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PDAC 2016: China`s Zijin Mining eyes further global growth after landmark deals last year

Source: www.chinamining.org         Citation: financialpost.com        Date: March 9, 2016

While most of the global gold industry is retrenching, one of China¡¯s leading producers continues to eye big global growth.

"We want to become a global leading company," George Fang, executive director of Zijin Mining Group Co. Ltd., told an audience at the Prospectors and Developers Association of Canada (PDAC) conference in Toronto.

It was a rare public appearance outside China for a Zijin executive, even though the firm has been making headlines around the world due to its aggressive expansion strategy.

State-owned Zijin, formed in 1993, has been looking abroad for gold and copper acquisitions for more than a decade, but has been a very active buyer over just the past few years.

In December 2014, the company unveiled an $81 million investment in Canadian miner Pretium Resources Inc. And in May of last year, Zijin announced two very big investments in Canadian companies. It gave Barrick Gold Corp. US$298 million for a stake in the Porgera mine in Papua New Guinea, and gave Ivanhoe Mines Ltd. US$412 million for a stake in the Kamoa copper project in the Democratic Republic of Congo. Those transactions instantly made Zijin a significant global player.

The two deals come at a challenging time for Western mining companies to raise capital on favourable terms. Zijin is following in the footsteps of many other Chinese resource firms over the past decade, which took advantage of drops in commodity prices to invest billions of dollars in companies around the globe.

Many of those Chinese firms have run into problems with their overseas investments, in part because they have struggled to adapt to business environments outside China. Fang stressed that Zijin wants to learn from its partnership with Barrick in order to become a better global company. The two miners plan to co-operate on future investments.

Fang spoke as part of a China-focused session at the PDAC conference. One of the key themes was that Chinese firms need to adapt to the local environments in which they operate in order to succeed. Michael Laffin, a partner at Blake Cassels & Graydon LLP, said they should focus on retaining and empowering good local employees, delegating some authority and upholding best practices in the local country.

"Tackling the cultural issues is critical," he said.

While Zijin is best known outside of China for its acquisitions, it has faced a lot of criticism within the country for its environmental practices. Most notably, it was blamed for a massive toxic spill in 2010 that reportedly released more than 9,000 cubic metres of acidic waste into a river.

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 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

China 2016 crude oil import growth may exceed 800,000 bpd -analyst

Source: www.chinamining.org         Citation: Reuters        Date: March 4, 2016

China`s crude oil imports may rise by more than 800,000 barrels per day this year, boosted by storage needs, robust gasoline demand and fuel exports, an executive from a Beijing-based consultancy said on Thursday.

The jump in imports, if realised, could see China overtaking the United States as the world`s largest crude importer after China`s average crude imports hit a record 6.71 million bpd in 2015, up 8.8 percent from a year ago.

China is expected to import 860,000 bpd more crude this year, Yao Li, chief executive of SIA Energy said at a Platts conference.

 Independent refiners who recently received import quotas, have become a driver of Chinese crude demand and their preference for low-sulphur oil could cause producers from Venezuela and the Middle East to lose market share, Li said.

"China`s crude oil slate will become sweeter and lighter because of production yield requirement and as independent refiners prefer low-sulphur crude due to cost advantage," she said.

"Middle East producers will probably lose more market share. Russian ESPO is the biggest winner."

China`s domestic oil consumption is expected to grow by 410,000 bpd as strong car sales boost gasoline use in the world`s second largest economy, Li said. The estimate is higher than that of the International Energy Agency which sees China`s oil demand growing by 330,000 bpd to 11.51 million bpd in 2016.

SIA Energy`s Li expects Chinese fuel exports to rise by 330,000 bpd this year as local refiners, driven by strong margins, have increased output, although this will be offset by incremental imports of 120,000 bpd, including mixed aromatics for gasoline blending.

Most of the exports will be from state refiners rather than private companies as they have weak trading capabilities, Li said. Private refiners are "more likely to compete in the domestic market", she added.

China is also expected to import 240,000 bpd more crude than last year to fill storage tanks for strategic and commercial purposes, Li said.

 More imports are also needed to replace falling domestic crude production, she said.

Sinopec said in February it will shut four small oilfields this year at Shengli in the eastern province of Shandong as low global oil prices take a toll on output from the country`s ageing fields.

