News

China and Russia cooperate on liquefied natural gas project

China and Russia cooperate on liquefied natural gas project

Source: www.chinamining.org Citation: chinadaily.com.cn Date: November 18, 2015

China and Russia are pressing ahead with the Yamal liquefied natural gas (LNG) project in Russia`s offshore Arctic area, according to senior officials.

China`s Vice-Premier Zhang Gaoli said that the strategic partnership between the two countries has continued at a high-level of development and he also pledged both parties to take an active part in the build-up of more flagship projects in energy cooperation.

Zhang made the remarks during the 12th Meeting of the China-Russia Energy Cooperation Committee in Beijing in preparation for the upcoming 20th Regular China-Russia Prime Ministers` Meeting.

During the meeting, both countries agreed to deepen energy cooperation over the construction of an eastern natural gas pipeline as well as projects for western natural gas and Yamal liquefied natural gas (LNG), according to a report by Xinhua News Agency.

In addition, both parties will make sure that the construction of a China-Russia crude oil pipeline goes smoothly and at the same time expand cooperation in the sector of energy equipment.

Earlier reports said that China and Russia are expected to sign contracts for the Yamal LNG project in December.

In September, the $40 billion Chinese Silk Road Fund acquired a 9.9 percent stake in Yamal LNG without disclosing detailed information about the price.

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^th-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, Mideast Gas Use to Overtake Europe by 2035, IEA Says

China, Mideast Gas Use to Overtake Europe by 2035, IEA Says

Source: www.chinamining.org Citation: www.bloomberg.com Date: November 11, 2015

China and the Middle East, spurred by lower prices and ample supply, will drive global natural gas demand growth in the next 25 years as consumption in Europe fails to recover to peak levels seen in 2010, according to the International Energy Agency.

Both regions will become larger gas users than Europe by 2035, the Paris-based IEA said in its World Energy Outlook 2015. Global demand for gas, a cleaner-burning fuel for power generation than coal, will rise 1.4 percent a year to 5.16 trillion cubic meters (182 trillion cubic feet) in 2040, making it the fastest-growing fossil fuel. The agency forecast 1.6 percent annual growth to 5.38 trillion cubic meters in last year`s World Energy Outlook.

"With gas prices already low in North America, and dragged lower elsewhere by ample supply and contractual linkages to oil prices, there is plenty of competitively priced gas seeking buyers in the early part of the Outlook," the IEA said.

Gas will account for 24 percent of power generation by 2040, up from 21 percent in 2013, as the share of dirtier coal falls to 30 percent from 41 percent. The fuel is also being used to spare use of oil and back up renewable energy generation.
Price Slump

U.S. futures, used to price contracts for the first liquefied natural gas exports from the shale boom, declined 46 percent over the past year. Exports from the Sabine Pass terminal are scheduled to start early next year, adding to expanding output of the super-chilled fuel from Australia. Brent oil declined 43 percent in the past year, dragging down oil-linked gas contracts.

"These price developments seem set to boost natural gas demand in major importing regions, reinforcing our view that natural gas is a fuel well placed to expand its role in the global energy mix," the IEA said.

Gas demand in the European members of the Organization for Economic Cooperation and Development will remain little changed at 528 billion cubic meters in 2040, rising 0.1 percent a year from a forecast for 0.7 percent annual growth in last year`s report. China`s consumption is expected to rise 4.7 percent annually, the fastest growth among all regions, to 592 billion cubic meters, the report shows. The Middle East will expand gas use by 2.1 percent a year to 738 billion cubic meters.

Coal Demand

Within the OECD, North America is the only region with significant demand growth, the IEA said. In the U.S., the largest consuming country, gas will displace coal as the largest source of power generation by the mid-2020s. By the early 2030s, it will overtake oil as the most used fuel in the U.S. primary energy mix, the report says.

Global coal demand growth is set to slow to 0.4 percent annually, the report shows. Energy efficiency, competition from renewables, and coal in power generation in some countries may constrain long-term expansion of gas, the IEA said.

Gas use could also be curbed if delayed investments amid lower commodity prices tightens the markets in the 2020s, the report said.

"Emissions of methane, a powerful greenhouse gas, along the supply chain will dent the environmental credentials of gas if there is no concerted policy action to tackle these leaks," the IEA said.

Unconventional Gas

While unconventional gas will make up about 60 percent of supply growth, the spread of projects such as shale-gas plays outside North America will be "more gradual and uneven," the report said. Global production of shale gas, coalbed methane and tight gas is set to rise to about 1.7 trillion cubic meters in 2040 from 630 billion cubic meters in 2013.

China aims to boost unconventional gas production to more than 250 billion cubic meters by 2040, the report said. Such growth is less certain amid challenges such as geology, limited water availability, population density in some areas, and regulatory issues related to pricing, the IEA said.

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Focusing on mining development opportunities with “The Belt and Road Initiative”

Focusing on mining development opportunities with “The Belt and Road Initiative”

Photo by Li Zhentao

Geosciences Cooperation Seminar of Countries along “The Belt and Road Initiatives” held on October 20^th, 2015 at Tianjin Meijiang Convention and Exhibition Centre During CHINA MINING 2015.

China speeds up “the Belt and Road Initiatives” in 2015, which gives great incentive to global mining industry in depression. During CHINA MINING 2015, it came into one of hot issues as expected that what development opportunities “the Belt and Road Initiatives” will bring to global mining industry.

Many experts analyzed and considered that deeper advancement of “the Belt and Road Initiatives” will surely expand the cooperation space of countries along the belt and road and fully motivate their complementary advantages in resources, market, capital, industry, technology and talents.

With current trend of mining globalization, the strategic prospect of “the Belt and Road Initiatives” indicates sincere cooperation among countries along the belt and road, which will surely convert their advantages in resources into new power to economic growth so as to bring unprecedented new development opportunities to global mining industry.

Abundant and Highly Complementary Resources

According to “the Belt and Road Initiatives”, energy resources will be one of key field where countries along the belt and road conduct their cooperation. There is no doubt that the implementation of “the Belt and Road Initiatives” will provide a new platform for mining cooperation among these countries.

As indicated by Mr. Kerim Tuncer Salikavak, Deputy Director of Administration of Mineral Survey and Exploration of Turkey in CHINA MINING 2015, “‘The Belt and Road Initiatives’ provides new platform for us. Countries along the belt and road are close to each other in history and mutual cooperation is very important.”

Countries along “the Belt and Road Initiatives” boast abundant mineral resource, serving as the main supply base of mineral raw materials, and the position they stood in global economic and social development can be described with the word of “prominent”. The public data show that the mineral resources deposited in this area are nearly 200 types with a value of over 250 trillion dollars, accounting for 61% of the world. Among which, China and Russia own the areas with highest coal reserves in the world; Uzbekistan won the reputation of “the home to gold”; countries in Southeast Asia boast tin-ore belt with a length of 2500 kilometers and also serve as the most famous diamond production area in the world; countries in West Asia possess the largest amount of proven petroleum reserve at present; India and Russia are important diamond production area and the Kursk of Russia is distributed with the largest iron-production basin in the world.

Why do the areas along “the Belt and Road Initiatives” boast so abundant mineral resources? In the afternoon of October 20^th, Mr. Pei Rongfu, Academician of Chinese Academy of Engineering, introduced in public the macroscopic geological background of areas along “the Belt and Road Initiatives” during Geosciences Cooperation Seminar of Countries along “The Belt and Road Initiatives”. “In the four metallogenic zones among global metallogenic units, there are 12 metallogenic areas and belts in the areas along ‘The Belt and Road Initiative’ and a total of 326 large and extra large deposits in all metallogenic areas and belts.”

