Do a good job in “tapping new sources of supply” and “throttling”
——On the implementation of the spirit of the Third Plenary Session of the 18th CPC Central Committee to promote the scientific development of mining industry
Source: www.mlr.gov.cn Citation: www.chinamining.com.cn Date: Nov.21, 2013
After over 30 years of sustained rapid development since the reform and opening up, China has achieved a stunning and eye-catching economic growth, enabling it to become the world’s second largest economy from the point of economic aggregate. However, it cannot be denied that for a long time, economic growth mode is extensive due to too much importance to economic growth, and energy resource price is not reasonable, which leads to the problems of the difficulty in efficient allocation of resources, excessive per capita GDP energy consumption and resources-squandering.
The newly-announced “The Decision on Major Issues Concerning Comprehensively Deepening Reforms” clearly puts forward to improve “the system of resource conservation mechanism” and develop “a sound system of energy, water, land saving and intensive use” so as to promote the formation of a new pattern of modernization construction of harmonious development between human and nature. This is an important part of the grand blueprint for China’s reform during the next 10 years and shows us the way to “tap new sources of supply” and “reduce consumption” to provide a reliable resources to realize China’s dream of industrialization, informatization, new urbanization and agricultural modernization.
Out of the way the western developed countries have taken, a lot of mineral resources are needed as the support to achieve industrialization. Therefore, as a developing country with a population of over 1.3 billion, China needs reliable mineral resources protection urgently. But from the point of China’s current situation, the reality is not optimistic.
First of all, China is congenitally deficient in mineral resources. Total amount is large, but little in per capita and endowment condition is poor. China’s proven reserves of mineral resources per capita only accounts for 58% of the world’s average level, taking the 178th place in world. Apart from the abundant deposit in coal, other energy mineral reserves, especially oil and gas, is limited. Iron, copper, aluminum, potassium and other important minerals are “poor in rich ore, rich in lean ore, rare in big ore and enough in small ore”.
Secondly, the degree of dependence on foreign mineral resources of our country is high, and there are many serious dependent types of mineral resources, and on the relatively concentrated area. About 45% of China’s imported crude oil is from the Middle East, 32.5% from Africa, 8% from Russia, and 3.5% from the Asia-Pacific region. Iron ore is mainly from Australia, Brazil, India and so on. In the past 15 years, our external dependency on oil, iron ore, aluminum smelting, refined copper, potassium is over 50%.
Thirdly, with the growing mineral resource consumption, the growth of explored mineral reserves can’t keep up with mineral consumption rate. It is becoming obvious that major strategic resources restrict the national economy development. Our country has become one of the largest major mineral consumption countries. According to the estimate, 11 of the 45 main minerals are in shortage in a certain degree. According to the existing proven reserves, static supply of some large reserves can only guarantee 10-15 years, and some even less than 10 years.
Fourthly, it is the lack of big discovery in ore-prospecting which can have macro influence. Although there are a lot of achievements in geological prospecting in recent years, it is not adapt to the needs of new situation. Therefore, it is difficult to solve the short supply of resources fundamentally, especially the shortage in bulk minerals.
Fifthly, the extensive pattern of mining development has not been changed. There is serious waste in mineral resources. Since the founding of PRC, in order to maintain high economic growth rate, our country has basically taken an extensive path for development at the expense of waste of resources and environment. The first 20 years after Reform and Open policy, doubled consumption of energy minerals and tripled of other minerals have ensured the realization of the strategic goal of quadrupling the gross domestic product. Over the past 15 years, the accumulated consumption of mineral resources in our country was twice more than the before.
Since 2003, our country has become the first consumer with coal, steel, and cooper, and second with oil. However, the GDP is only about 4% of the world’s total. At present, the comprehensive utilization of mineral resources is between 30%-35%, which is 10%-20% lower than the global average level. The comprehensive utilization of par genetic minerals and associated minerals is no more 20%. The overall recovery rate is 30%. Statistics shows that in the “extensive” stage, the raw material needed for creating $10000 value in our country is seven times of Japanese, almost six times of the American and three times more than Indian.
