News

Chinese companies meet resistance when investing in Australia

Source: www.chinamining.org   Citation: Global Times  Date: August 31, 2015

Australia is China`s second largest target country for foreign investment. It is also the country where Chinese companies encounter the most "troublesome projects" when they invest abroad. Although challenges exist, Chinese companies have learned some valuable lessons that have helped them come up with new ways to succeed overseas.

The Rio Tinto Iron Ore Parker Point export loading facility in Dampier, Western Australia`s Pilbara region. The facility is part of the mining operation of British-Australian mining and resources company Rio Tinto. File photo: CFP

When Hu Yaobang, former general secretary of the Communist Party of China Central Committee, paid a visit to Australia in 1985, he was invited by former Australian Prime Minister Bob Hawke to visit the Pilbara region of Western Australia, the largest iron ore producing area in the world.

Years later, Hawke still remembered the details of that day when he picked up a piece of red iron ore and handed it to Hu, who then carefully put it into a pocket of his suit.

In 1987, China Metallurgical Import and Export Co purchased a 40 percent stake in Channar, a company under British-Australian mining giant Rio Tinto.

The deal marked China`s first important overseas investment project since the reform and opening-up in late 1970s.

China Metallurgical Import and Export Co merged into the State-owned steel company Sinosteel Corp in 1993.

In recent years, thanks to a A$27 billion surge in investment, China has overtaken the US (A$17.5 billion) as the largest foreign investor in Australia, according to a report released in 2014 by the Australian Foreign Investment Review Board (FIRB).

Australia has also become China`s second largest target country for overseas investment, according to the report.

However, Chinese companies that seek to make large-scale foreign investments are likely to encounter the most "troublesome projects" in Australia.

"Australia relies deeply on Chinese markets as China`s investment has soared year by year," a person close to FIBR was quoted as saying by the Hong Kong-based Phoenix Weekly magazine on Wednesday, noting that this situation has mingled hope and fear.

Although Chinese companies have had their share of difficulties while investing in Australia, some successful cases have lessons worth learning.

The secret of soccer teams

In March 30, 2012, Chinese telecom equipment maker Huawei Technologies Co invested $1.7 million to sponsor the Canberra Raiders soccer team.

The Raiders weren`t a great team, and the investment did not attract much attention, though one of its council members was Dennis Richardson, former director-general of the Australian Security Intelligence Organization.

Australian media interpreted the sponsorship as "Huawei`s attempt to pave road for future bids by sponsoring the soccer team owned by an influential Australian politician."

At that time, the US government had accused Huawei of posing a risk to its national security.

Under this influence, the Australian government disqualified Huawei from bidding for a National Broadband Network (NBN) project worth A$38 billion.

Still, its soccer strategy gained recognition within the company. Apart from renewing the contract with Raiders, Huawei announced in April this year its partnership with Gold Coast Suns, another team in the Australian Football League.

The Australian`s report cast the public spotlight on Huawei for the first time. It was Huawei`s first credibility crisis in Australia.

The company then began a bold trial. It created a board of directors in Australia to raise the company`s prestige and deal with the doubts and questions posed by the Australian government and media.

The board of directors was considered something of "dream team" because it included several Australian political heavyweights, including the former foreign minister Alexander Downer and former Victoria state premier John Brumby.

John Lauder, the former commander of the Royal Australian Navy, chaired the board.

Huawei continued to provide services to Australian telecom companies, and won orders for Australia`s network construction from Singapore Telecom and the British mobile phone giant Vodafone.

To clear up the doubts concerning the potential security threats that Huawei might pose to the country, Lauder suggested publicly that the Australian government should establish a security evaluation center to reduce the potential risks.

Government pressure makes up only a small part of the difficulties that Huawei encountered in Australia, Lauder said. The company`s bigger problem was that so few people had heard of it.

"In Australia, the company has to face politicians, business groups, the communications industry and the public; thus, various strategies are required," Lauder said.

Huawei tried hard to win public recognition in Australia through sports marketing, and the outcome seems sound.

`Australian mentality`

Australian newspapers paid close attention to news about China, especially concerning its stock markets, manufacturing, luxury market and investment policies for the retail sector.

Every move that China makes can impact Australia`s economy, the person close to FIRB told Phoenix Weekly.

For example, the price of iron ore has taken an unprecedented fall since 2014, leading the Australian media to declare that the country`s commodities boom was coming to an end.