And more importantly, there is greatly complementary in the cooperation among countries on mineral resources. For example, the minerals and strategic emerging minerals including copper, cadmium and nickel which run short in China exactly are the advantageous resources in other countries along the belt and road. The Central Asian countries with abundant oil and gas resources are relatively weak in exploration development and exploitation ability, which can cooperate with China to a promising prospect and great potential.

Mr. Kyaw Kyaw Ohn, Assistant Director from of Geological Survey and Mineral Exploration Bureau of Myanmar, indicated during CHINA MINING 2015 that Myanmar is rich in mineral resources but relatively backward in traditional development means. “At present, further mineral prospecting and development will be conducted in East Myanmar. We are amending relevant laws and provisions to attract foreign investors and expect to import advanced technologies and methods to help Myanmar to resolve difficulties encountered in mining development.”

This situation is very common. China is geologically adjacent to the Southeast Asia and mutually connects in geological structure. The Southeast Asia locates at the southern extend belt of “three jiang” metallogenic belt in southwestern China and metallogenic belt of South China, featuring with favorable metallogenic conditions, abundant mineral resources, but low level in mineral prospecting and development. Therefore, “Developing geoscience cooperation between China and countries in Southeast Asia is conducive to deepening the understanding in metallogenic rules of areas and better advancing the sustainable development in regional mining economy.” Dr. Mr. Lin Fangcheng from Chengdu Geological Center of China Geological Survey said.

An Extensive Prospect with Growing Enthusiasm on Cooperation

With the market economic condition of reciprocity and mutual benefit, taking full advantage of and integrating all strengths in resources, capital, talents, technology and equipment are attractive to global mining industry remaining in deep adjustment. Before the opening of CHINA MINING Congress and Expo 2015, relevant news came in a row that countries along “the Belt and Road Initiatives” take active efforts into the advancement of mining cooperation.

The first non-governmental think-tank on mining cooperation of “the Belt and Road Initiatives” was established in China and the enterprises and institutions can access to reserves, output and development situation of over 50 kinds of mineral resources in 65 countries along the belt and road. The first Cambodia state geological laboratory will be built in the Guangxi Zhuang Autonomous Region, and the first Private Entity Fund on “the Belt and Road Initiatives” mineral resources and related industry officially launched in Beijing, aiming to raise 10 billion yuan before the end of this year…

Currently, many countries along the belt and road have realized or personally experienced that the construction of “the Belt and Road Initiatives” in post-financial crisis will able to share dividend of reform and development in China and convert their strengths in local resources, technology and capital into the market and cooperation advantages. For this purpose, countries carry out cooperation in mining of “the Belt and Road Initiatives” along the extremely high enthusiasm

During the recent Northeast Asia Mining Cooperation Conference under China-Russia Expo 2015, delegates from countries including Russia and Mongolia got together in Harbin to share their achievements in mining exploration with each other and express their desire to active cooperation. Russia specially prepared a thick brochure to recommend their mining projects. 22 mining projects cooperation between China and Russia were established with just half a day.

During the Chin-ASEAN Mining Cooperation Forum in September, delegates from China, ASEAN and other countries focused on the mining opportunities with “the Belt and Road Initiatives” and had in-depth discussions on topics of mining situation, geoscience research and cooperation, mining policy research and geological environment protection.

After the decision of constructing state geological laboratory with Guangxi Zhuang Autonomous Region in China, Mr. Di Ti, State Secretary of Cambodia Ministry of Minerals and Energy, indicated that “we expect to rewards our both countries and also bring more benefits to countries along the belt and road. And more exchanges with China Ministry of Land and Resources are welcome.”

The areas along “the Belt and Road Initiatives” are most vigorous in global economic development and the largest consumer of global energy resources. During Geosciences Cooperation Seminar of Countries along “the Belt and Road Initiatives”, delegates from departments of mineral resources of Myanmar, Vietnam, Thailand, Tajikistan, Pakistan and Turkey introduced their resources possession and geological exploration and meanwhile expressed their strong desire to conduct cooperation.

“This fully indicates that countries along the belt and road share the common vision on strengthening efforts to mineral resources exploration and development to achieve the transformation from resource advantages to economic advantages.” An expert told the correspondent that, “Cooperation is the essential way.”

The expert told the correspondent that surplus productivity is one of the largest challenges faced by China in the mining industry. “if it is possible for us to transfer our technology and capital, it will not only bring benefits to countries along the belt and road, but also provides opportunity for us to optimize the mining industry structure.”

Taking steel industry as an example, large investment on infrastructures construction of “the Belt and Road Initiatives” will push up the demand for steel and most countries along the belt and road are important targeted market of our steel export. With such cooperation in production capacity, it will surely step up our steel plant going out and be beneficial to not only relieve surplus productivity in China, but also further reduce cost through foreign superior mineral resources.

Geology Leading the Way with a Promising Future

Experts consider that “the Belt and Road Initiatives” is a major innovation for all-around opening in China, the engine of global economic growth. In the view of mining development and sustainable development in developing countries, Pei Rongfu held the opinion that “the Belt and Road Initiatives” can be regarded as the pioneering work in current era.

Either innovation or initiative, the construction of “the Belt and Road Initiatives” greatly promote mining development in areas along the belt and road and bring opportunities to geological works. Many experts considered that the construction of “the Belt and Road Initiatives” will provide a stage for geological works and international geoscience cooperation to show themselves well.

Pei Rongfu pointed out during Geosciences Cooperation Seminar of Countries along “the Belt and Road Initiatives” that developing mining industry is a non-profit work in geology system with the purpose of resolving the “resource” problem in minerals, and mining development gives priority to commercial geological work in market with the purpose of resolving the “asset” problem in minerals. With “resource” and “asset”, business running with going public is also required to form “capital”.

He therefore put forward that the position of geological work stood in the mining development of countries along the belt and road. “‘Resource’ among the ‘three points’ in mining development should focus on ore-deposit geology and prospecting geology, ‘asset’ should be responsible by the mining entrepreneur and ‘capital’ should mainly follow the economics and commercial science.”

In addition, he also proposed the establishment of “the Belt and Road Initiatives” mineral exploration risks fund to instruct the enterprises to package exploration in ore-concentrated area to immediately make breakthroughs in prospecting mines.

The correspondent was informed from CHINA MINING 2015 that some achievements have been made in geoscience cooperation between China and countries along the belt and road. “China Geological Survey is strengthening efforts to jointly conduct regional geological survey, geophysical exploration and geochemical mapping with countries along the belt and road.” Mr. Wu Zhenhan, Director of Department of Sci-Tech and foreign Affairs under China Geological Survey, introduced that, “For example, the 1:5000000 International Geological Map of Asia jointly accomplished by more than a hundred geologists for different Asian countries under the organization of Geological Research Center of Chinese Academy of Geological Sciences is evaluated as the best geological map in 2014 by Commission for the Geological Map of the World.”

In many experts’ view, these solid works surely provided essential macro-geological information for mining development of “the Belt and Road Initiatives”. During CHINA MINING 2015, many officials and scholars from state geological survey institutions in other countries expressed their strong desire to conduct geoscience cooperation. Mr. Syed Ishtiaq Khan from Pakistan Geological Survey indicated that Pakistan was urgent to maximize energy utilization rate and develop prosperous mining industry due to the need of economic development. “It is expected that geological institutions from other countries jointly participate in the geological survey in Pakistan.”

“There is a mutual integration among different civilizations and an enhancement on mutual understanding and friendship. We sincerely hope that this conference, especially this seminar, will further promote the integration and cooperation in energy and resources among countries along the belt and road to achieve mutual advantages complementary to each other, share risks and results in common and ultimately realize a development with mutual benefits.” The host sent such good wishes to the ending of Geosciences Cooperation Seminar of Countries along “the Belt and Road Initiatives”, may presenting heartfelt voices of all attendees. (Li Xiang)

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An overview of shale gas exploration through CHINA MINING 2015

An overview of shale gas exploration through CHINA MINING 2015

As a new star in energy market, the shale gas is motivating an energy revolution in China.