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 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

China raises coal bed methane gas subsidy to help fight air pollution

Source: www.chinamining.org         Citation: www.scmp.com        Date: March 2, 2016

Beijing has raised the subsidy for coal bed methane (cbm) production by half from this year to 2020 in a move to encourage exploration and production of the cleaner-burning fuel as part of its air pollution control initiatives.

The subsidy for each cubic metre of cbm ¨C natural gas trapped among coal seams ¨C has been raised to 0.3 yuan in the five years to 2020 from 0.2 yuan in previous years, the Ministry of Finance said in a statement posted on its website on Tuesday.

The move is expected to help struggling producers of the greener but more challenging and expensive to extract natural gas, after Beijing slashed non-residential wholesale natural gas prices by an average of 28 per cent from November following a crash in global energy prices.

 "Many cbm projects are no longer profitable following the recent domestic gas price cut amid slowing demand growth," Nomura Asia-Pacific head of oil and gas research Gordon Kwan said. "This is why China is lending a helping hand to the producers to motivate long-term investment in cbm."

Cbm and shale gas ¨C natural gas trapped between shale formations ¨C are unconventional forms of gas that are free from state pricing, but they have not been immune from price reduction pressure since conventional gas has similar properties to and competes with unconventional gas.

 China is rich in unconventional gas but poorly endowed in conventional gas.

Hong Kong-listed and Shanxi province-based AAG Energy, the first non-state-owned cbm explorer to get Beijing¡¯s permission to enter into large-scale commercial production in 2011, said in January competition from the expected conventional gas price cut forced it to lower its own cbm prices as early as September.

 As a result, its average selling price fell 11.9 per cent to 1.56 yuan per cubic metre in the second half of last year from 1.77 yuan in the first half.

The latest 0.1 yuan per cubic metre subsidy increase is not sufficient to offset the price decline.

 Since 2005, Beijing has offered conventional gas producers preferential policies to entice companies to invest in the nascent sector, including refunds on value-added tax collected from gas sales, exemption from equipment import duties, and free-market gas pricing.

 Last May, the National Energy Administration said the shale gas subsidy would be cut from 0.3 yuan between 2016 and 2018 to 0.2 yuan between 2019 and 2020, as production costs were expected to fall with technological improvement and rising production scale.

 Kwan said "there is a good chance" Bejiing will cancel the cut given the sharp fall in energy prices in the past 18 months.

 "Policies in China do change in exceptional times and no one anticipated earlier that global oil and gas prices could collapse to such depressed levels," he said.

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 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

Brent crude price drop takes toll on Yanchang Petroleum

Source: www.chinamining.org         Citation: China Daily        Date: February 24, 2016

A worker checks facilities of Shaanxi Yanchang Petroleum (Group) Co in Wuqi county, Shaanxi province. (Photo/Xinhua)

Shaanxi Yanchang Petroleum (Group) Co, China`s fourth-biggest oil producer by output, may cease production in some oilfields and stop drilling both old and new wells in some areas in response to the sharp plunge in crude oil prices, a media report said on Monday. 

The Yan`an-based company faces huge pressure over soaring cost in terms of oil exploitation, personnel and operation. The cost for oil production at Yanchang stands at about $70 per barrel, against a national average of $40, according to sources quoted by Securities Daily.  

In order to remain profitable, the State-run company also plans to cut capital spending by a total of 3.1 billion yuan ($480 million) this year and merge at least three oil drilling facilities, the report said.  

Yanchang Petroleum lowered its oil output target to 12.2 million metric tons for this year, about 200,000 tons lower than a year earlier, according to a statement on the company`s website.  

The more than 50 percent slump in global crude oil prices since June has badly hit producer`s earnings. Brent crude oil is currently below $30 a barrel, for the first time since May 2009.  

Yanchang Petroleum is not the first firm to respond to the price dive by cutting spending or suspending production.  

Shengli Oilfield, owned by China Petroleum & Chemical Corp, the nation`s second-largest oil major, plans to shut down four oilfields in the country`s eastern Shandong province to stay afloat.  

The company, also known as Sinopec, said the four oilfields are the least profitable projects in the region with only a few tens of thousands tons of production, and the shutdown could save at least 200 million yuan.  