According to its annual report on August 6, Rio Tinto`s net profit for the first half of 2015 fell 82 percent year-on-year to $806 million.

Analysts attributed the company`s plunging profits to the slowdown of China`s economy and its diminished demand for bulk commodities.

China`s investment in the mining industry and energy industry has undergone a major decline since 2013, according to a report released by KPMG and Sydney University in early 2014.

"Australia needs to make more effort to attract investment from China, given the increasingly intensified global market," said Doug Ferguson, head of KPMG`s Asia Business Group.

It was said so because there has been a type of mentality among the locals in recent years that Australia hopes to develop its economy with China`s abundant capital while worrying that these investments would run counter to the country`s interests because its resources will be sent to China.

Based on a public opinion poll conducted in 2014 by Lowy Institute, an independent international policy think tank, more than 31 percent of respondents regarded China as Australia`s best friend, overtaking Australia`s traditional ally Japan (28 percent). At the same time, 56 percent of respondents said that China had invested too much in Australia.

The results illustrates the dilemma faced by Australia`s Department of Finance, which is making adjustments to a series of policies, such as raising the threshold for investigations into foreign enterprises.

"The concerns are mainly about China`s large State-owned enterprises, which will be investigated in light of their relationship with the government, asset background and investment purpose," the person close to FIRB told Phoenix Weekly.

According to the current policies, China`s State-owned enterprises must get permission for investment from FIRB, regardless of the scale.

Under the "One Belt and One Road" initiatives, China`s overseas investment will continue to surge as more and more companies go global.

It seems that Chinese companies that plan to expand overseas should try hard to figure out how to deal with this "Australian mentality."

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China tests deep-sea mining exploration vehicle

Source: www.chinamining.org   Citation: Xinhua   Date: August 28, 2015

The first phase of trials on China`s independently-developed autonomous underwater vehicle (AUV) in the South China Sea has finished, the ocean resource authority announced Friday.

The deep-sea mining exploration vehicle, which is designed to reach depths of up to 4,500 meters, recorded a maximum depth of 4,446 meters over 15 dives spanning 35 days, according to a statement released by the general office of the China Ocean Mineral Resources R&D Association.

Under the supervision of the State Oceanic Administration, the association was set up in 1990 to explore deep-sea development and exploration.

With the ability to detect hydrothermal fluids, as well as photograph and survey terrain and relief, the vehicle will explore sea areas rich in sulfide deposits that contain various metals.

"The trial allowed us to verify certain functions," the statement said. The functionality tested included deployment and retrieval, deep-sea navigation, and optical and acoustic detection.

The vehicle will undergo its second- and third-phase trials in the southwest Indian Ocean in November.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

 CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China, US seek `clean coal` agreement as industry struggles

 Source: www.chinamining.org   Citation: Associated Press   Date: August 26, 2015

China National Energy Vice Administrator Shi Yubo, left, and U.S Assistant Energy Secretary Christopher Smith initial an agreement to increase collaboration between the two countries to develop technologies that capture greenhouse gases produced from burning coal during a Tuesday ceremony in Billings, Mont. China is the  world`s top consumer of coal. (AP Photo/Matthew Brown)

U.S. and China officials took a major step Tuesday toward an agreement to advance "clean coal" technologies that purport to reduce the fuel`s contribution to climate change - and could offer a potential lifeline for an industry that`s seen its fortunes fade.

The agreement between the U.S. Department of Energy and China`s National Energy Administration would allow the two nations to share their results as they refine technologies to capture the greenhouse gases produced from burning coal, said Christopher Smith, the Energy Department`s assistant secretary for fossil energy.

Terms of the deal were finalized late Tuesday. Officials said it would be signed at a later date.

Smith spoke after he and other senior officials from President Barack Obama`s administration met with representatives of China`s National Energy Administration during an industry forum in Billings. The discussions took place near one of the largest coal reserves in the world - the Powder River Basin of Montana and Wyoming, where massive strip mines produce roughly 40 percent of the coal burned in the U.S.

But clean-coal technologies are expensive, and efforts to develop them for commercial use have struggled to gain traction in the U.S. Some critics describe clean coal as an impossibility and say money being spent on it should instead go toward renewable energy.

China leads the world in coal use. It produces and consumes about 4 billion tons annually, four times as much as in the U.S.