The news came from the CHINA MINING Congress and Expo 2015 in Tianjin that exploration and development of shale gas in China has been carried out and breakthroughs have been made successively in marine facies of Sichuan Basin and continental facies of Ordos Basin. China comes into the third one achieving commercial development on shale gas after America and Canada.

As the America was succeeded in fracturing the first shale gas well in 1981 and made a breakthrough in exploration and development of shale gas, the global pattern in energy and resources has gradually been broken. Up to 21st century, shale gas has brought major changes in the energy industry in many countries. Compared with the United States, China is merely a “new recruit” in shale gas development.

China is rich in organic shale beds with an extensive distribution and possesses a great potential in shale gas resources. After nearly 10-year practice of exploration and development, technological progresses and theoretic explorations, China has made significant progresses in shale gas development including resources potential evaluation, core technology and equipment system and basic theory construction, which basically meets the requirement for large-scale commercial development. During this session, Mr. Zhai Gangyi, Deputy Director of Oil and Gas Survey under China Geological Survey, introduced current situation of exploration and development of shale gas in China, theory innovation and technology advancement and future outlook in shale gas development and utilization. This page focuses on the latest news from CHINA MINING 2015.

■Current Situation of Exploration and Development

Four Shale Gas Production Areas Initially Formed

According to Zhai Gangyi, the proved reserves of shale gas in China have experienced a rapid growth in recent years with over 500 billion cubic meters currently. Four shale gas production areas including Fuling, Changning, Weiyuan and Yanchang are formed with an annual output capacity of over 6 billion cubic meters.

Among which, the SINOPEC explored the proven reserve of shale gas field with 380.598 billion cubic meters in Fuling and the CNPC totally submit the proved reserve of 163.53 billion cubic meters with Ning201—YS 108 well area in Shangluo of Changning shale gas field and Wei 202 well area in Weiyuan shale gas field.

The distribution map of four shale gas production areas

Fuling shale gas field of SINOPEC：

By the end of August, 2015, there were 253 wells being drilling, 204 wells being drilled and 143 being fractured into production. Every single well has a daily average production of 327.2 thousand cubic meters with top production of 591 thousand cubic meters. A total daily production reaches more than 12 million cubic meters and a total of gas production adds up to 2.5 billion cubic meters. The annual production capacity has already achieved 5 billion cubic meters.

Changning and Weiyuan shale gas field of CNPC：

◆Changning201-YS108 well area: there are 67 wells being drilled, 61 wells being drilling with an average testing daily production of 143 thousand cubic meters.

◆Weiyuan202 well area: there are 25 wells being drilled, 14 wells being drilling with an average testing daily production of 167.3 thousand cubic meters.

Shale gas production area in Ordos Basin of Yanchang Petroleum Corporation：

Yanchang Petroleum Corporation made a breakthrough in shale gas exploration in Ordos Basin. A number of wells including Liuping177 and Yunye2 achieved shale gas flow, presenting a promising prospect of exploration and development. Up to now, there are 59 shale gas well being drilled with 50 vertical wells, 3 cluster wells and 6 horizontal wells.

Significant discoveries in new beds and new areas：

◆Important Discoveries in Cambrian Niutitang FormationShale in the South

Shale gas was discovered in Weiyuan of Sichuan Province, Chengkou of Chongqing Municipality, Cengong of Guizhou Province and Yichang of Hubei Province.

JinyeHF-1 well: shale gas flow with high production was firstly achieved in lower Cambrian Qiongzhusi Formation in Weiyuan area in Southwest Sichuan, with a daily production of 80 thousand cubic meters after fracturing.

Yidi2 well: a well blowout occurred with combustible gas when drilling Tianheban Formation in Yichang of Hubei Province.

◆An important discovery in Sinian Doushantuo Formationshale in the South

Zidi1 well: shale with a thickness of 100 meters was discovered in Zigui County of Hubei Province, and the Doushantuo Formation shale features with a thickness of 145 meters and the gas-bearing volume of 2-4 cubic meters per ton, which were succeeded in ignition.

◆Important discoveries in Carboniferous- Permian shale in the North

Weican1 well is the first oil and gas parameter well inUpper Paleozoic Erathem deployed and conducted in western Taikang uplift area by Oil and Gas Research Center, with 69 layers through gas logging, 465 meters drilling thickness of shale and gas content of 4.5 m3/t.

Mouye1 well is the first shale gas exploration well in Zhongmou area, with 10 shale reservoirs, 277.6 meters thick and a daily testing gas production of 3000 m³/d after fracturing.

◆Important discoveries of Permian shale in the South

Baye1 well: separated gas content averagely reaches 1-2 m³/t, capable of ignition.

Hedi1 well: pure separated gas content reaches the peak of 3.03 m³/t

Jingye1 well: total hydrocarbon in target layer reaches 0.0238%-13.7639%

◆Important achievement in shale gas resources survey in Southern areas of Yunnan, Guizhou and Guangxi

Steady progresses have been made in bidding-won area exploration：

The bidding-invited area has successively conducted shale gas well drilling in Longmaxi Formation, Niutitang Formation and Carboniferous- Permian system in North China and achieved good discovery of shale gas.

■ Exploration and Development Situation

Breakthroughs only Made in Parts

Resources possess a great potential while the distribution regularities are not clear.

Ministry of Land and Resources organized and conducted shale resources potential evaluation in 41 basins in 2011, with 25 trillion cubic meters recoverable resources, and selected 180 shale gas favorable areas but the distribution regularities are still not clear.

Breakthroughs have been made in merely some areas and several layers, and scope has not yet been expanded.

At present, breakthroughs in shale gas exploration have been made merely in some areas and several layers. For example, Longmaxi Formation has only made breakthroughs in local part of Sichuan Basin and Niutitang Formation has only achieved the shale gas flow in a few exploratory well. In addition, it is still not clear currently in the development potential and prospect in continental facies and marine-continental transitional facies.

Fracturing site of Fuling shale gas field of Jiaoye9-1HF and 9-3HF

Optimal Longmaxi Formation in Sichuan Basin and its lower periphery

The high-quality shale in Sichuan Basin and its peripheral lower Silurian Longmaxi Formation features with extensive distribution, great thickness, well gas-bearing capacity, great resources potential with20% of national shale gas resources, promising exploration and development and key advantage of preservation condition.

Important Lower Cambrian Niutitang Formation (with Sinian Doushantuo formation) in the South

Niutitang Formation shale features with extensive distribution, great thickness, high maturity, a certain gas-bearing capacity but a high degree of thermal evolution, great tectonic destruction and relatively great difficulty in exploration. The working idea of “finding low in high and weak in strong” has taken initial shape.

Favorable conditions for forming shale gas in Upper Paleozoic marine facies in Yunnan, Guizhou and Guangxi

Another breakthrough is expected to be made in this area.

The localization is basically achieved in technology and equipment but the core technology requires continuous efforts to make a breakthrough.

China currently is capable of drilling the horizontal well with less 3500 meters and staged fracturing, explores and implements the industrialized-well operation model and independently innovates equipment including 3000HP fracturing truck. However, the complementary development technology for over 3500-meter wells, micro-seismic monitoring technology and dynamic production forecasting technology are failed to master and equipment including rotary geo-steering system, staged fracturing with sliding sleeve, nano-microstructure and composition analysis are still out of localization.

The development cost is gradually decreasing but the single well cost continues to stay in a high level.

The economic development of shale gas still facies challenges and its commercial development still require sequal attention to supportive policy and cost reduction through technology.

