Appreciating the smooth and rational development footsteps of mining industry

As a matter of fact, global mining industry had taken on the tendency of slow-down since the second half year of 2012, turbulence & shrink, a downward trend followed later on, the period of high profit in mine enterprises were drawing to a close, winter seasons for mineral development were coming. In 2013, the growth of global economy still didn’t get any better, price of mineral products continued to fluctuate, mineral costs rose, global prospecting market was weak.

In China, some mineral products had excess capacity, mineral price dropped, geological exploration input declined. From this year, the mineral situation in China still isn’t optimistic. Taking coal which is the main energy product as an example, enterprises deficits exceed 70%, over 50% of enterprises reduced, unpaid and delayed workers’ wages.

In that case, has the global mining development reached a situation that can’t be better? How should we treat the present mining situation?

In our opinion, benefiting the better-towards development of advanced western economies, which even has a sigh of increasing, especially the newly-industrializing economies such as China, India, ASEANs and urbanization process, it is temporary to be down-wards for the global mining. In the medium-long run, there is still great development space.

Why? Here are the main reasons:

First, the experience from developed western countries proves that the process of industrialization and urbanization will be faster when the average GDP of a country or region surpasses 3000 dollars, which leads to the development in some industries such as steel, concrete, construction materials and machinery. At the same time, residential consumption structure will be upgraded,  consumption demands to the end-market such as houses, cars, household electrical appliances will be increased substantially. Development of all the above depends on energy mineral & resources and ore materials. Judging from the current situation, though global mining industries adjust and shrink at a certain degree, the industrialization and urbanization process of newly-industrializing economies represented by China and India, is still developing continuously, which will drive the global mining industries rebounding and maintaining strong demands to resources in a quite long period.

Second, from China’s situation, so far,  China has developed into a new period called Three Major Trends, that is the shift phase for economic growth, the throes phase for structural adjustment and the digestion phase for the early stimulus policies. The major content of the economic work is to increase steadily, to adjust structures and to promote reform, to change the mode of development, to adjust economic structures and to improve the quality & efficiency. In general, the global changing economy promotes China’s economic situation and make it change from foreign demands to domestic demands, the huge inner market demands are releasing continuously, which makes the economy possible to stay in a stabler, healthier state in ten to twenty years.

The stable development of China’s economy will drive the increase in resource demands. Though China has made a great success in carrying out the strategy to find mines and got a result better than expectation in recent years, the situation that we need more energy and the proven reserves are limited hasn’t been changed fundamentally. The contradiction between demands & supplies in China is still serious and we still have high external dependency. As a world factory, we need lots of mineral resources to use as raw materials and power. That means China’s demands to ores will still rise rigidly and stay in large scale and a high increasing rate.

Of course, we think, in order to seize the future of global mining development, the following two points should be brought to the attention.

First, as the transfer of global economic increasing center from west to east, the consumption center has transferred with it. On one hand, developed countries represented by the US and Europe,  are starting their re-industry period. Low-carbon economy represented by new energy, environmental protection, high value-added manufacturing industries and high-technology industries to increase energy efficiency will be the main driving force for the new round of structure adjustment, that will make the demands towards primary minerals tend to reduce. Meanwhile, as the strategy called energy independence in America advances effectively, especially affected by the spillover effects of Shale Gas Revolution, America’s oil demands is reducing instead of rising, which supplies a good chance to develop for developing countries. On the other hand, it is predicted that developing counties will develop more rapidly in the future twenty years. It is estimated that the new-added energy demands of the world will gathered in China, India, South-east Asia, the Middle East, Latin America, Africa, etc, which will become the important element and counter for emerging powers to rebuild the global energy and trade order.

Second, in the process that mining propels economic development, developing countries or new economies represented by China, will put environmental protection and ecological civilization construction the same important position, the extensive growth and development mode that was at the expense of environment will be abandoned gradually. In recent years, Ministry of Land and Resources which is in charge or resources in China, has proposed that they will protect the land and resources dutifully, they will use them economically and intensively, they will spare no efforts to defend rights and interests of mass. Furthermore, they will take the three principles as the fixed position at present and in the future. That means besides impelling exploring more mineral resources, that is to continue boosting the strategy to find mines nationwide and reinforcing geological prospecting, for the characteristics of large amount, many lean ores, abundant associated ores, they will strengthen the throttle and speed up promoting energy saving and comprehensive utilization.

In fact, recently, as the department in charge, on the basis of strategic requirements of constructing an ecological civilization, Ministry of Land and Resources has been enhancing institution innovation in the field of environmental protection, saving & intention, ecological compensation, stringent regulation, responsibility assessment, etc continuously, they has been establishing new mechanism to build ecological civilization and has made phased success. Recently completed investigation results about Three Rates of main ores show that the development and utilization level of main mines in China are increasing constantly. On the condition that mining grade drops and mining depth adds, the extract recovery rate increases 1%-2% on average, raw ores grade drops continuously, the ratio of concentration recovery and comprehensive utilization increases obviously.

In the overall context of building ecological civilization and beautiful China, the age that China depends on massive infrastructure construction to pull GDP growth has gone, mining industry will return to a normal state of basic industry instead of changing radically few years ago. The notion of ecology civilization of respecting, conforming and protecting the nature, propelling the green, recycling and low-carbon development is becoming the consensus and common action.

Mining enterprises in China are sparing no efforts to do well in strategic shift, readjusting the industrial structure, realizing industrial upgrading and returning to rational development state. It can be expected that, in the near future, mines and mining industries will not only be the producer and guarantor of mining modernization in China, but be the main part of green mines and harmonious mine lots, making a greater contribution to building a beautiful China and realizing China Dream expectably.  (translated by TLRHVC)