Shi Yubo, vice administrator of China`s energy agency, told delegates to the forum that coal will continue to play a role in China`s developing economy. "But we need to pay special attention to developing clean coal technology," he added through an interpreter.

Shi said China was seeking to develop more demonstration projects that capture carbon to prevent it from escaping into the atmosphere. He acknowledged that efforts to put the greenhouse gas to beneficial use "are still far behind."

Meanwhile, the U.S. coal industry has suffered a beating in recent months, with major mining companies going bankrupt.

The Interior Department is proposing hikes on coal royalties and possibly lease payments for publicly owned reserves of the fuel in areas such as the Powder River Basin. Also, cheap natural gas is squeezing out demand for coal, and Obama has made reductions in carbon dioxide emissions from coal-fired power plants a key component of his climate policy.

"You`ve got to develop wind and solar and develop nuclear, but you also have to deal with the challenge of reducing the greenhouse gas impacts of coal-fired power plants," Smith told The Associated Press. "It`s positive if those projects (to capture carbon) get built here. It`s positive if those get built in China and India and Europe and around the world."

Almost one-third of energy-related carbon dioxide emissions in the U.S. come from burning coal, equivalent to 1.6 billion tons of the gas in 2014. By comparison, two clean coal projects that Smith described as closest to completion ¡ª the Petro Nova project in Texas and the Kemper project in Mississippi ¡ª would capture less than 5 million tons of carbon dioxide annually. He said the interactions between his agency and its Chinese counterpart created opportunities for companies from both countries to come together on ways to meet ambitious plans to cut emissions.

Montana Gov. Steve Bullock opened Tuesday`s forum by telling delegates from the two countries that "climate change is real." The Democrat pointed to the smoky skies outside the meeting hall ¡ª caused by record-setting forest fires to the west ¡ª as an indication of how its effects are manifest.

Bullock later was joined by Wyoming Gov. Matt Mead, a Republican, who said that regardless of his personal belief on whether climate change is real, economies around the world already are reacting to it. He rejected the notion that clean coal is a pipe dream.

"In the climate change debate, we have gotten sort of stuck in the mud, calling each other names. We need to move beyond that," 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 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

Getting the global price right

Source: www.chinamining.org   Citation: China Daily   Date: August 18, 2015

Chinese companies are increasingly trading in global commodities to secure long-term supplies and exert more influence over pricing mechanisms.

As one of the world`s largest consumers of commodities such as agricultural products, metals, minerals, oil and gas, China has historically purchased these commodities from international markets at unfavorable prices due to lack of participation in international commodity exchanges, which set commodity prices.

But that is now changing as increasingly, Chinese banks, securities firms and commodity trading firms are joining international commodity exchanges, mainly to buy and sell commodities on behalf of their clients in China. This in turn helps them hedge against future price fluctuations.

For example, if a Chinese oil refinery knows the quantity of crude it requires in a year`s time to meet production targets, it can purchase Brent Crude on the US-listed Intercontinental Exchange, or ICE, at a price determined by the futures market. By receiving a locked-in price, the firm is able to accurately determine its business model and be certain of profit margins.

Before such trading activity became possible, the same company would have needed to either buy crude oil in bulk for storage, or wait a year until the oil is required, facing the risk of increased prices.

"It is natural for Chinese companies to take a more dominant position in the global commodity trading space, both physically and financially, because China is one of the biggest commodity consumers in the world," said Bjarne Schieldrop, chief analyst of commodities at SEB, a Nordic bank.

He said that in the commodity markets, the fundamentals of supply and demand determine the long-term price, but in the short-term, on the day when a trade is made, the price is set by financial markets because sentiment can move prices up and down.

"At the moment I think China is huge on the physical side while the rest of the world has dominance in the financial markets," Schieldrop said.

One of the reasons that China has historically not engaged in commodity trading on financial markets was because it was highly focused on securing actual supplies.

In addition, China`s capital account restrictions, which limit the amount and type of financial flows into and out of China, also has been a factor behind its limited involvement in international commodity trading. The liberalization of the capital account in recent years is allowing more Chinese banks to trade on international exchanges, Schieldrop said.

Chinese companies` increased trade in commodities in foreign exchange is also a natural continuation of rising Chinese investment and financing activities in the international commodity markets, said Josh Clarke, counsel in the Perth office of the law firm Squire Patton Boggs.