■Progress in Geological Theory Research

Main controlling factors in shale gas of marine facies in South were found out

The complexity and uniqueness in geological conditions of shale gas in China decide that our shale gas exploration cannot mechanically imitate the experience of shale gas exploration and development achieved in America. It is the key to resolve problems of shale gas exploration and development in China to strengthen theory researches on accumulation mechanism and distribution regularities and technological progresses in exploration and development.

According to Zhai Gangyi, China now has preliminarily concluded main controlling factors of enrichment and high-production of shale gas in marine facies in the South.

Deep shelf as favorable facies belt for developing high-quality shale

Deep shelf features with abundant planktonanda strongly reducing sedimentary environment, conducive to the accumulation and preservation of organic matters and the development of organic pore, high organic carbon content and thick high-quality shale with regular distribution.

Tectonic preservation condition as the key factor of shale gas accumulation

The high-quality shale in deep shelf of marine facies in the South generally experiences two stages including early continuous deep burial and late continuous uplift. Roof and floor conditions are main factors of shale gas retention and preservation in early continuous deep burial stage, and the tectonism is the main factor of shale gas preservation in late continuous uplift stage.

The relatively steady tectonic area and favorable roof and floor conditions play a vital role in shale gas with high production. Formation pressure coefficient serves as the direct evaluation index to preservation condition of shale gas.

Reservoir physical property as important condition for shale gas with high production

Shale gas reservoir with natural fractures development, high porosity, high gas content and low ground stress difference greatly contributes to shale gas with high production. The better micro-fracture developed, the larger proportion of free gas and higher initial production will be. And the less horizontal stress difference, the better fracturing will gain.

Process technology as guarantee for shale gas with high production

Horizontal well trajectory and staged fracturing technology are crucial factors effecting the production after fracturing.

Seven main controlling factors

◆High-quality shale sector in abyssal shelf facies features with great thickness and steady distribution.

◆ Relatively steady tectonism, favorable preservation condition and moderate burial.

◆ Formation overpressure (pressure coefficient＞1.2)

◆Reticular natural fractures development

◆High porosity and gas content

◆Less difference in ground stress

◆Horizontal well trajectory is perpendicular to maximum principal stress.

■Progress in Exploration and Development Technology

Independent Innovation to Step Up Development

Shale gas resources in China features with complicated types and various distribution formations, and relatively great differences in main controlling factors of shale gas accumulation with various sedimentary types and different tectonic units, which are great challenges faced by China in shale gas exploration and exploitation. However, independent innovation on exploration and development technology has speeded up the development of shale gas resources in China.

Shale reservoir well-logging evaluation technology

Compared with conventional reservoir, the well-logging evaluation of shale gas reservoir presents more complicated. The logging information plays an essential role in key evaluation parameters including the source rock evaluation, shale gas qualitative identification, the acquisition of total organic carbon, gas content and rock brittleness index. The comprehensive well-logging evaluation has come into the technological support to current shale gas exploration and development.

At present, China has built up the immediate recognition mode for well-logging information of shale gas reservoir in marine facies has been. The “four high and three low” well-logging response characteristic comprehensively reflects high TOC, fine reservoir property, high gas content and good potential in fracturing.

In addition, it also built up the TOC and gas content litho-density interpretation model and mineral content and porosity interpretation model based on elemental capture spectroscopy sonde and combined framing density.

Seismic prediction technology forshale gas “sweet point”

◆Wave-impedance inversion technology for shale thickness predication

◆ TOC pre-stack seismic quantitative predication technology

◆ Pre-stack inversion and gas recognition technology

◆ Seismic fracture prediction technology

Achieving the prediction of sweet point area through seismic and electrofacies characterization.

Shale gas horizontal well drilling and completion technology

◆ Horizontal well drilling and design optimization technology

◆ Horizontal well optimized and fast drilling technology

◆ Remote transmission geo-steering drilling technology

◆ “Well factory” effective drilling mode for complex mountain surface

Staged fractured gas testing technology of shale gas horizontal well

◆ Parameter optimization technology of differentiation staged fracturing

◆ Pumping bridge plug and perforating combining operation technology, horizontal well coiled-tubing drilling plug technology

◆Effective fracturing fluid system for geological features in China through independent innovation

◆ Micro-seismic monitoring technology

◆ Fracturing flow back treatment technology

◆ Compound bridge plug and 3000HP fracturing truck through independent innovation

◆ Forming the “well factory” fracturing operation mode

Jiaoye42 platform: 17 days for 4 wells with 75 sectors fractured, the top of 8 sectors fractured in a single day, the highest fluid volume of 14 thousand cubic meters into the well and the highest fractured sand volume of 508 cubic meters in a single day, which achieved the construction record with top fractured sectors in single day, top added sand volume and fluid volume.

◆Attempt to “carbon dioxide” waterless fracturing

■ Development Outlook

Face Both Opportunities and Challenges

1. Breakthroughs in Sichuan Basin and its periphery

CNPC and SINOPEC made constant efforts to advance the exploration in peripheral Sichuan Basin and successively achieved progresses and breakthroughs in areas including Dingshan, Nantianhu, Wuzhishan of Meigu County, Micangshan, peripheral Changning and Xuanhan-Wuxi.

2. Increasing shale gas productivity construction

CNPC, SINOPEC and Yanchang Petroleum Corporation increasingly strengthen the shale gas productivity construction and it is expected that the already production capacity in 2017 can exceed 15 billion cubic meters.

3. Progresses expected in bidding won areas exploration

Progressive discovery of shale gas by means of exploration and drilling and fracturing transformation are gained in areas of Baojing, Qianjiang, Cengong, Laifeng, Chengkou and Zhongmou.

Next, horizontal well drilling and staged fracturing will be in practice and it is expected to achieve progresses in industrial gas flow.

4. Ministry of Land and Resource further strengthen efforts to survey on shale gas resources

5. Active initiation on national key science and technology special projects on unconventional oil and gas exploration and development

6. Green and environment-friendly development

◆Establishing green development complementary technology

◆Developing environmental protection measures

The shale gas development in China insists on placing safety and environmental protection, green and low-carbon as top priority, and paying equal attention to resource development and ecological protection, strictly follows safety and environment assessment procedures and strengthens HSE system construction and total HSE management to promote the shale gas field development with safety, effectiveness and cleanness.

◆Forming environmental regulation and contingency plan(Translated by TLRHVC)

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Spring of “Internet +” in mining winter

Spring of “Internet +” in mining winter

Mining industry is in a poor state while internet industry is developing strongly. In CHINA MINING 2015, Internet plus gained the most popularity. In the afternoon of October 20, the site of strategic sub-forum cohosted by Qinglan Mining Circle was fully occupied.

"Internet + Mining" first will drive resource growth, then bring the change of the industry development, and then promote the transformation of mining companies, and at last lead to the rise of new markets. Mr. Jiang Jianjun, director of Science and Technology and Cooperation of Land and Resources believed that "Internet + Mining" is promising and even bring a turning point of mining development.

This forum was hosted by Dr. Mr. Zhang Yan, founder of Ming Circle. Guests present at the conference analyzed difficulties faced by resource industry, discussed the innovative mode of "Internet + Mining" and analyzed the changes that Internet plus has brought to mining industry from the perspectives of industry, finance and service.　　

Guests pointed out three issues faced by the current mining industry. The first one is that the industry efficiency is not high, supply and demand information is asymmetry and division of Industries and local authorities is serious. The second one is that financial service is not enough nearly without mining capital trading platform and minings of heavy assets are seriously lack of capital. The third one is extensive enterprise management, low enterprise internal management level and huge enterprise external industry space that can be optimized.

These issues mean challenges as well as opportunities.

Mr. Feng Rui, chairman and CEO of Silvercorp Metals Inc, recognise the convenience that Internet plus has brought to the internal management. He said that his company has developed a web-based software, to which engineers can upload the recorded details and photos after getting into the mine. Then managers at all levels can check the safety inspection at any time. This not only solved the problem of the performance assessment, but also formed management platform of the problem, improving the efficiency and saving the cost.

