Jinchuan Group, a major Chinese producer of nickel, copper and
cobalt, has reduced wages as it copes with difficulties in its
markets and a slowdown in Chinas economy.
The move, which
isnt unusual in Chinese state-owned companies going
through challenging periods, was confirmed by the company.
There was some market
speculation that the measures were related to some kind of
significant one-off loss, but a company executive denied this.
"This (cut) is due to some more profound reasons. After all,
the economic situation is not good," he said.
Three-month nickel on
the London Metal Exchange, which fell 29 percent from a
year-to-date high of $18,665 per tonne in early February to a
low of $13,245 in July, settled the official session at $13,830
per tonne Aug. 30.
unit has suffered difficulties and production shortfalls
because of a shortage of scrap, and declared force
majeure on some shipments in June.
Chairman Yang Zhiqiang
warned in mid-July that the company needed to "strengthen
control of operational costs and capital management," adding
that it had to deal with high inventories and rising
operational risks. The company also should limit mining of
low-grade mines to lower average mining costs, he said.
In the cobalt market,
the company was said to be actively selling cobalt scrap, which
was seen as unusual. "In the past, they never seriously thought
about cobalt metal leftover pieces unless they were approached
for the stuff. Now, they are actively trying to promote it,"
one market source told AMM sister publication
A company executive
said it was selling the material at only 3,000 to 4,000 yuan
($490 to $654) per tonne lower than its standard cobalt metal.
The latest cobalt metal price in China is between 192,000 and
206,000 yuan ($31,375 to $33,662) per tonne, with the Jinchuan
brand trading at the high end of the range.
According to several
sources, Jinchuan lowered the performance-related part of
employees salaries in July, with management being paid 60
percent of that portion and other workers 80 percent.
The staff said it was unclear how long the reductions would
be in place.
A version of this
article was first published in AMM sister publication Metal