For example, in Australia, as Chinese companies have bought shares in natural resources firms, more of those Australian companies` activities are financed by Chinese banks that already have a working relationship with their shareholders.

This trend has led Chinese banks into the commodity financing sector, and as a result of such involvement, participation in the commodity trading and hedging space became a natural progression, Clarke said.

This increasing commodity trading by Chinese banks will benefit the global commodity trading markets by increasing liquidity. It will benefit the clients of the Chinese banks, for example, through making available to those clients the means to hedge their forward price risks.

In 2012, Bank of China`s commodities trading arm, BOCI Global Commodities (UK) Ltd, became a member of the world`s biggest metals bourse, the London Metal Exchange, giving it the right to trade by phone and electronically. This was followed by China Merchants Securities, one of China`s largest securities companies, and GF Financial Markets, a Chinese derivatives broker, which also started trading on the LME.

Earlier this year, Bank of China became the first Chinese bank to join the auction process that sets gold prices in the London market, run by ICE Benchmark Administration.

These initiatives by Chinese banks are happening at a time when Western banks are retreating from the commodity trading sector due to declining profitability in the sector and increasingly stringent financial regulations following the 2008 financial crisis.

Most of these financial regulations demand stricter capital requirements for banks, such as Dodd-Frank, EMIR, and Basel III, and limits on proprietary trading by banks, such as the Volcker Rule.

Last year, Barclays said it would give up most of its metals trading, and JPMorgan agreed to sell its physical commodities business to Mercuria, a Swiss commodities trading firm.

Chinese banks` bigger balance sheets mean on average they have more capacity for commodity trading while still meeting the requirements, Clarke said.

"Chinese banks trading in this space have bigger balance sheets to start with than other banks, so the overall risk from such activities may be lower. Potentially, the returns for Chinese banks may be higher, or pricing keener, if the cost of capital used for such trading activities is lower than other banks," Clarke said.

Meanwhile, China is also setting up its own commodity exchanges to allow Chinese buyers and sellers to trade on a platform in their own time zone, and in a market which they are more familiar with.

Because commodity exchanges in China have trades denominated in yuan, Chinese participants are not subject to exchange risks or capital controls that they would face by participating in overseas exchanges.

China has three key commodity exchanges, the Shanghai Futures Exchange, established in 1999; the Dalian Commodity Exchange, established in 1993; and the Zhengzhou Commodity Exchange, established in 1990. None allows foreign participation because of China`s capital controls.

Fang Jian, a partner at the London-based law firm Linklaters, said that China`s three biggest domestic exchanges are all exploring how they can best open up to foreign trading. It is possible that the government will eventually allow foreign traders, who meet certain criteria, to take part.

"What the Chinese regulators are doing is realistic. The process of liberalization for commodity trading in China may be quite similar to the process of gradually allowing qualified foreign institutional investors to participate in China`s stock market," Fang said.

Despite the Chinese commodity exchanges being relatively young, they have already gained significant influence in the commodity industry because of the massive volume of trade in the country.

They are also increasingly providing benchmark prices for commodities in their respective sectors, according to Daniel Morgan, global commodity analyst at UBS.

For example, iron ore traders now look to the Dalian Commodity Exchange for iron ore prices as a reference point, due to the large volume of trade on the exchange, Morgan said.

"As many iron ore buyers use the Dalian Commodity Exchange to hedge their risks, the exchange quickly received significant liquidity. When it first started trading, we and other people in the market were surprised by how quickly this liquidity came. Given its status now, it`s hard for anyone else to try to wrest it away," 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 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China`s energy use slows in 2014

Source: www.chinamining.org   Citation: Xinhua   Date: August 14, 2015

Energy consumption for every 10,000 yuan (1,563 U.S. dollars) of China`s GDP fell 4.8 percent year on year in 2014, the biggest in the past five years, data showed Thursday.

Shanghai Municipality and Hebei and Jilin provinces posted the greatest year on year decline, dropping energy use by 8.71 percent, 7.19 percent and 7.05 percent, respectively, according to the figures released by the National Development and Reform Commission, the National Bureau of Statistics, and the National Energy Administration.

The government also evaluated energy use for every 10,000 yuan of industrial value-added output in 2014. Guizhou Province topped the list with a decline of 13.39 percent from the previous year. Xinjiang Uygur Autonomous Region ranked last, with a 2.31-percent increase in power usage per 10,000 yuan of industrial value-added output.