Mr. Yi Tingbin, CEO of Beijing Headmen Group，who has many years of experience in mining right evaluation,is interested in “Internet + Mining + Finance”. He said that because mineral resources on the underground is protean, financial institutions loans more cautious of mineral rights, especially the right of exploration. However, the mode of “Internet + Mining + Finance” can solve this kind of problems to some degree.

Zhang Yan introduced that through the mode of “Internet + Mining + Finance”, Mining Circle has developed mining loans(P2P), mining trade(Crowd funding), and has innovatively offered mining internet financing service.

During the forum, mining circle held a conference of global mining “One Mine, One Code”. Enterprises just spend three minutes filling the relevant information on the mining circle platform to generate the only 2D barcode and its enterprise’s related introduction page. Moreover, enterprises can position their own map according to minerals and industries, release product supply and purchasing information, open up the three level of industry chains, information flow, logistics and capital flow, in order to forming the big data of the global mining Internet plus.

Mr. Yao Chuanlie, general manager of Shenzhen Qianhai Supply Chain Management Co., LTD, thumbed up for this action. He said, the resource is a big industry with hundreds kinds of minerals and each mineral has more than 10 industries, which will make hundreds of matrix. Through “One mine, One code”, we can register and release our product demand in three minutes, and find our upstream and downstream, as well as our own position.

At the scene of the forum, Chinese mining “Internet+” strategic alliance organized by mining circle held its signing ceremony. The alliance take the advantages of the features of fast, equality and coordination of internet information technology, with the help of the alliance enterprises’ technology, capital and service, break the barrier of the traditional industry structure and interface of cooperation, provide high efficient products and services, establish organic relationship between industries and build good resources ecological system in China.

Guests have spoken highly of this kind of collaboration. Madam Xia Yucai, general manager of Hebei Hanxing Mining and Metallurgy Design Institute Co., Ltd said, his company is establishing a service alliance with two companies respectively responsible for exploration and mine production management. He added, “mining industry is in its winter period with difficulties in asking for money and finding mines. However, we think that if winter comes, can spring be far behind. We are confident for our future.”

Mr. Zhang Jinghe, chairman of China Coal Group Co., Ltd, said, “The winter of mining industry has a great impact on all of the mining service industry. We need to discuss the service mode of powerful combination and invest overseas with mutual support. And “Internet +”can save our cost and improve our efficiency.”

As an innovation of mining industry in China, “Internet +” has gained popularity from the industry. According to Zhang Yan, through the wechat platform built by mining circle, 3,000 insiders participated this forum. A total of 180 representatives released their 2D barcode on the spot and 100 enterprises have applied to join the alliance. Now mining circle has 5000 enterprise users and 5000 individual users. (Cheng Xiujuan and He Zhiqiang)

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Liu Yikang: To stay or to Act when mining winter is coming?

Liu Yikang: To stay or to Act when mining winter is coming?

"Nowadays, the global mineral exploration market appears to hit bottom. China’s mining industry’s strategy of "going global" is still going on, although it has many setbacks. The abundant experience from last round of "going global" has become the precious wealth for next time of overseas expedition. If winter comes, can spring be far behind? At this moment, it should be taken action when time is right."

CHINA MINING Congress and Expo 2015 had a hot topic: On the occasion of the winter of mining industry, has the market already hit the bottom? In the China’s Enterprises Outbound Investment forum, the insiders from mining industry almost unanimously believed that mining market had hit the bottom. A new round of "going global" should be carried out immediately.

First of all, let’s began with a mining investment case, which just missed the perfect opportunity. Oyu Tolgoi Copper Mine belonged to Mongolia, approximately 80 kilometers away from the border with Mongolia, with copper reserves of 31.19 million tons. In 2013, it had been completed and put into operation. Copper production was expected to reach 500,000 short tons annually. In September 2002, with great discovery of a rich concealed ore body in the 270th hole, it achieved a major breakthrough. At that time, Ivanhoe Mines (Ivanhoe Mines Ltd., a Canadian mineral exploration and development company, was listed on the Toronto, New York and NASDAQ Stock Exchange.) wanted to invite Chinese companies to invest in Oyu Tolgoi mine, so they invited the author to pay a visit to this full of prospect land. The end of 2002, like now, was a winter of mining industry. When the author went back with this blockbuster information, few person made inquires. Instead of interesting, all of the Chinese companies held a view that “We have already in trouble now, please give up the idea of talking about overseas investment and long-term development strategy with us". As everyone known, 3 years later, with the recovery of mining industry, Chinese companies poured out to invest overseas, but it was too late. Because of improper disposal, we lost the wonderful chance.

The same was about to happen again in 2008, with global mining climax, Chinese investors flocked to invest in overseas mining market at a staggering price. However, due to the lack of serious investigation of investment environment and specific response plans for different countries’ different risks, Chinese investors directly moved the domestic operation ideas and methods to a completely different cultural background, and ultimately caused massive failures of foreign investment in mining industry.

The current situation of China’s mining industry was similar to the situation in 2002. From 2012 to 2015, the shares of mining kept going down. At the Conference, many spokesmen predicted that mineral products prices slide had room to run, and probably would continue to fall. And mining companies had to go through a period of rough time in the cold winter of mining industry. At this moment, the market values of some large mining companies had shrunk dramatically, and the market values of the junior exploration company had shrunk by more than 90%. With high quality and low price, there were many good projects on the market, which provides enough space for investors to make choices.

However, the domestic mining industry investors had a tradition to chase high. A domestic iron and steel enterprises bought 25% stake of Sierra Leonean Tonkolili Iron Ore at the total price of $1.5billion in July 2011, and purchased the rest 75% stake in in 2015 April with $1.7 billion. The purchase price at low tide was only 3.7% of the purchase price of the crazy period. Because of this tradition, a lot of enterprises were holding back to see what would happen next. As if it was a repeat of the same mistake of Oyu Tolgoi mine in 2002.

From author’s view, mineral investors should have a strategic vision to search for the global potential project with low price and high quality instead of maintaining those exanimate exploration projects with the result that miss so many wonderful opportunities. Many of the world`s junior exploration companies’ share price had fallen to three or five cents. It had hit the bottom. Could it be worse?

Look at those excellent Chinese investors, like WISCO, Sinotech and so on, with considerable strategic vision, they precisely spotted the mining market trends, seized the window of mining recession period, and grasped the opportunity to get the good performance of overseas mining investment.

Nowadays, the global mineral exploration market appears to hit bottom.Of course, some mineral projects had no opportunity to develop during the mining downturn. But when the springtime of mining industry is coming, it will become a popular asset.

China’s mining industry’s strategy of "going global" was still going on, although it had many setbacks. The abundant experience from last round of "going global" had become the precious wealth for next time of overseas expedition. If winter comes, can spring be far behind? At this moment, it should be taken action when time is right. Liu Yikang)

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Capital gives wings of mining development

Capital gives wings of mining development

—A record of the mining investment & finance and capital Market session

With current sever situation, global mining giants experience the loss of 50% in their market value, and the preliminary exploration enterprises even face the value loss of more than 70% and only about 20% of previous value left. Main tasks faced by all enterprises are cost control, optimization on capital expenditure and the most pressing demand for financing. And Chengtun Mining Group Corporation has succeeded in transforming from a traditional mining enterprise into a compound one with mining financing, which has not only achieved more growth benefits but also provided the financial products and packages for other enterprises. Its financial business resolves the problem on self-development as well as comes into a new service increasing point.

