The Yunnan provincial government plan to support local base metals producers by arranging stockpiling through 2009 has come into effect, according to official and trade reports this week. Yunnan Tin, the only officially designated tin supplier, is reported to be contributing 6,000 tonnes initially.
The Yunnan Provincial Economic and Trade Commission announced on 31 December that it will initially purchase a total of 590,000 tonnes of base metals from local producers, as part of its previously announced one million tonne base metals purchase scheme. The first batch of purchases consists of 30,000 tonnes of tin, 180,000 tonnes of primary aluminum, 236,000 tonnes of zinc, 104,000 tonnes of lead and 40,000 tonnes of refined copper.
According to the announcement, the primary tin, aluminum and copper stocks will be solely sourced from the largest local producer of each metal, while lead and zinc will come from a number of different suppliers. An official with commission told Interfax that it tailored the first batch of the purchase scheme to meet major local producers’ requirements, and that the province may also source stocks from other producers in future. Under the plan Yunnan Province will subsidize storage costs and interest for loans from local banks using the metal stocks – sequestered by the companies themselves or held in reserve by the government’s stockpile agency – as collateral.
Yunnan Tin, the world’s largest producer, will store 6,000 tonnes of the metal and Yunnan Copper, China’s third-largest producer, will stockpile 2,000 tonnes of copper, the companies said separately on 30 December. Participating in the initiative “helps improve our cash flows,” Matthew Zhou, a manager at Yunnan Tin Group Co., told Bloomberg. “I don’t think we will have more to store in the future”, with the smelter halted till probably February, he said. Other press reports suggested that the company could contribute larger tonnages to the scheme.
