerals
FG Fingers Foreigners Sponsoring Banditry For Illegal Mining
The Nigerian Government has threatened to come down heavily on foreigners sponsoring bandictory as a way of sustaining illegal mining activities in parts of the country.
The warning was handed down in Abuja by Minister, Solid Minerals Development, Dr Oladele Alake, while receiving a delegation of the Nigeria-China Chamber of Mines led by its National President, Dr. Olugbenga Ajala.
Details of these were contained in a statement released by Head, Press & PR, Ministry of Solid Minerals Development, Alaba Balogun over the weekend.
The statement cited, Dr Alake, thus, “The government will come down firmly on these unscrupulous foreign operators sponsoring banditry to perpetrate illegal mining: let me use this medium to appeal through you to tell those sponsors to desist or face the full wrath of the law.”
According to Dr Alake, the Ministry is committed to establishing a multi-agency task force that will end the activities of illegal miners and their collaborators.
The Minster made it clear that the FG had given illegal miners a 30-day-ultimatum to legitimise their businesses, quit Nigeria or incur the wrath of the law.
According to him, this will help “to streamline and structure the Small-Scale Artisanal Miners for maximum yield to the Federal Government.”
The delegation paid a courtesy call on the Minsiter at the Ministry’s headquarters in Abuja.
Energy
Fuel Scarcity: Govt Yet to Increase Pump Prices – NMDPRA
By Edozie Obasi-Eze
Amidst heightening uncertainties in the domestic petroleum products market characterised by scarcity and irregular pricing, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has declared that there’s no intention to review pump prices upwards.
This was contained in an advisory issued by General Manager, Corporate Communications, NMDPRA, Kimchi Apollo.
He stated that the Nigerian National Petroleum Corporation Limited (NNPCL) had imported PMS with current stock levels sufficient for 34 days.
In an attempt to address panic buying and speculations which have seen price of Premium Motor Spirit (PMS) oscillate between N180-N250 in the Lagos area, Apollo assured that there was enough quantity of the product in the country already.
He said, “Consequently, marketers and the general public are advised to avoid panic buying, diversion of products and hoarding.
“In keeping with the Authority’s responsibilities as outlined in the Petroleum Industry Act (PIA), the Authority assures the public that it would continue to monitor the supply and distribution of petroleum products nationwide, especially during this holiday season.”