Opportunities hidden in challenge and renewing idea wins future
Source: www.chinamining.org.cn Citation: www.chinamining.org.cn Date: Nov.11, 2013
Mining Development High-level Forum, which was highly expected, was held in Tianjin Meijiang Convention & Exhibition Center on November 4th. The forum was especially eye-catching in the context of grim global mining.
Will gold price reach bottom? How do coal enterprises walk out of valley bottom? What challenges and opportunities will be faced when “going out”?
The forum room was packed. Jiang Jianjun who is the Director General of Department of International Cooperation & Science and Technology of Ministry of Land and Resources of China chaired the forum and actively participated in the discussion. 13 senior executives from mining giants had a deep analysis of global and China mining development situation and communicated about enterprises development strategies in the context of weak economy growth around the theme of “challenge, opportunity and development”.
All the present delegates deeply felt that: Opportunities were hidden in challenges and renewing ideas could win future; strategic transform was extremely urgent and system construction still had to be taken effort.
We should insist on innovation of the system and mechanism as well as technological innovation to improve the level of specialization of enterprises; we should insist on cooperation and mutual complementarities and mutual benefits as well as protecting environment and fulfilling social responsibilities; we also should insist on respecting resources environment, saving and intensively utilizing resources and respecting laws and regulation as well as carrying out mining activities legally if we want to realize healthy and sustainable development of mining industry.
13 mining giants discussed mining development, exchanging ideas and communicating sincerely, which showed their great longing for a bright mining future.
Global Mining: Opportunities Coexist with Challenges
Although speakers’ ideas were different, one idea was the same, which was grasping opportunities.
In 2013, Global economy was still in the process of deep adjustment. Despite the slow recovery of economy, the foundation was solid gradually and the trend continued to be divided. There were challenges and opportunities in the development of global mining. China economy has been keeping development stably. Through releasing reform dividend, speeding up new urbanization and increasing investment of technical research, China economy will show delayed effect.
Li Tong who is the CEO of BOC International Limited thought that “Global mining faces new situation and challenges. From 2012, European market has been unstable; US’s QE policies have gradually tapered and emerging market economy has entered structural reform and adjustment period. In the future period, emerging market region like China will be hard to grow as rapidly as 2002-2007. Bull market of commodities which was highly dependent on strong demands in the past 10 years may be weakened.
Li Tong thought that dissolving capital restriction, reshaping profitability and improving element productivity will be the core issues of survival and development for global mining enterprises in the next 1-2 years under the pressure of profit drop and cost remaining high.
She brought good news at the same time, “Global mining merger may still exceed mining profit fundamental in the future. In the first 9 months of this year, global mining merger grew again, with year-on-year growth of more than 100%. The proportion of China as the buyer involved in the amount of merger reached 12%.”
Xu Shusen who is the Vice President of China Nonferrous Mining (Group) Co., Ltd reminded that opportunities were hidden in the challenges. “Economy recovery of current world is hard and twisty. Global mining is still in the deep adjustment. Mining development faces many challenges. In front of opportunities and challenges, persistence is as important as choice.”
Li Fuli who is Vice President of China Minmetals thought that global mining would return to normal and he made a deep analysis on it. “Global mining will step into normal development after decades of years rapid growth and financial crisis. A completely competitive pattern whose capacity is more decentralized and strength is more changing will be present in front of us and its huge and deep influence will be shown too. Under market conditions of future completely competitive, manufacturing enterprises’ influence to industry development will increase.”
Li Fuli thought it was not a bad thing, “It is helpful for the healthy and reasonable development of mining. As long as we obey mining rules and insist on right ideas, no matter big enterprises or medium and small enterprises all can find their own development room in the new international mining cycle to realize value development.” He also suggested that mining enterprises could respond to changes by ways of improving its specialization, taking new mining development road and highly focusing on social interest of mining economy.
Ju Yitai who is Deputy Director General of China Metallurgical Geology Bureau was positive for global mining situation. He hold the point of view that global mining investment was becoming better. “ I am full of confidence for the development of global mining economy because of the long existence of global resources tense and economy’s strong needs for resources. Super cycle of global mining is far from over. We still have much to do on strengthening resources support and relieving resources restriction. The features of mining resources development and industry development rules decide that mining market will keep long-term stable in a certain period. Mining investment which has the features of high risk, large investment and long cycle makes it possesses the abilities of bearing investment and development risk and enduring slow benefits of input and output. The cycle shaped by weak economic growth and reverse coercion system will help to push long-term and stable development of mining market.
Different views on mining situation
Weng Zhanbin who is the Vice President of Shandong Zhaojin Mining Industry Co., Ltd said amusingly “Bull market of gold has gone and Chinese Dama couldn’t save gold market.”He thought that gold market would enter a new more unstable period, the situation of high gold price would be ended completely and the pressure of gold price dropping would be more and more. Future gold price might be fluctuate from $1200 per ounce to $1500 per ounce. After the fierce shake, gold value would be further confirmed by the market and gold price would go toward the peak the previous bull market.
However, Du Haiqing who is the deputy general manager put forward another view. He said “This year is uncommon in the history gold industry development. Although gold industry has been facing various difficulties and disadvantageous elements, we should see dialectically that the overall situation of gold industry is good.”
Current gold price was challenging investors, which was a severe test for gold enterprises. How to respond was the common topic for gold enterprises facing the challenge of gold market.
Weng Zhanbin proposed 3 ways for gold enterprises on this problem. “Gold enterprises especially big gold group should strengthen risk control of management, optimize internal operation, strengthen technology creativity and management innovation as well as improve endogenous driving force.”