Increasing Capital Pressure

“Looked from the financial statement in recent two years, it is found that a number of large mining enterprises are in high debt level and it is required to control the debt index of new high-tech enterprises and carry on a major reform on fund management. Currently, these enterprises are facing the major tasks of controlling capital and optimizing capital expenditure.” Mr. Wang Minghui, Head of Mining and Metals of Standard Bank, said so.

If performance of large mining enterprises is like so, then how about the preliminary exploration enterprises?

Mr. Wang Dongsheng, General Manager of Chinalco Resources Corporation, indicated that the mining industry has stepped into a tough time of “cold winter” with main performances in following aspects. First, there is a sever lack of confidence in current market, which leads to the sharp decline in commodity prices of metallic and mineral products. Second, mining enterprises experience an extensively loss in their market values including the large mining enterprises and the world-class mining giant such as Glencore. The preliminary exploration enterprises lost over 70% of value and about 20% of previous value left. And enterprises are extremely difficulty in financing.

Mr. Fan Zhaokang, CEO of BOCI Global Commodities (UK) Limited also considered that the greatest important need faced by all current enterprises was financing.

“The essence of mining industry is resource and capital.” Mr. Wang Jionghui, Assistant President of China Minmetals Corporation hit the point of essential connotation of mining industry with one comment. With current situation, what is the top priority for all mining enterprises? He considered that the first one is cash flow. The enterprises should own a cash flow and positive one is better during the downturn mining industry, which will enable them get through this “winter” in mining industry. Second is debt ratio. Remove the non-performing assets as far as possible, especially in the terrible situation of mining industry, and the shareholders and others have to clear their most assets. Third is cost. The core of the enterprise is to own the controllable cost. If the enterprise is greatly endowed with resource, it can continue to produce but also with a control on production and take this opportunity to focus on its internal strengths and cost control for benefits to make the cost reasonable. Although there is a narrow gap between our country and the overseas in resources evaluation, a still gap in production organization and management and a large gap in cost management and control.

“The price of mineral products continues to fall and changes also have taken place in demand structure with surplus productivity in iron ores and molybdenum minerals, which are actually the indication of mining industry under the New Normal.” Mr. Gao Xiang, President of China Beijing International Mining Exchange, indicated that investment and financing activities in mining industry under the New Normal is decreasing and the difficulty in financing is expanding. Taking two financing indexes of total amount and programs amount of Toronto Stock Exchange in Canada as an example, the total financing amount is decreased while the financing programs are increased in the corresponding period, which can be simply interpreted that each single financing amount is decreased with the reduction of total financing amount. The financing comes to greater segmentation, which actually shows that the enterprises in preliminary exploration has made a lot of small-scale financing in order to continued running and even the management layer of some enterprises in Toronto Growth Enterprise Market takes out money to make their enterprise continuously survived.

Moreover, “there are a number of great changes took place in our country. First, the state finance is mainly invested on non-profit basic constructions rather than common projects, which tightens commercial investment. Second, many enterprises suffered a great loss with their investment in the previous climax period of mining industry, quite a number of enterprises suddenly wanes their enthusiasm for mining investment, and various other factors lead to the sharp drop in domestic investment amount.” Mr. Wang Dongsheng said so.

Financial Products Bring New Hope

Mr. Wang Wei, Head of Fixed Income Research of BOC International Holdings Limited, considered that “financing is not only the problem involving the enterprises’ self-development but also a new service increasing point for themselves. In the view of both national policy and the development of global capital market, the past 10 years, especially the past 5 years, has witnessed that the enterprises in China has greatly expand their financing room in capital market at home and abroad.”

Although the mining financing face great difficulties, “the support from financial industry is indispensable to the mining enterprises.” Mr. Cheng Manjiang, Chief Economist and General Manager of Research of BOC International Holdings Limited, considered that according to the future situation, mining industry may be not a commodity any more, nor a concept of a large commodity any longer. The majority of income of most enterprises probably comes from the trade and design of financial products. Without engaging in trade and design of financial products, running the mining industry will merely stay in substantial level and hard to rise from the current valley bottom. With the accelerating process of globalization, the mining industry, different from any other industry, is truly a global industry integrated with uniform price, products, trade rules and others, which all require the mining enterprises to rapidly improve their own management ability and financialization level.

In this aspect, Chengtun Mining Group Corporation Limited has taken a firm step with successful transformation, which not only resolves their own problems but also provides the financial products and packages for other enterprises. Mr. Zhang Jiangfegn, the Vice President, introduced that their enterprise achieved different results since choosing the way of designing and trading metallic and financial products. After the gradual implementation of designing and trading the financial products, Chengtun Mining Corporation has achieved the growth against the market with the stagnation in the mining industry. Based on original mining foundation, seven mines of Chengtun Mining Corporation still gain a growth of 50% in benefits with exploiting their potential in the situation of falling prices and market demand shortage. However, after introducing their financial products into the market, they actually bring the company a growth benefits of 200%. The high-level of Chengtun Mining Corporation realized that although there is a development room for a traditional enterprise running the mines, there is a larger development space when it turns to the design and trade of financial products and more infinite space for development, so to speak. In 2013, Chengtun Mining Corporation has further adjusted the design and trade of metallic and financial products.

“This enlightenment has its origins in our merger negation.” Zhang Jiangfeng explained. During the past merger and acquisition for various mines, Shengtun Mining Corporation often confronted the same problem that mutual parties held a large difference in prices. For example, the opposite party charged for 1 billion yuan while Chengtun Mining Corporation only offered 500 million. 99 negotiations ended up in failure with such 100 negotiations on merger and acquisition for mines. Unless there is regardless of cost, but many things cannot be done. Every mine expected to be merged wants to access to finances in various ways, and Chengtun Mining Corporation own a 20-year history in capital market with a strong power of financing which is also its strength. As a result, Chengtun Mining Corporation was inspired to take their capital advantage to work together with mines.

The large commodity trade currently faces the downturn, the price of mineral products experiences a sharp fall, and the state-own banks and commercial banks withdraw loans from the enterprises, which cause a tight financial budget for the enterprise. Zhang Jiangfeng said that facing such situation, Chengtun Mining Corporation upgraded and transformed the traditional mining enterprises and innovated the current seven financial products and services ranging from factoring business to finance lease, small-amount loan, P2P, gold lease and even auction. Chengtun Mining Corporation has expanded much more development space during the whole industry chain, and all enterprises on the industry chain started from mines excavation to smelting and then metal processing become the client of Chengtun Mining Corporation, which is unimaginable in the past.

He introduced that Chengtun Mining Corporation currently takes advantage of its capital strength to serve for the mines with finance lease in various ways including direct lease and leaseback. If some mines require the technological transformation, Chengtun Mining Corporation will directly invest them with equipment and the mining enterprises can use the equipment provided by Chengtun in the way of lease. Some mines are rich in mineral resources and good in production equipment but lack of funds, Chengtun Mining Corporation will firstly purchase the equipment of mines and then conduct the leaseback to the mines. In the way, the mines access to fund and both two methods stimulate the capital circulation for mines, which is a very effective way for the enterprise to go through the tough time and truly achieves a win-win result. A number of mining enterprises has experienced a very hard period after the banks withdrawing loans and the decline price of mineral products. However, with the equipment or capital investment of Chengtun Mining Corporation, they immediately motivate their business activities. Zhang Jiangfeng believed that there would be a long-term cooperation between Chengtun Mining Corporation and these mining enterprises in the future to shape a beneficial cycle.

The large commodity trade faces a bad situation on the whole during the economic downturn. If more efforts are taken into the design and trade of financial products, the mining enterprise will embrace a better future, which also conforms to the topic of CHINA MINING Congress and Expo in this year—New Normal, New Opportunities and New Development. On this point, Wang Wei considered that the enterprises can choose financial products for themselves according to their own needs.