China aims to cut energy use by 16 percent by the end of this year from the 2011 level, which was 0.793 tons of standard coal per 10,000 yuan of GDP. It also aims to bring the share of non-fossil energy to 15 percent by 2020 and 20 percent by 2030.

In the first half of 2015, China`s power use rose only 1.3 percent, while economic growth held steady at 7 percent, the lowest quarterly growth rate since 2009.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China strengthens hold over oil market as price maker

Source: www.chinamining.org   Citation: Reuters  Date: August 12, 2015

China`s growing ability to buy and sell millions of barrels of crude oil on the Asian physical market in a matter of minutes through its main trading firms has given China so much clout that other traders are often forced to follow its agreed prices.

Leading Chinese oil traders have cornered the market on several occasions since October last year. Early this month, Chinaoil, the trading arm of PetroChina , bought 5 million barrels of crude in just 30 minutes through Asia`s main price-finding mechanism organised by Platts, part of McGraw Hill Financial Inc (MHFI.N).

Market power is shifting towards big consumers, with oil output at record highs and global demand slowing. China`s main oil traders Unipec and Chinaoil have been able to cherry-pick the best offers and take advantage of cheap oil to build strategic reserves.

"China`s view of supply security is now increasingly a question of becoming a price maker and being involved in the entire supply chain globally," said Michal Meidan, director of consultancy China Matters.

This year, China is challenging the United States as the world`s No.1 crude buyer, with weaker oil prices lowering the cost of building China`s strategic petroleum reserves. China bought nearly 11 percent more crude in the first seven months of 2015 from a year earlier. [O/CHINA1]

For China, the cost of importing roughly 200 million barrels of crude a month has fallen to $10 billion at current prices around $50 a barrel, from $23 billion when prices were at $115 a barrel last summer.

`GET OUT OF THE WAY`

Nowhere has China`s move from price taker to maker been more obvious than in daily physical crude oil trading.

Unipec, the trading unit of Sinopec Corp , and Chinaoil often dominate daily trading, surpassing volumes dealt by Western majors.

"Get out of the way when the train is running," said a trader with an Asian refiner. "Little guys like us can get run over easily."

Riding on China`s growth of the past decade, which has not only seen it become a top crude importer but also a large exporter of refined products, Sinopec and PetroChina have evolved from being passive oil importers to sophisticated traders of crude oil and refined fuels.

Since the second half of 2014, both firms saw oil traders ascend to top management, replacing executives of either planning or refinery manager background, company sources said.

Sinopec and PetroChina do not comment on trade-related matters.

The huge volumes exchanged by China`s two major traders are straining Asia`s benchmark price-finding mechanism in the physical oil market, the Dubai Market-on-Close (MoC) by Platts.

In a process called "the window" by many traders, the soaring activity of these traders has often led little space for other participants to trade in the oil price-making process.

"The concern which I and a lot of others have is that the Dubai market does not reflect the true market price of Middle East crude with this kind of action," said Oystein Berentsen, managing director of crude oil with Singapore-based Strong Petroleum .

Additionally, the government is slowly deregulating its import market, granting more licenses to independent refiners to buy overseas crude, further boosting demand not just for physical crude from the Middle East, but also for the main international crude futures benchmarks Brent (LCOc1) and West Texas Intermediate (WTI) (CLc1).

"Granting of crude import licenses is one step towards deregulating China`s oil industry. This also helps boost demand for lighter grades," said Singapore-based brokerage Phillip Futures this week in a note to clients.

"Thus, it could help support both WTI and Brent, which are of the lighter grades."

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China urged to `take rightful place` in world gold markets

Source: www.chinamining.org   Citation: China Daily Europe   Date: August 10, 2015

Growth in the global gold market is shifting from West to East, and China should further liberalize its gold exchanges and allow international participation in order to "take its rightful place" in the world market, says Roland Wang, managing director for China at the World Gold Council.

Wang says the expansion of strong gold trading hubs in Asia will improve price discovery, liquidity, transparency and efficiency, all of which will transform the landscape of the global gold market, and China has a big advantage enabling it to benefit from these trends.

One significant catalyst for China`s increasing gold pricing power is the much-talked-about yuan-denominated gold index, expected to be launched by the Shanghai Gold Exchange by the end of 2015.