Du Haiqing also gave some suggestions. “In the new period, the development of gold industry needs us to take new measures to respond actively. In the severe price situation, gold manufacturers should strengthen market analysis, stabilize operation, prevent risk, strengthen communicative cooperation and relying technology to propel the healthy development of this industry. Gold manufacturers should actively shoulder social responsibilities, realize mutual benefits of enterprises’ interest and local development.”
He also called on “The government and society should give support to enterprise at the same time of enterprise taking responsibilities to society.”
Coal enterprise must experience complete change if they want to walked of the gloom.
The advantages of “Coal Boss” has gone which means traditional extensive development has come to an end. Severe market situation reversely coerced coal enterprises to accelerate innovation and adjust the step of industrial structure. Zhang Youxi who is the Chairman of Board & Party Secretary, Datong Coal Mine Group Co., Ltd thought that coal development should be harmonious with environment. “As a kind of resources enterprise, coal enterprises should and must lead to change industrial civilization to ecological civilization. We should build big coal mine and big ore cluster, change past extensive growth mode and develop from dominant coal to diversified development. We should also speed up to build integrated base of coal and electricity to make coal-electricity integration advantages extend to the whole industry.
At the same time, Zhang Youxi thought that we should change previous economy development idea. “We should insist on green concept, construct green mines, change industrial chain advantage to ecological advantage, change economy supremeness to harmonious development between economy and ecology, carry out important ecological restoration engineer, build beautiful home and insist on Green GDP”. He said.
Almost every speaker in this forum referred to sustainable development. In the situation of every big mining enterprises carrying out new round of reform, Wang Jianhua who is the President of Zijin Mining Group Co., Ltd. thought that we should be more cautious. He put forward several questions on current sustainable development. “Shortage is unsustainable, while is excess sustainable? Is monopoly sustainable? Is all large-size, large scale and over speed development sustainable? Is highly depending on import sustainable? These questions deserve us to reconsider.”
“I thought that people engaged in mining should have a deeper understanding of taking responsible. As Lu Xun said that limitless places and people have something to do with people engaged in mining.” Wang Jianhua said with a deep feeling when he referred to social responsibilities of mining enterprises.
Overseas investment; Insist on Mutual Benefits
Now, more and more Chinese enterprises are aiming to overseas market.
Yu Changqing who is the Chairman of Shandong Gold Group put forward that the main tendency was cooperation, mutual benefits and development. “Extremely volatile minerals price is challenging our abilities and testing our wisdom of responding. If modern but traditional mining industry wants to develop well and realize value maximization of resources allocation in the situation of economic adjustment, mining enterprises should cooperate mutually, which is inevitably demands of mining industry and strategic needs of mining enterprises.”He said. He also suggested mining enterprises explore to build mutually-beneficial and cooperative mining system platform first, then explore to build mutually-beneficial and cooperative science and technology service platform and explore to build mutually-beneficial and cooperative information interactive platform.
Liu Xiangmin who is the Senior Vice President of Aluminum Corporation of China limited thought that now is the best timing for domestic mining enterprise to accelerate transformation. “The slowdown of economy growth has created opportunities for mining enterprise to integrate resources and transformative development as well as created conditions for the self-development of quality exploration enterprises with bright prospecting outlook. Some powerful enterprises could have a global view to carry out strategic transformation better.
On the investment cooperation of mining industry development, win-win has become a key word.
Xu Shusen suggested that we insist on cooperation idea of mutually benefit and common development and jointly develop with interested parties. “Mining enterprises could cooperate with foreign local powerful enterprises or domestic big groups and be dominant stockholders, which is in favor of giving full play of management, technology and talents, striving for preferential policies of foreign countries and getting support of partners. Mining enterprises should also insist on resources sustainable development and emphasize environmental protection, energy saving and emission reduction.”
In Xu Shusen’s point of view, the most important things are to fully integrate social responsibilities to company operation and management; be people oriented, guarantee legal interests of employees of host countries; care staff, strengthen their sense of identity for enterprises to create good environment for enterprises development.
Xu Hailong who is the Managing Director of Eldorado Gold (Beijing) Management Co., Ltd suggested that domestic mining enterprise should deepen opening-up. “The feast in the past years would not reappear in future long period, but China still has great influence to global mining. Everyone is related at globalized present. We need others’ resources and others need our market. China is one of the most fast developing countries, so China’s enterprises need to go out constantly to obtain some resources. We have been going out for many years and we still need to be more open. International Energy Agency predicted that 80% of China’s crude oil will be dependent on foreign countries, so it is better for China to go out to get that 80% rather than ensure its own 20% with more efforts. China should allow foreign enterprises to invest in China, increase communication and even form partnership to achieve win-win result.”
“State-owned holding companies should make full preparation when carrying out overseas investment. The most important about how to minimize the risk is to change idea and mode of managing domestic enterprises and build risk early warning system.” Wang Feng who is the Vice General Manager of Yunnan Chihong Zn & Ge Co., Ltd said.
Wang Feng also suggested to establish risk monitoring and early warning system, carry out multiplex investment strategy and build company alliances in practice. In dealing relationship with aborigines and local community, it is better to hire local law firm to be the representative to negotiate and communicate with them and companies win’s participate directly. Chinese enterprises should take various ways to improve transparency of the company and be responsible.
“Environmental risk control is a problem that has been ignored for a long time. We could invite environment companies which is famous in home and abroad to identify and evaluate local environment where our projects are”. Wang Feng also referred.
Clive Tasker who is the CEO of Beijing Investment and Consulting Company of Standard Bank Group thought that Africa might become the new favorite place of investment. “In the future, Bulk commodities in Africa will be more and more important. In this big context, Africa means opportunity. Chinese enterprises’ investment in Africa has grown faster than other countries’. Demands from China will be continuously increase in the future and Africa will benefit from China’s investment in the whole industry chain.” He said. (Translated by TLRHVC)
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