Seize the Opportunity of Low Financing Cost

The recent price of mineral products is relatively steady, and the industry widely considered that the price in the future will rise up but merely not sure when it would happen, and the future of mining industry is still promising. Although the mining industry stays in an extremely difficult stage, there also contains opportunities. Mr. Wang Jiahua, Vice Standing President of China Mining Association, took Zijin Mining Group Corporation as an example and said that “although some enterprises which has previously gone abroad are ‘once bitten, twice shy’, it is not for all. Zijin Mining Group Corporation shot attempts twice in this year and merged two important projects in the international market.”

He regarded that the 18^th National Congress of the Communist Party of China has defined the direction to establish a multi-level financial market. Risk exploration capital market actually exists in the global and it is very necessary. China will surely establish our own risk exploration capital market. Although Canada, Australia and the UK own a mature risk exploration capital market, China cannot blindly copy or mechanically imitate them. We should, based on our state facts, learn from the advanced foreign competitors including Australian JORC Standard and Canadian 43101 Standard to build up our own risk exploration capital market focusing on the core of risk control and the construction of credit system to enable the fraud behavior in system construction detested everywhere like rats crossing the street.

Meanwhile, he indicated that risk exploration market would bring three major changes into China, firstly the achievement of global resource allocation, secondly the improvement of internationalization level and thirdly the formation of social diversified investment. In the past, the investments mainly happened within the mining industry, which led to investment shortage in some way. And now the introduction of “Internet+”, especially with the establishment of risk exploration capital market, will exploit a new market for new modes including internet crowd-funding. A powerful mining industry requires diversified investments in the society rather than the merely investment within the industry.

With regard to capital and finance, Wang Wei said that the mining industry was actually linked with capital market. Just as the mining industry was at a valley bottom, the financing cost is low in the view of current situation and the enterprises should seize the opportunity of low financing cost to further expand their own share in the global market with the very low asset price. Currently, purchase some assets with low price, fewer competitors and relatively low cost, and this moment is a good chance to enter into the market, especially for the resource-based industry.

Mr. Wang Dongsheng, General Manager of Chinalco Resources Corporation, proposed an advice of seizing the investment opportunity in the current market. In his opinion, the short-term depression and the middle-term optimism offered a great chance for the enterprises in China, which is an opportunity to enlarge and strengthen China mining industry in the world. The period is more depressed, the more important to transform and develop. Just as the developed countries invested on China in the early period of reform and opening up, they attached great importance to the emerging markets and countries as well as the investment development of potential countries and markets.

At the same time, he reminded that investment require to learn the regular rules and pay attention to relevant issues. The mining industry features with long period, large investment, high risk and high return, which has been shared in common. After many years of practice, a large amount investment generally is short in period and often lies on the middle and late exploration project. Generally speaking, the middle and late exploration project and the early development project feature with high likelihood of success, low risk and high return. The investment on commercial exploration has to select the type of ore, area, investment phase and cooperative enterprise, and the popular ore with good liquidity is the best.

He specially pointed out that controlling risk must focus on the investment opportunities of two kinds of projects. One is the high-quality project with middle and late exploration periods and the other is merging the project of converting the exploration right into mining right to construct mines with low-cost investment. If the investors want to make benefits in the way of investment, these two kinds of projects are most possible to produce values. Thus, great concentration should be taken on these two kinds of projects. The key point among them is to lower the prospecting risk and select the high-quality enterprises with good projects as the premise. (Liu Aiying)

About CHINA MINING

Opportunities and difficulties coexist in Sino-Mongolian mining cooperation

Opportunities and difficulties coexist in Sino-Mongolian mining cooperation

Source: www.chinamining.org Citation: chinadaily.com.cn Date: October 28, 2015

China and Mongolia reached eight cooperation agreements on mineral exploration ,worth over 30 million yuan ($4.73 million), at the first China-Mongolia Expo in Hohhot, Inner Mongolia autonomous region.

The meeting on mineral resources exploration is held at the first China-Mongolia Expo on Oct 24 in Hohhot, Inner Mongolia autonomous region. [Photo/nmg.gov.cn]

For instance, Inner Mongolia Mining Group signed an overall plan on joint exploration of non-ferrous metal and unconventional gas with a Mongolian mining company.

The two groups will increase cooperation in mineral prospecting, mining, and infrastructure construction, according to Hao Shen, deputy director-general of Inner Mongolia Mining Group.

Chinese and Mongolian mining industries stepped up cooperation in recent years thanks to support from top authorities on both sides.

The joint declaration on establishing a comprehensive strategic partnership signed by Chinese and Mongolian heads in August 2014 mapped out cooperation in mineral exploration, infrastructure construction and financial cooperation. The cooperation mechanisms of both countries are being improved. A mineral resources and energy cooperation committee was established, said Peng Qiming, chief-engineer of the Ministry of Land and Resources.

Peng Qiming, chief-engineer of the Ministry of Land and Resources speaks at the meetingon Oct 24. [Photo/nmg.gov.cn]

In 2014, Sino-Mongolian trade volume totaled $7.3 billion, with mineral and livestock products the main exports from Mongolia.

However, mining cooperation is held back by the current international economic environment, infrastructure conditions and business costs.

Wang Bo, vice-chairman of Inner Mongolia addresses to the meeting. [Photo/nmg.gov.cn]

China and Mongolia set high value on mining as a driver for economic development. Pushing reforms, innovation, sustainable development and cooperation is a concern shared by both countries, said chief-engineer Peng.

About CHINA MINING

CHINA MINING Congress and Expo 2016 will be held at Meijiang Convention and Exhibition Center in Tianjin on September 24^th-27^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.

Mining rights policies and regulations under New Normal

Mining rights policies and regulations under New Normal

—Q&A seminar by relevant departments from MLR

Source: www.mir.gov.cn Citation: www.agkyb.com Date: October 28, 2015

The CHINA MINING Congress and Expo 2015 held the session on special topic of “Interpretation of Mining Right Policies”. The relevant heads of Department of Mineral Development and Management, Department of Mineral Resources Reserves, Strategic Research Center of Oil and Gas Resources and Department of Cultivated Land Protection (all the above department are under Ministry of Land Resources, PRC)focused on the interpretation of new policies and new requirements of mining right management issued by Ministry of Land and Resources,PRC and promoted newly-issued measures of mining right management for the public convenience. The session also conducted interactive activities with mining right people and investors, and the heads of related departments on the spot gave answers to inquiries of the policies problems.

Q: Fluorite mine previously was the mineral with total production control. Are there any latest regulations or development trend on current fluorite mine?

Mr. Yao Huajun, Director-General of Department of Mineral Development and Management under MLR: MRL issued the “Notice on Control Index of Total Production of Highly-alumina Clay Minerals Fluorite Mine” in 2010 and firstly implemented the control management on total production of fluorite mine. The control at that year targeted at a total production of fluorite mine with 11 million tons (ore production), and now there is no longer for the implementation of total production control on fluorite mine. With regard to protective mining policy, it will be taken into consideration with our industry policy for establishment of a dynamic adjustment mechanism on a pilot basis in the future to gradually improve the examination and approval proceedings of protective mining minerals. The State Council also retained the examination and approval of protective mining minerals as an internal item in government during this approval system reform, and it is surely a hot issue. There actually are some relevant regulations on fluorite mine in other industry, but it is not the protective mining mineral any more. With the accelerating social process of post-industrialization, non-metallic minerals play an increasingly important role and Ministry of Land and Resources will also organize experts to have discussions on establishment of a dynamic adjustment involving more mineral types than fluorite mine.

Q: We faced relatively great confusion in running fluorite mine in the past and it was difficult to exactly grasp the establishment of mining right and exploration right and the regulations relevant to production quota. Please give a detail on the establishment of mining right and exploration right, and whether the relevant quota policies are similar to other minerals? Is there any special?