At the same time, Daqing Oilfield, the largest oilfield explored by China`s major oil and gas producer China National Petroleum Corp, reduced crude oil production in 2015 for the first time in seven years.  

Though it is a painful process to make cuts or even suspend production, it is better to act early than leave it, experts.  

"It is a normal practice when oil prices plunge. It is an adaption that oil companies have to make to meet market requirements," said Han Xiaoping, chief executive officer of online energy information portal China5E.com.  

He said the cost for oil exploitation has been rising as some wells are getting old, but oil prices have been plummeting even faster, putting huge pressure on many large oil producers.  

"Oil companies need to bring costs down in line with the current lower oil prices. Many foreign companies have also made plans to sell off part of their assets or even start drilling fewer wells," he said.

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 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

More than 1,000 coal mines scheduled to close in 2016

Source: www.chinamining.org         Citation: Reuters        Date: February 23, 2016

China aims to close more than 1,000 coal mines with a total production capacity of 60 million tons this year, as part of its plans to tackle a price-sapping supply glut in the sector, the country`s energy regulator said.

The nation is the world`s top coal consumer but demand has been on the wane as economic growth slows and the country shifts away from fossil fuels in order to curb pollution.

In a notice posted on its website on Monday, the National Energy Administration (NEA) said the closures would form part of the plan released earlier this month to shut as much as 500 million tons of surplus production capacity within the next three to five years.

China has 10,760 coal mines, and 5,600 of them will eventually be required to close under a policy banning those with an annual output capacity of less than 90,000 tons, the China National Coal Association has estimated.

The government has promised to stop approving all new coal mine projects for three years in a bid to control capacity. The country produced 5.7 billion tons of coal last year and has an estimated capacity surplus of 1.7 billion tons, according to domestic news portal sohu.com.

Last year, the supply overhang dragged down domestic coal prices by one-third, but there has been some recovery this year with thermal coal at the port of Qinhuangdao up 2.7 percent at 380 yuan ($58.29) per ton.

Apart from coal, China will also aim to tackle overcapacity in the thermal power sector this year by controlling new projects and cancelling projects in regions with the biggest capacity surpluses.

Utilization rates in the power sector last year fell to their lowest since 1978, with demand failing to keep up with the rapid expansion in capacity.

China will further promote a program that allows suppliers to enter into direct power sales agreements with consumers, and it will also work to reduce power prices this year, according to the NEA.

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 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

China`s coastal coal freights began rising in week to Tuesday

Source: www.chinamining.org     Citation: Platts      Date: February 22, 2016

Freight rates for shipping coal from northern China`s Qinhuangdao port to the other Chinese ports of Zhangjiagang, Shanghai and Guangzhou in eastern and southern China began to rise in the week to Tuesday, port operator Qinhuangdao Port said.

The freight rate from Qinhuangdao to Zhangjiagang in eastern China`s Jiangsu province for 20,000-30,000 mt capacity vessels rose by Yuan 0.70/mt on the week to Yuan 29.50/mt ($4.28/mt) on Tuesday, Qinhuangdao Port said.

The rate from Qinhuangdao to Shanghai in eastern China for vessels with a capacity of 40,000-50,000 mt edged up Yuan 0.90/mt on the week to Yuan 22.60/mt. The rate from Qinhuangdao to Guangzhou in southern China for 50,000-60,000 mt capacity vessels rose by Yuan 1.40/mt to Yuan 32.60/mt.

A recovery in downstream coal demand after the spring festival holidays, coupled with news that China has stopped importing coal from North Korea since Sunday, has boosted the coastal coal freight market, the report said.

Meanwhile, coal stocks at Qinhuangdao port were 4.41 million mt on Tuesday, up from 4.715 million mt on February 14, port figures showed.

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 2013 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 2-5, 2013. We invite you to join the event and to celebrate the 15th anniversary of CHINA MINING with us. For more information about CHINA MINING 2013, please visit: www.chinaminingtj.org.

China`s Shenhua sticking with Australia coal project despite legal challenges

Source: www.chinamining.org         Citation: Platts        Date: February 19, 2016

China coal giant Shenhua remains committed to its sole Australian export coal project despite legal challenges from environmental groups the latest this week in the New South Wales Land and Environment Court, an Australia-based spokesman for the company said Thursday.  

