New normal ignites new opportunities
---At keynote session of CHINA MINING Congress and Expo 2015
Right after the opening ceremony of CHINA MINING Congress and Exp 2015 on October 21st, 2015, Mr. Peng Qiming, chief engineer of Ministry of Land and Resources, presided the keynote session of CHINA MINING 2015. Four industry leaders and economists gave their speeches on “New Normal, New Opportunities, New Development”. They shared their ideas on the current situations and trend of global economy and mining development.
Mr. Peng Qiming considered that these ideas had great meanings for global mining industry to recognize the developing trend of global economy and mining industry, to be confident for the future and to facilitate the sound development of global mining.
“It would take longer time than expected for the price of mineral products to be within reasonable range.”
Analyzing the global mining industry situation, Mr. Si Xinbo, deputy general manager of Silk Road Fund pointed that “with global economy undergoing deep adjustment, mining fields now face the challenges of weak demand, financial barrier and mere benefits. The traditional drive pales while the emerging impetus is still preparing. Changes and challenges are still existing in supply and demand structure, industry chain and trade and investment environments.”
Mr. Chen Jinghe, chairman of Zijin Mining Group Co., Ltd, argued that it was unrealistic and impossible to count on China’s growth pushing forward the increase of global mining industry. It was also impossible to hope that current mining condition can be improved like that in 2008 and 2009, in that the whole consumption demand had touched the ceiling. It was said by him that the benefits of mining industry has been dropped since 2012 with the first eight months of 2015 dropping 57%. While a majority of mining companies still increased their production capacity. Therefore, in the next 3 to 5 years, the prices of mineral products will fluctuate at the current and price and some certain minerals may touch the bottom prices.
He believed that “It would take longer time than expected for the price of mineral products to be within reasonable range.” The weak demand severely impacted the mining industry. For example, the growing manner transformed from extensive growth to innovation-driven growth; the economy grew depending on the tertiary industry instead of the second industry and dragged by consumption instead of investment; the real estate market had enormous impact on China’s economy and metal materials; the demand of mineral products grew slowly while the huge production capacity formed during the prosperous period of mining industry still released; the gloom expectation of the markets led to the price slumps of commodity; issues of mining industry, mining mountains, mining personnel and mining cities reappeared; over production capacity disappeared and the production sharply dropped.
He pointed that “ China’s mining industry has congenital disadvantages and it’s our first priority to keep our mining industry alive.” He put forward that we should control the cost, reform and adjust the management system formed during the prosperous period of China’s mining. The related administration, financial and taxation departments shall sound the reform measures to help the mining companies overcome the difficulties.
“New Normal Ignites big opportunities, and mining enterprises shall bravely go globally”
Grave as the current situation was, there were still more positive factors.
“New Normal Ignites big opportunities”. Mr. Chen Jinghe listed 5 evidences to support himself. Firstly, China will maintain an moderate-high growth rate. A growth rage of 5% still sounded good. Secondly, the rising of emerging markets along the Belt and Road area, in India and in counties lying in Southwest Asia have an huge need for mineral materials, especially when these countries are pushing forward industrialization.
Thirdly, the recovery of western counties like the United States of America needs mineral resources to support. Fourthly, the costs of many mining products are at the level of cash expenses with some even higher than the integrated cost. What’s more, there are more and more capital investment and construction investment in mine prospecting. Therefore, there is mere dropping space for mineral products. Fifthly, with the ever growing of emerges and acquisitions between mining companies, China will play an most active role in the global mining market.
Mr. Si Xinbo, deputy general manager of Silk Road Fund, also expressed similar opinions. He thought that severe market situation brought heavy downward pressure for mining industries, yet it also offered more needs and chances for emerges and acquisitions. He introduced that it was also an general manner for giant international mining enterprises to adopt emerge and acquisition for capital structure optimizing, operation quality improving and running risks reducing. Statistics showed that there were 23 emerges and acquisitions in the first quarter of 2015 with the total value of 2.93 billion dollars and 35 in the second quarter valuing 6.5 billion dollars, two times more than that of first quarter. In order to lose economy downward pressure and improve the competitiveness of the mining industry, some countries revised the Constitution, readjusted the taxation regulations and quickened the government review to better the mining investment environment, picturing a new trend of loose mining supervising, all of which created new opportunities and space for the optimizing of resources distribution and investment cooperation in the mining industry field.
“Chinese mining enterprises boast their own advantages. Firstly, they boast advanced innovation, applications and cost-controlling in terms of advanced mining prospecting technologies. Secondly, they rank top globally in the developing and utilizing the low-grade resources which are also difficulty in separating. Thirdly, they enjoy their own features in prospecting the small-sized complex deposit.” Mr. Chen Jinghe said, “Some excellent mining enterprises are capable of international competition. Even though there are few successful cases, we have learned lessons. We shall not over criticize the pioneers. Currently, China’s mining industry lacks of talents with global operation experience. We should cultivate our talents in such regard in the process of actual mining practices”.
Mr. Li Shanquan, Vice President & Senior Manager, Oppenheimer Funds, pointed out that Chinese mining enterprises boasts advantages in capital, technologies and management with strong government support and at the same time, the upgrading of China’s international status also offers favor conditions for Chinese enterprises going globally.
“The Belt and Road Initiative’ sheds light for Chinese enterprises going globally”
Mr. Li Shanquan put forward five advises for Chinese enterprises to go globally. Firstly, we shall establish or buy the global mining industry data base for scientific decision depends on information. Secondly, we should track the information of the listed mining enterprises based on the global mining industry date base. Thirdly, qualified enterprises shall build up their own technique teams to specifically follow intriguing mining projects of certain countries and regions. Fourthly, Chinese enterprises should try to buy some shares of the listed enterprises if interested so as to know more about the project. Fifthly, Chinese enterprises shall learn to cooperate and establish joint-venture companies.
Mr. Li Shanquan believed that Chinese enterprises shall learn to cooperate and establish joint venture companies so as to control the resources instead of controlling the listed mining enterprises. He also thought that private or mixed ownership enterprises are more popular overseas the state owned enterprises because of certain reasons.
Mr. Chen Jinghe considered that ‘Belt and Road Initiative’ shed light and provided a favorable policy environment for Chinese mining enterprises going globally. The government shall offer more financial and policies support for global-going mining enterprises. In addition, Chinese mining enterprises should also learn from excellent international counterparts, pay attention to the sound development of mining circle and avoid zero-sum competition. Chen Jinghe Said, “ against current market background, it would be a grave failure if China missed the opportunity to cultivate world-renown multi-nation mining group.” He also forecast that, with the RMB being put into international monetary system, Chinese capital will finally enter the global market and yield tangible fruits.
Madam Anita Marangoly Geogre, Senior Director, Energy & Extractives of the World Bank Group, said that mining industry is of enormous importance for sustainable development as 30% of GDP are coming from mining industry in some mineral countries. During the gloom period of global mining industry, we should strengthen reform and lower cost through innovation, integrated utilization and recycle utilization to ensure sustainable development and do good to the local natives. She promised that World Bank will play an assistant role in helping Chinese enterprises go globally. (Cheng Xujuan)
About CHINA MINING
Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.
CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on October 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us. For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.