Mr. Bo Zhiping, Deputy Director-General of Department of Mineral Development and Management under MLR: The control management on total production of fluorite mine has been released currently. This control management has its origins at the year of 2009. Then, the economies including EU, the United State and Japan launched the proceedings against 13 raw materials in China under the framework of WTO. We chose two minerals including the fluorite mine in response to this lawsuit and started to manage total production control since 2010. China lost this lawsuit and lifted total production control.

Q: My question pertains to the policy of shale gas. If there is a requirement for drilling only a parameter well of shale gas, does it need to approved by Ministry of Land and Resources? Since there is a clear permission restriction to shale gas exploration and exploitation, what qualifications are required to the unit for application of drilling a parameter well of shale gas?

Mr. Zhao Xianliang, Director of Strategic Research Center of Oil and Gas Resources under MLR: We firstly have to be clear on a concept. Only the corresponding qualifications are required for a unit to obtain the exploration right or mining right. At present, Ministry of Land and Resources is considering setting free to the qualifications for exploration right of shale gas. The first round of bidding for exploration right of shale gas merely faced four corporations including CNPC, SINOPEC, CNOOC and Shaanxi Yanchang Petroleum Corporation. And the qualifications for application were adjusted during the second round of bidding for exploration right of shale gas. All units with qualifications of gas exploration (including coalbed methane and natural gas) are qualified. Thus, the second round of bidding for exploration right of shale gas witnessed a large amount of enterprises with coalbed methane exploration qualifications registering or participating the competitive bidding as operating representatives.

With regard to conventional oil and gas, its initial bidding pilot in Xinjiang has currently been conducted but cannot be totally cancelled since the prospecting license and mining license still require corresponding qualifications.

At present, Ministry of Land and Resources has adjusted relevant policies based on the consideration of laws and regulations and the need of reform. The open bidding for oil and gas exploration regions in Xinjiang did not make requirements on exploration qualifications, but the bid winner ought to select an exploration institution before exploration registration for a temporary qualification in Ministry of Land and Resources.

What qualifications are required for drilling the parameter well of shale gas depends on the specific behavior of drilling the parameter well. If it is merely a geological survey project, there is no need to apply the exploration right but a corresponding filing or application in local government department is required. If drilling the parameter well is purely a personal behavior, it may not be approved without any exploration qualifications.

Mr. Yu Haifeng, Director-General of Department of Mineral Resources Reserves under MLR: If the project of survey work is funded by finance, after being officially approved and replied, it can be drilled with permission of provincial departments of Ministry of Land and Resources. If the enterprise wants to drill the parameter well of shale gas with previously obtained oil and gas exploration right, it can be achieved through altering additional minerals. Except above two cases, it is the key for other enterprises to obtain the approval of provincial departments of Ministry of Land and Resources. Considering the complicated facts and different conditions, it is hard to simply decide whether it can be drilled or not.

Q: According to relevant state regulations, only the proved orefield financed by our country is allowed to charge for the mining right. In the past several years, the mining industry was in better situation and the mining enterprise did not particularly care about the assessment amount of the money paid for the mining right. However, in fact, there are many cases that the current documents or relevant materials are not very standard to fully evidence that the proved orefield is state-financed, which may cause the partial loss of state assets. Particularly, the enterprise who has obtained but not disposed the mining right has to pay for the charge with a large amount of money during alteration of mining mode. And the policies in all provinces (areas and municipalities) are different, what is the opinion of Ministry of Land and Resources on such issue?

Yu Haifeng: I have three points on this issue. First, according to our understanding in charge, the national finance investment on the geological survey project enables a valuable orefield formed or a valuable mine explored, which must reflect the right of national finance as an investor in the way of charge. However, in the practical work, all valuable orefields formed with national finance investment or vacant land without national investment in some provinces (areas and municipalities) are required payment and also called charge as long as they are remised. Therefore, a clear comprehension in the term of charge is required.

Second, we actually experienced such issues many times during the current audit and inspection tour in the field of mineral resources. Many officials in the system of Ministry of Land and Resources are arrested for involving the loss of state assets. With regard to the identification of criminal liability, both the auditing department and discipline inspection department ask for opinions of Ministry of Land and Resources. We insist on that if there is the investment based on national finance (including the central and local governments) and ore field or valuable ores are actually found, corresponding charge is surely required after the charge assessment of mining right. This system has never changed. However, the difficulty of this issue lies on whether the valuable ore field or minerals are found. It depends on the real historical materials at that time to prove whether they are drilled or conducted with heavy engineering and other works. Some surveys might happen in the 1950s and the workers in those previous projects cannot be found, which is hard to check and verify in this case and it merely depended on the current materials and numbered evidences. Charge is required if it is true, and charge is not required in the contrary situation. Of course this issue is hard to handle and it involves various interests from all parties.

Third, concerning charge assessment and its repayment, Ministry of Land and Resources is considering a number of new reform measures to relieve the pressure on enterprises for paying a large amount of charge, including installment payment or staged payment, or adjustment to payment with the varied mines income. The ultimate goal targets at resolving the issue in a way combined the consideration of actual difficulties faced by the enterprises with the protection on the authority of charge revenue. The system is under our study and has not shaped at present.

Q: There are still three questions to inquire. First, how to define the standard of “state-financed”? Second, with regard to the “state-financed”, the burden of proof should lie on the government. If the government fails to evidence the national finance investment amount and the already conducted survey on the involved valuable ore field, is it possible to consider that it is the government rather than the mining right people who cause the potential adverse effect? Third, at present, the installment payment on mining right charge is allowed within our policy. However, if the current charge is too high, a certain proportion of fund possession cost is surely charged in accordance with relevant regulations and the cost equals to the loan interest rate at the corresponding period. This is an extremely high financial cost, being the greatest financial pressure for every mine. Is there a better way to help the enterprises to resolve this problem and relieve the pressure?

Yu Haifeng: I want to talk the last question firstly. We are informed on the issue of financial cost that there is truly heavy burden on some domestic major enterprises of iron mine in this aspect and at least heavier than those in other countries around the world. The recent price of iron ore is lower and taxes and dues account for 37% of the whole income, which leads to great difficulty in continued running of the middle and small mines. Thus, it should be brought to the attention. Our preliminary idea is to work out a reasonable mechanism and adjust it with the market. In addition, a supportive policy for the enterprises is introduced in a special period, instead of blindly strict taxes or charges, to help the enterprise through this tough times.

The second question pertains to the fund possession cost. At the end of this year or so, Ministry of Land and Resources may shape an opinion on this issue and also on the previous mentioned issues—how to define the standard of “state-financed”? who will provide proof? What should do if there is a mass in explanation? —and on other issues.

Q: The latest document from Ministry of Land and Resources has mentioned the support to public entrepreneur and innovation and “land for new energy” are defined and explained in its content, with a special mention of the permission of leasing the photovoltaic land and the necessary formalities of construction land for farmland. Then, does the program of mutual supplement between agriculture and cultivation, fishery and cultivation require to go through the farmland formalities?

Mr. Yan Gang, Deputy Director-General of Department of Cultivated Land Protection under MLR: As regards photovoltaic land, our country has introduced a number of policies including growing rice and keeping fishes under the photovoltaic panel. Two groups are classified at present, the waste land which is directly access to and the cultivated land which is used in accordance with policies. In case of other new situations and new problems, it will be gradually worked out in the future.

Yao Huajun: This issues contribute great help to our work advancement, system improvement, reform deepening, services optimization and efficiency enhancement. At present, the mining industry has entered into a new development with new normal, new challenges and new opportunities, which also demands for higher way to develop and utilize the mineral resources. The transformation in development and utilization inevitably forces the birth of corresponding system and policies, even the adjustment, adaptation, supplement and improvement on higher laws and provisions. (Liu Aiying)

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