Regional banking offices in China were recently ordered to raise the level of scrutiny imposed on calculating credit risks in the coal mining industry. This could create funding issues for groups in the sector, although when these organizations take certain steps, they can make up these potential shortages in other areas, including equipment repairs.
According to Bloomberg News, the China Banking Regulatory Commission issues alerts pertaining to events or businesses that could create a risky environment for banks. As the coal industry is a significant part of the Chinese economy, it is important that these groups have the necessary resources to carry out their processes. Therefore, banks must partner with mining businesses while protecting themselves against losses from risky investments.
"Coal is a pillar industry in the economy and banks' exposure to the sector should be quite substantial," Rainy Yuan, Masterlink Securities Corp. analyst, told Bloomberg News.
However, when funding issues arise, mining organizations can keep their budgets in line by preventing large scale repairs through preventive maintenance. According to Mining Equipment Design, maintenance costs can comprise up to 50 percent of an organization's budget. Reducing these expenditures can create additional financial resources for mining companies.
When key pieces of large machinery are properly maintained with equipment condition monitoring technology, operators can upkeep systems as necessary to boost equipment reliability. Through this strategy, maintenance costs can be curbed.