Working together to achieve a win-win cooperation
——Mining Ministers and Mining Development Forum Reviewed
In the morning of November 5, 16 mining executives from home and abroad shared their experience of how to work together in the crisis and achieve win-win cooperation in face of the sustained turndown of the international mining in the past year. This event submitted an ideological feast for the exhibitors and there were more than 300 audiences presented.
Opportunities in the Crisis, Focus on Industrial Upgrading, Merger and Reorganization
Zhou Zhongshu, the President of China Minmetals Corporation, revealed the common unfavorable situation for the line of international metal mining with a group of convincing facts: For more than a year, commodity prices had continued to fall, and almost had no rebound; New investment declined greatly as investors had lost their confidence; Enterprises were in the struggles for survival, and the prices of mineral products had shrank to the bottom line; Default occurred frequently in the circulation market and an unprecedented credit crisis had appeared in the mining market.
According to Zhou Zhongshu, though the metal mining market was periodical in the development, and it was at the brink of frothy stage this year, we still had to be alert to the downturn which lasted such a long time and had wide influence. Although the whole world economy was in a downturn, including metal mining, external economic environment could not exert such a big effect on mining industry. In China, for example, the auto industry and the real estate industry were still maintaining a positive growth, which was enough to sustain the rigid demand of the basic minerals. The problems of world metal mining lay in the internal causes such as the overcapacity, the homogenization competition, and the unreasonable industrial structure.
In view of the problems above, various countries have announced their new industry norms to promote the industrial upgrading and the healthy development. In order to solve the conflicts of capacity, competition and profit distribution from the essence, interests must be in redistribution. The international metal industry will be reshuffled, and a group of enterprises will go downhill for lack of the core competitiveness.
For the problems of the low industrial concentration and the homogenization competition, Song Xin, deputy general manager from China Gold Group, Wang Janhua, deputy general manager from Shandong Gold Group and Li Shousheng, deputy general manager from Shandong Zhaojin Group all have the real empathy. At present, the gold industry is on the up grade, it still has to face the problems of the low industrial concentration, relatively small scale, slow development of the modernization and the apparent problems such as the repeated construction, repeated exploration and development. Industry dispersion not only affects the development of the gold enterprises in China but also the investment of the resources exploration. At present, China`s gold resources conservation is only 6,328 tons, ranking the third place in the world, which is not symmetric with China’s status as the biggest gold production source in the world.
In face of these common problems, Zhou Zhongshu said that the new technology revolution in the field of new energy, new materials, information, and the environmental protection industry is in the ascendant and remains its connotative growth at present. The green development has become a new economic trend. He also mentioned that as it is very difficult for the metal mining`s extensive development mode to conform to the demands of the new era, we must adjust the economic structure, speed up the industrial upgrading, rely on the advanced technology and enhance the service for the progress and development.
In light of the merger and reorganization, Shandong Gold Group has obtained remarkable achievements. According to Wang Jianhua, based on large-scale resource integration, Shandong Gold Group has increased the investment on the technology and exploration and makes great breakthrough in the 800 meters, 1,500 meters and 2,600 meters deep mining prospecting, which greatly increases the company’s resources reserves. Shandong Gold Group is striving to make 100 tons of gold base to achieve the first-class prospecting, mining, science and technology security ecological modernization. The completion of the world gold base will further consolidate China’s No. one position in the gold production. “The price of gold should also be decided by the Chinese!” said Mr. Wang.
According to Li Tong, CEO of BOCI, the global minerals demand structure has changed greatly under the background of the economic transformation. Strategic new industries and new technology industries has produced important influence on the traditional mining pattern. Shale gas and other alternative energy have accounted for more than ever before. The prices of traditional metal rises slightly, while the prices of new metals such as rare earth, and lithium generally rises sharply. For the mining giant, mergers and acquisitions have become the important means to increase resources reserve, enhance the technical level and expand the market share. He believed the concentration degree of the new metal industry is higher than that of the traditional industry. Although the global economy is in a downward cycle, mergers and acquisitions of new metal industry are still active. Production mode changes, technology research and development, the productivity promotion do all need a huge capital expenditure and the support of investment and financing. The capital market needs to be reformed urgently and the financing tool innovation should be accelerated to solve the financing demand of the mining enterprises.
Increase the environmental protection and safety investment: “We don`t need the gold with the cost of life.”
The green mine construction is the theme mentioned by almost every executive in this forum. HanJianGuo, deputy general manager from Shenhua Group Corporation Limited said, China, as world’s top consumer and producer of coal resources should implement the strategy of the high carbon and low carbon industry development.
According to Han Jianguo, Shenhua has carried out a series of beneficial attempt in building the green coal industry, realizing the coal prospecting, mining, transportation, utilization, transformation, and the green development of its whole life cycle. At present, Shenhua Group has basically realized the coordinated development between large mining area resources and environment, and attempted the whole process of carbon capture and sequestration. At the same time, Shenhua invested 2.5 billion yuan to establish an independent innovation base of the low carbon clean energy industry and introduced a number of international top personnel to speed up the green coal industry development and demonstration project construction.
