(Corrects spelling of company name to Phoenix in fifth and seventh paragraphs.)
Aug. 14 (Bloomberg) -- The Henan provincial government in central China has lobbied the nation’s banks to support struggling local coal and solar companies, according to government officials familiar with the talks.
Local authorities asked eight banks, including Bank of China Ltd. and Industrial & Commercial Bank of China Ltd., to keep lending to the three largest coal producers in the region and to offer preferential interest rates, according to two government officials, citing a meeting the government initiated last week. The officials asked not to be identified because they weren’t authorized to speak publicly about the matter.
The companies are Henan Energy & Chemical Industry Group, Zhengzhou Coal Industry Group and China Pingmei Shenma Group, according to the officials. The three generated around 341.7 billion yuan ($55.5 billion) of revenue in 2013, or equal to the nation’s top coal producer Shenhua Group, according to China National Coal Association. Henan was China’s fifth largest coal producing region in 2012.
China’s coal companies are struggling after prices in the world’s largest producing nation fell to the lowest in seven years. More than 70 percent of coal companies are losing money and 50 percent of them aren’t paying wages on time, according to the China Coal Industry Association. They are also having difficulty paying loans to banks, according to Helen Lau, an analyst at UOB-Kay Hian Ltd. in Hong Kong.
Banks were also urged to keep financing Phoenix Photovoltaic Technology Co. Officials from the local branch of the central bank and China’s top banking regulator also participated in the meeting, the people said.
An official at the general office of Henan provincial government declined to comment and refused to give a name. Beijing-based press officers at the Bank of China and ICBC didn’t immediately respond to a text message seeking comment.
Two calls to Henan Energy and Chemical Industry Group weren’t picked up. Two calls each to the press office of Pingmei Shenma and Zhengzhou Coal Industry went unanswered. The office number for Phoenix Photovoltaic, a solar wafer producer, was out of service.
--With assistance from Feifei Shen and Aipeng Soo in Beijing.