Mon, May 22, 2006 - Page 12 News List

Would-be coin smelters warned of stiff penalties

HOT MARKET In an apparent bid to deter smelting of the NT$1 coin -- and a repeat of a 1973 crisis -- the bank said the coins were worth less than NT$1 when melted

By Max Hirsch  /  STAFF REPORTER

The central bank issued a terse press release on Thursday warning the public not to smelt coins. Soaring metal prices have fueled speculation of the possibility of mass illegal coin smelting.

The bank's release states that the metals comprising a NT$1 coin are worth less than the value of the coin itself, and that because coins are a blend of metals, this renders them unsuitable for industrial or commercial uses.

Those who illegally smelt coins are subject to stiff prison sentences of between one and seven years, the statement said.

According to a United Daily News report on Thursday, the release came in the wake of an emergency meeting convened by the central bank as metal prices surged.

If mass coin smelting were to transpire, it would not be the first time. In 1973, high global metal prices led to coin smelting nationwide, resulting in a severe lack of coins, the report said. At the time, businesses were forced to substitute NT$1 coins with NT$1 stamps and IOUs, it said.

According to local media reports, central bank officials are considering altering the content of the NT$1, NT$5 and NT$10 coins to reflect the increase in metal prices and because the coins have not been updated for 20 years. The move could also discourage the illegal smelting of coins, which could cause a repeat of the 1973 crisis.

The local business news Web site cnYes.com recently reported that 1 million NT$1 coins could fetch up to NT$1.26 million on metal markets if properly recycled. However, the bank's release said that the metal content in a NT$1 coin is worth only NT$0.36 -- less than half the value of the coin itself.

Experts regularly point to China's sizzingly economic growth as a major factor contributing to rising metal prices. Strong demand for metals has led to the disappearance of manhole covers on the streets of cities worldwide, in alarming numbers. In 2004, 24,000 manhole covers were stolen from Beijing's streets, according to a Xinhua News Agency report. Scrap metal thieves can sell the covers for up to 20 Chinese yuan (US$2.49) -- the equivalent of some migrant workers' daily wage, the report said.

Copper prices in particular, have skyrocketed this year and market analysts have speculated that a scandal involving Liu Qibing, a Chinese futures trader who went missing last November, helped contribute to the rise.

Liu reportedly traded metals in London for China's secretive State Reserve Bureau (SRB), which amasses commodities for China. Liu allegedly placed a series of bets on copper futures last summer, incurring hundreds of millions of dollars in losses when the market failed to match his expectations.

He vanished shortly after his positions came up tremendously short. The SRB denied the existence of Liu, only later to recant and label him a rogue trader who had worked on his own.

Base metals prices -- including copper, which comprises 92 percent of the NT$1 coin, according to cnYes.com -- plummeted on Friday after reaching record highs the previous week, an AFP report said on Saturday.

This story has been viewed 5664 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top