Seven months have passed since Australian federal environment minister Greg Hunt gave his approval last July for Shenhua`s 100%-owned Watermark project in the Liverpool Plains pastoral region of New South Wales, thereby allowing it to proceed to its development phase.  

The project involves the extraction of 133 million mt of metallurgical coal and 26 million mt of thermal coal for shipment through Newcastle port, and has attracted controversy over its potential impact on groundwater supplies including freshwater acquifers and on farmland.  

Conservation group the Upper Mooki Landcare group and Shenhua Watermark Coal is listed for a judgment hearing at the Land and Environment Court in Sydney on Friday, according to the court`s website.  

The legal challenge by the Upper Mooki Landcare group concerns the potential impact on 850 hectares of habitat for koala bears that stands to be cleared for Shenhua`s Watermark mine project in the Gunnedah Basin coal field of New South Wales.  

Shenhua has spent about A$1 billion ($700 million) on its Watermark project since landing an exploration license for the mine site in 2008 for which it paid A$300 million.  

The Chinese company has incurred additional costs since such as A$200 million on acquiring land from local farmers, and A$175 milion of infrastructure spending. 

The Watermark project will have an estimated capital cost of A$780 million when it eventually goes ahead.  

SETBACKS  

Shenhua has suffered a number of setbacks in relation to its Watermark project, including having to resubmit -- along with other coal companies -- its application for a mining license after a new planning approvals process was introduced following the 2011 New South Wales state election.  

Undeterred, Shenhua said via a spokesman Thursday that it intends to see the project through to its completion.  

"The company continues to work on various regulatory requirements since achieving state and Commonwealth government approvals last year," said Shenhua Watermark spokesman Jonathon Moore by telephone from Sydney.  

The New South Wales government`s independent Planning Assessment Commission gave Shenhua approval for the environmental aspects of its Watermark project in 2014.  

This allowed for the extraction of up to 10 million mt/year of coal at the Watermark site until June 2046.  

Thermal and coking coal mined from the project`s three open-cut pits will be transported 282 km (175 miles) via rail to Newcastle port. During the mine`s peak production period, 16 train movements a day will be required, said Shenhua in a submission report to the PAC.

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 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 22^nd -25^th, 2016. We invite you to join the event and to celebrate the 18^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2016, please visit: www.chinaminingtj.org.

China`s oil demand growing, but at a slower pace

Source: www.chinamining.org     Citation: UPI      Date: February 14, 2016

A metric used to gauge oil demand in China, the world`s second-largest economy, show steady gains but at a slower pace than before, S&P Global Platts said.

Platts measured China`s apparent oil demand, which measures the amount moving through domestic refineries against net imports, at 2.3 percent higher in December when compared with last year.

When using official government data, apparent oil demand last year declined 0.8 percent as the economy moved from a quantitative growth phase to a qualitative one. The assessment from Platts, however, said it found an increase because of activity at independent Chinese refineries.

"That said, the pace of growth fell in 2016 from 6.6 percent in 2015, when oil demand had been boosted by a crude oil price drop to levels just over $50 per barrel," Song Yen Ling, a senior analyst with Platts China Oil Analytics, said in an emailed report. 

Ratings agencies Moody`s and Fitch in December reported the Chinese economy could face headwinds this year, with the banking sector facing the brunt of the downturn. Government estimates of the Consumer Price Index, which gauges national inflation, came in well below the official target rate of 3 percent.

By January, the Chinese National Bureau of Statistics said growth was the slowest it`s been in a quarter century, but still likely to top all other major economies.

Economists with the Organization of Petroleum Exporting Countries expect the Chinese economy will grow by 6.2 percent in 2017, against a forecast of 6.7 percent last year. 

China`s central bank on Monday injected $14.5 billion into the financial system, the official Xinhua News Agency reported. A monetary policy for the year was described by Xinhua as "prudent and neutral."

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 2017 will be held at Meijiang Convention and Exhibition Center in Tianjin China in September 2017. We invite you to join the event and to celebrate the 19^th anniversary of CHINA MINING with us. For more information about CHINA MINING 2017, please visit: www.chinaminingtj.org.