Shanxi Coal Miners Owe 1.1 Trillion, Rely on Subsidies to Pay Wages

"Before enterprise efficiency is good I got 3,000 yuan a month, after dropping lower and lower, now only 1296 yuan, and after January I haven't received anything." Working in Shanxi Coking Coal Group, a company for many years Ms. Zhang told the Beijing News reporter, less than the retirement age, she and several colleagues, was included in the list of your company's split.

The very fact that the fate of the choice facing in this round of reform to capacity is not alone. In the coal-rich province of Shanxi, being conducted to the plight of the business capital chain, Shanxi coal companies have all fallen into debt capped situation. As of May 12, the seven state-owned coal enterprises in Shanxi all reported earnings. Beijing News after carding statistics showed that by the end of 2015 the total debt of the seven coal prices increase 100 billion over the previous year, to reach 1.1 trillion yuan.

Debt levels are high relative to assets:

At the end of last year, a total of seven state-owned coal enterprises in Shanxi Coking Coal Group liabilities, with the Coal, Luan Group, Shanxi Coal Group, Yangquan Coal, Shanxi Energy Group, Mountain Coal Group and other breakthrough 1.1 trillion, reached 1.111983 trillion yuan, representing an 2014 year-end increase of 103.027 billion yuan, an increase of 10.2 percent, as the country's third largest, with a maximum liability of Shanxi coal Group's largest coal enterprises, the end of last year to 219.209 billion yuan.

Debt ratio, the reporter found after sorting the data, as of the end of 2014 and the end of 2015, the total assets of the seven coal prices were 1.243107 trillion yuan and 1.350416 trillion yuan, asset-liability ratio rose from 81.16% to 82.30%.

This level has far exceeded the warning line. Generally believed that the balance of risks and benefits, the appropriate level of corporate debt ratio is 40% -60%, 70% of the cordon, many banks are lending this as if the reference standard.

Cash flow swung from positive to negative last year:

With the debt ratio rising at the same time, seven coal prices shrinking cash flow. Carding statistical cash flow statement, net cash flow from the seven coal prices at the end of last year, total operating activities -48.1 million, compared to 16.046 billion yuan by the end of the previous positive to negative.

Some workers haven't been paid for more than a year:

"Coal mine before walking on the main power plant sales, plant sales but now basically cut off most of the mine company we have been on holiday, on half a year did not go to the mine, the mine only a few chief on duty," Wang Gang said, "In the past month to benefit a good time to get 3,000 yuan, after falling a few times, dropped to less than 2,000, followed by more than a year without wages."

Government subsidies are keeping wages paid:

"Promises, as long as the government issued grants, the company gave wages; but who do not know, how long the company can issue." Li Xiao said. "If not for government subsidies and the fact that I'm pregnant, I would leave," Li Xiao reluctantly said, the company launched after staff triage, still lactating she chose to leave temporarily, and so her children do intend to.

Government subsidies doubled in 2015 for some firms:

Li Xiao where Jinneng Group's consolidated income statement shows that their access to government subsidies of up to 1.607 billion yuan, 664 million yuan more than in 2014 more than doubled in 2015, is a major coal enterprises in Shanxi, the biggest increase.

In addition to unpublished government subsidies exact data of Yangquan Coal Industry, the six other coal enterprises eligible for government subsidies totaling 5.683 billion yuan, compared to 2014 increased by 21.5%.

Financing costs are soaring:

However, even if financing is guaranteed, but also a sharp increase in the interest burden of coal enterprises. Datong Coal Mine Group 2015 consolidated income statement shows that operating costs under the item interest expenses 3.0814 million yuan from 2014 to 2015 of 31.7398 million yuan, turned over 10 times. Datong Coal Mine Group acknowledged that it is because of a substantial increase in interest expense of financing due to scale.

Subsidies are being chewed up by interest payments:

Analysts pointed out that, although the Government is willing to come forward to "reveal", but compared to the size of the debt, 35 billion yuan limited effectiveness.

According to CRE securities recently released research report, seven bond scale coal enterprises totaled 223.2 billion yuan stock about 12.7 billion yuan a year to pay the interest.

In Shanxi Coal bonds recently, Shanxi coal prices in the open market there has been intensive two debt default events.

April 6, Shanxi Coal Group subsidiary Hua Yu announced a short-term financing bonds of 638 million yuan of default. April 8, ING Group announced that, as of the date of overdue debts accumulated 390 million yuan.

In this case, some companies began to change their business models, to seek replenishment from the upstream and downstream industries.

A person in charge of the coal electricity supplier located in Taiyuan, said, "Some private coal prices are more flexible, and now began to actively own business chain downstream extension of themselves to send coal to the downstream business."

"In the past coal mine are waiting for customers to purchase automatic door, there are still a large number of coal mines or so, would prefer not to sell coal, but also do not want to explore a new model," the official said, "almost all the coal enterprises now have funding problems, but only the individual is exploring financing channels, and the days are basically private enterprises, state-owned enterprises, after all, better than some, there is government support. "

Lee Kum said that in case of deterioration of cash flow, Shanxi provide 35 billion yuan to increase trust guarantee is a last resort. Currently, the situation in Shanxi coal prices by refinance old debt has been relatively common, but this is only the contradiction goes back in the future could have big trouble. Shanxi provincial government should be specific coal prices, coal classification, adhere to the "one enterprise one policy," some "zombie Mine" transfusion should continue, but should take the form of bankruptcy to solve their debt problems.

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