China to Pour 100 Billion Yuan into Metal and Logistics

By Liu Peng
Published: 2009-02-26

China plans to spend 100 billion yuan in the next two year to spur the development of non-ferrous metal and logistics sectors.

The plan, announced on the Chinese government portal ( on Thursday, was part of a scheme to revitalise both the sectors badly hit by the current economic slowdown. It was approved by the State Council's standing conference, chaired by Premier Wen Jiabao on Feb 25.

Since last July, prices for tin, copper and aluminum have nosedived after months of escalation. As a result, many domestic smelters, who had purchased large quantities of non-ferrous metals for stockpile before the price slump, suffered huge losses. Many had to cut their output or shut down their smelting plants.

The latest revival scheme was meant to aid these troubled firms. The Chinese cabinet emphasized that the industry needed a technology upgrade, restructuring and more mergers to realize stable growth.

To tackle these goals, the government would provide discount loans to firms for technology upgrades. In addition, tax rebates would be raised to promote non-ferrous metal exports, according to the scheme published on the government website.

The scheme also called for establishing a national reserve system for non-ferrous metals as soon as possible. The scheme would help smelters to store up their products for future sales instead of selling them at dirt cheap prices in the current poor market.

The pilot of a reserve scheme was first introduced in Yunnan province last December, whereby troubled firms could borrow against these assets to secure discount loan, thus injecting the cash-strapped companies with liquidlity.

For the pilot, the Yunnan authorities set aside 25 billion yuan for storing up hundred of thousands of tons of metal and fertilizer.

The idea was later picked up by the State National Material Reserve Administration, which started a reserve in late December. Its first purchase for stockpiling was 250,000 tons of aluminum ingot at 12,350 yuan per ton - an offer some 10% higher than market price - from eight domestic smelters, including the state-owned Chalco, the country's largest alumininum producer.

However, there still lacked a standardized nationwide reserve scheme that would allow co-ordination of the storing of non-ferrous metals.