China’s Mining Industry Embraces Golden Time for External Investment



China’s Mining Industry Embraces Golden Time for External Investment

At the 2016 (The 4th) International Summit Forum on Mining Development held on December 8, attending experts said, under dual pressures of meeting peak period of resource demand and confronting industry adjustment, over supply of global major mineral products will continue, in the next three to five years prices of mineral products may continue to stay at low level. Meanwhile, with the proposal and progress of the “One Belt, One Road” initiative, all industries in China will come to enjoy broader space for development and maneuver, China’s mining industry will embrace golden time for external investment.

Speaking of development situation of the mining industry at the current stage and for a certain period in the future, Chen Feng, President of the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters, said at the Forum that this year international market of bulk commodities including mineral products experienced across-the-board recovery, overall prices rose quickly before decline and stabilization. Looking ahead into 2017, global economic and trade situation still remains complicated and grim, uncertain factors are growing, prices of commodity market will continue slow rising trend amid fluctuations.

Chen Feng pointed out that, according to estimate by the United Nations Conference on Trade and Development, in 2016 the global volume of external direct investment may drop by 10%~15%, which will bring uncertainty to prospects of global mining investment.

Wang Hongjian, Director of the Chinese Academy of Geological Sciences, Research Center for Strategy of Global Mineral Resources, said that prices of global mineral products have entered downward path, despite some fluctuations, the expectation of price returning to high level lacks support. “In the next decade, the demand for most bulk commodity mineral resources will reach peak value, meanwhile, China’s demand for mineral resources will change from all-round high-speed growth to mid to low-speed differentiated growth. In the situation in which mounting peak of resource demand and the pressure of industrial adjustment co-exist side by side, global major mineral products are still over-supplied, in the next three to five years prices of mineral products may continue to stay at low level.” Wang Hongjian predicted.

According to Li Xinchuang, President of the China Metallurgical Industrial Planning and Research Institute, since there are still growing uncertainties in global economy, all mineral products including iron and steel products are facing serious surplus, the development of global iron and steel industry has entered a new stage. Looking ahead into the future, high speed growth period of iron and steel industry has become a thing of the past, it will enter a long cycle of low-speed growth. Against the background of consistent overall decline, although governments fueled growth in steel product demand through investment, and de-capacity also created favorable environment for some regular enterprises, it cannot change the situation of sluggish demand for ion & steel and mineral resources, and difficulty to significantly improve performance within a short period of time.

Against the background of declining global mineral product prices, difficulty in enterprise operation, and obstructed mining capital chain, attending experts put forward suggestions that, Chinese mineral resource related enterprises must firmly grasp the current favorable opportunity, actively “Walk out”, acquire or merge overseas companies with high resource quality and large scale, and improve enterprise’s international competitiveness.

Li Xinchuang pointed out that, in view of the current situation, mineral resource related enterprises including iron and steel enterprises need to re-shape value chain, change increasing quantity & expanding output to reducing output & increasing performance. “Chinese enterprises should direct more attention to overseas market, and can even transfer 85% above of their efforts to overseas market, and fulfill coordinated development through cooperation and M&A with overseas enterprises.” Li Xinchuang said.

Wang Hongjian also suggested that, in the upcoming five to ten years, India, ASEAN, and Brazil are key successors of mineral resource demand, Chinese mineral resource-related industries must actively “Walk out”, so as to be able to share resource dividend in industrialized countries and industrialization process during the subsequent stage.

Chen Feng considered that, with the proposal and progress of the “One Belt, One Road” initiative, all industries in China will come to enjoy broader space for development and maneuver, the development of China’s mineral industry also encounters new opportunities. “The ‘One Belt, One Road’ construction will help shatter restrictive impact of existing mineral resources on China’s economic development, and will provide powerful support to China’s sustained and stable economic development. In the cold winter of sluggish economic development of mining industry, the Chamber will help mining enterprises to grasp development opportunities represented by the ‘One Belt, One Road’ construction, and accomplish breakout and transition.”

Wang Hongjian also indicated that, to coincide with the “One Belt, One Road” national strategy, Chinese mining enterprises should resort to capacity cooperation of mineral resources such as petroleum, natural gas, copper, aluminum, lead, and zinc, support the construction of regional infrastructure, and fulfill mutual benefit and win-win.

Attending experts also analyzed existing problems in the “Walk out” process of mining enterprises. According to experts, many mining investment failures to a large extent can be attributed to relatively rough recognition and judgment of the value of mining investment, as well as lack of understanding of the national condition and social environment of the countries and regions being invested. According to expert suggestion, when judging the value of mines, it is not only necessary to listen to opinions of geological and mining experts, but also necessary to listen to voices from legal, policy, ecology, environment, religion, and community circles, so as to ensure harmony and coordination between economy, environment, and social benefit.