Han JianGuo said enthusiastically that the green coal industry can not only provide green resources for human, but also provide business opportunities. He hoped counterparts, domestic and abroad, would participate in this new industry!"
In the safety and environment protection, many executives also shared a lot of successful experience.
Shandong Gold Group always adheres to the principal “NO Bloody Gold.” From 2008 to 2010, it invested 750 million yuan for the safety and environment protection, and no accident occurred during those years, which led to its leading position in the domestic mines exploration safety. At the same time, Shandong Gold Group had created the first national environmental friendly mining, established five green mining test bases, and strived to achieve the goal “Dedication of the gold and silver, leaving the green mountains and rivers.”
According to Zhang Youxi, chairman of the board from Datong Coal Mining Co. LTD., the company always adheres to the principle of green mining, and 100,000 households have moved out of the mining area for the recovery of the ecological green environment. Now they have built a national mine park which is the largest in scale, the most profound in coal culture, and the most obvious in the ecological improvement. Meanwhile, they strive to construct the new pattern of low carbon and environmental protection and build TaShan circular economy park, realizing 100% utilization of the waste. Waste water from life and industry achieves zero discharge. TaShan circular economy park has achieved social, economic and ecological benefits. By the end of the year of 2011, the total investment was 20.7 billion RMB yuan, with an annual output of 23.5 billion RMB yuan, a profit of 5.3 billion RMB yuan, and the taxes 4.2 billion RMB yuan.
Win-win cooperation and experience accumulation for “Invest in the Foreign Countries
Strengthening the cooperation and working together in the crisis are the consensus among the mining enterprises’ executives.
Cao Yunde, chairman of the board from Cambodian Khmer Resources Investment Holding Group Co., LTD , and Bai Deming, managing director from South Africa Standard Bank Group, who is responsible for business and clients in China, Asia introduced the mineral resources situation of Cambodia and South Africa respectively at the meeting and hoped that China’s mining enterprises would invest on their resources industries.
After years of the rapid economic accumulation, Chinese enterprises have gradually matured and invested in the foreign countries, which has become the important choice for many China’s mining enterprises.
Li Shousheng, deputy general manager from Shandong Zhao Jin Mining Industry, said that at present, China’s mining enterprises were big but not strong, and hard to compete with foreign rivals. The strategy of “Invest in Foreign Countries” for many gold enterprises were lack of strong policy support and the effect was not obvious. He hoped the large gold groups would participate in international market competition to become bigger and stronger with the national support. At the same time, opening the mining capital market, perfecting regulation system, enhancing the transparency and the sound development of mining capital market were all the support for the mining enterprises’ “Invest in the Foreign Countries”.
With a rich experience of “Invest in the Foreign Countries”, Zijin Mining Group Company shared its experience. Qiu Xiaohua, vice chairman of the board from the company believed that political risks were of primary caution. In addition, economy, social stability, labor policy, investment sensitive area and limited field should be investigated thoroughly, especially in some politically unstable countries. Meanwhile, legal risk, fiscal policy risk, environmental risk and safety risk should also be paid attention to. Do in Rome as Rome does. He suggested we should make full use of various policy convenience and policy Banks’ credit support to prevent risks through China’s overseas financial services institutions for the purpose of “Invest in the Foreign Countries”. The authorities should also set up overseas rights protection center to maintain the legitimate rights and interests of overseas enterprises.
Song Xin said China Gold Group would focus on its “invest in foreign countries” policy and establish overseas capital operation platform to quadruple economic indicators within four years after the completion of “Twelfth Five-Year” Plan, entering the ranks of global top 500. Lu Jin, director from China Metallurgical Geology Bureau, said that with the policy of “invest in foreign countries” , the geological exploration bureaus will have a brilliant future. The geological exploration bureaus should first attach great importance to the technical service, deepen the exchange among the resource countries, and integrate their business into the global countries to achieve a win-win cooperation. Qi Ming, deputy general manager from Yunnan Metallurgy Group thought that in the form of participation, holding, acquisitions or joint development, these enterprises could involve in the development of mining resources at home and abroad and realize a new breakthrough. Liu Xiangmen, vice President from Aluminium Corporation of China said that in order to make the world first-class mining company, we must innovate resources cooperation pattern, and promote enterprises’ leap frog development. He also revealed that, as the product of exploration technology cooperation and mining investment mechanism innovation, China Aluminum and Lituo Exploration Co. Ltd. by China Aluminium Corporation and Lituo Group has obtained the approval of the Chinese government and will be formally established.
After the forum, the reporter’s strong impression was that although the world mining changed dramatically, the industry leaders has been well prepared. (Yu Xingdi)
(translated by TLRHVC)
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