The Shanghai Gold Exchange is to launch the yuan-denominated gold index this year,
predicted to increase China`s gold pricing power. Photos provided to China Daily

This new gold index will provide new competition to the London Gold Fix, which is currently the global reference point for the industry, meaning that buyers and sellers of gold would look to the benchmark to determine the exact price of their specific trade.

The Shanghai Gold Exchange was established in 2002 to centralize China`s gold trading. It now consists of a Main Board for Chinese traders and an International Board, which is located in the Shanghai Free Trade Zone, which is dedicated to foreign investors.

Currently the Main Board and International Board are separate from each other because the renminbi is not freely convertible and China`s capital control means financial trades made by domestic and foreign traders have to be separate in order to help maintain this currency control.

But once the renminbi can be freely converted, the two boards are expected to merge and the SGE will become a significant gold exchange center globally, with Shanghai taking its place as one of the three major international gold exchanges, alongside New York and London, Wang says.

While China is a big consumer of gold globally, it still lacks gold pricing power, and Wang says Chinese banks need to increase their participation in international gold exchanges so that the demand and supply of gold in China can be reflected in gold prices in international markets.

"China`s lack of international participation tends to directly impact China`s competition for gold price-fixing power," Wang says.

"Only by involving Chinese financial institutions in the global gold fix mechanism, and by advancing renminbi-denominated commodities to encourage foreign investors to conduct business in the China market, can China increase its gold price-fixing power accordingly," he says.

One major milestone in China`s participation on international gold exchanges is Bank of China becoming the first Chinese lender to join the London Gold Fix, among seven other banks.

Administrated by the ICE Benchmark Administration Limited, the London Gold Fix is a twice daily electronic auction held in London which determines the benchmark gold price.

Wang says this move by the Bank of China will reinforce the connection between the Chinese and overseas markets, with the international gold price better reflecting supply and demand in China, as well as promoting the internationalization of the Chinese gold market.

"Bank of China`s participation in the Gold Fix is the first step for China being the largest gold market in the world, and to become a gold trading center along with London and New York," Wang says.

He says that in the long term China`s increasing gold pricing power globally will also fuel the renminbi`s internationalization, because the International Board of the SGE will offer a range of renminbi-denominated products for foreign investors to trade, which in turn will lead to increasing liquidity for renminbi internationally.

Historically, China`s renminbi was pegged to the dollar but after the financial crisis, extensive quantitative easing by the US has significantly diminished the value of Chinese foreign reserves. China has adopted a policy of gradually opening up its foreign exchange restrictions to help the renminbi become a reserve currency internationally.

Another initiative to help China`s participation in international gold trading is the SGE`s plan to soon establish the world`s largest physical gold fund, the Silk Road Gold Fund, sponsored by Shandong Gold Group.

The fund is expected to raise an estimated 100 billion yuan ($16.1 billion; 14.8 billion euros) and invest in physical gold and gold mining companies along the Silk Road, which is the ancient trade route that connects Asia with the West.

The news first appeared in a May report by Xinhua News Agency, which said that the fund will facilitate gold purchases for the central banks of member states to increase their holdings of gold.

The member states include about 60 countries that lie on the Silk Road, including the world`s two biggest consumers of gold - China and India. Together, these 60 countries account for more than half of the world`s gold production and 80 percent of the total global gold consumption.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20^th-23^rd, 2015. We invite you to join the event and to celebrate the 17^th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

Chinese coal producers suffer heavy losses in H1: NDRC

Source: www.chinamining.org   Citation: Xinhua   Date: July 31, 2015

Chinese coal producers suffered heavy losses in the first half of this year due to oversupply and falling coal prices, according to the country`s top economic planner Thursday.

Over 70 percent of the country`s medium-sized and large coal companies suffered losses in H1 and total losses of those loss-making coal producers stood at 48.41 billion yuan (7.91 billion US dollars), according to Lu Junling, a senior official with the National Development and Reform Commission.

Major coal producers as a whole made a profit of 20 billion yuan, equivalent to only 10.5 percent of their profit in the same period of 2012, according to the commission.

The coal market has been troubled by oversupply since 2012 and the situation is likely to continue in the second half as coal demand for electricity production and the steel and construction material sectors is expected to drop while coal production is still in its peak period, according to Guo Zhonghua, a researcher with China National Coal Association.

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