With China’s rapid advance in industrialization, urbanization and agricultural modernization synchronization, the importance of mineral resources is increasingly highlighted. Rigid demand in resource rises while the backup base of mineral resources that can be developed in our country is in serious shortage and the production growth rate of the main energy mineral resources is significantly lower than the growth in consumption. Especially because geological exploration lagged behind in the past and mine construction needs time, increasing reserves will not immediately be transferred into supply capacity at present stage. The contradiction between supply and demand of domestic mineral resources becomes more prominent.
The economists expect that China’s economy will remain about 7.5% growth a year during the next 10 to 20 years. This also means that the imbalance between mineral resources supply and demand in our country is not a short-term problem. According to the measurement, the peak demand for mineral resources in our country will generally appear in 2025 ~ 2035, and then may fall steadily. It is visible that the tense situation of China’s mineral resources will become tight for a long time. Resources and energy security situation is grim.
Sustainable supply of mineral resources is the basic guarantee for the sustainable development of social economy. There is historic and strategic significance for China, the biggest developing country, to construct ecological civilization and ensure the supply of mineral resources. However, how can we just provide reliable mineral resources to realize the sustainable development of society and economy and China’s dream?
Efforts are intensified to develop and utilize mineral resources more economically and intensively, which means “tapping new sources of supply” and “throttling”. The so-called “tapping new sources of supply” is to find more mineral resources and use technology to promote the founding of the deep mineral resources. “Throttling” basically is to improve the comprehensive utilization of resources and explore the utilization of low grade and refractory ores.
In recent years, the central government has attached great importance to the geological prospecting and emphasized repeatedly that resource security should be based on the domestic. In October 2011, executive meeting of the State Council examined and approved “The Prospecting Breakthrough in Strategic Action Outline” (2011-2011), describing the blueprint for geological prospecting work in the new period, also proposing new challenge to the development of minerals and the protection of the environment. Subsequently, Land and Resources, the National Development and Reform Commission, Science and Technology, Finance jointly launched the prospecting breakthrough strategic actions, and formulated the “358” target. Up to now, the action has been implemented for three years, and got a satisfactory result.
In recent years, the Ministry of Land and Resources has attached great importance to comprehensive utilization and saving of mineral resources, made a series of policies and took measures in law, science, technology, economy, and obvious achievements were obtained. For example, in 2010, the Ministry of Finance, the Ministry of Land and Resources, set up special fund for saving and comprehensive utilization of mineral resources. During the past three years, special funds of RMB9.5 billion has been invested, promoting mining enterprises to invest more than RMB70 billion and increasing output value of nearly RMB200 billion. Mining recovery rate, ore dressing recovery and comprehensive utilization increased by 3 to 4% on average, activating a batch of low grade and refractory ores.
From the perspective of speeding up the construction of ecological civilization, in order to further improve the economical utilization level of mineral resources in our country, it will be necessary, in accordance with the requirements and ways of “The Decision”, to strengthen market access standards of economize on energy, land and water, environment, technology and safety; establish and improve a long-term effective mechanism to prevent and dissolve excess production capacity; correct the simple achievements’ assessment towards economic growth rate and increase weight of resource consumption, environmental damage, ecological benefit, excess production capacity, technological innovation, production safety, new debt and other indexes; practice a system of paid use of resources and the ecological compensation system, accelerate price reform of the natural resources and its products; persist in consistent use of resources, and gradually extend the tax to various space occupying natural ecology, etc.
As to mineral resources conservation, we think that, on the one hand, sole ore can be multi-ore, small ore bigger, lean ore rich to improve resource support capability; on the other hand, make waste profitable, reduce waste emissions, construct “green mining” to protect the natural environment. Furthermore, try to establish the “trinity” model of resource management with quantity, quality, and ecology. Specifically speaking, special attention should be paid to the following aspects:
First of all, we should continue to prospect the basis in domestic. The geological condition of our country is very superior and potential of prospecting the basis is enormous. But there are some of the problems that need solving at present. For example, geological conditions of metallogenesis and evolution history are complex in our country. Especially due to the complicated phase transformation, it is necessary to bring forth new ideas in the metallogenic theory with Chinese characteristics to guide the prospecting. As a result of the present backward exploration technology and obsolete equipment in our country, it is difficult to deal with the deep concealed deposits and ore prospecting, and the development of new prospecting technology and new large-scale equipment is in urgent need.
Secondly, try to get more overseas resources with more economic and safe way in the optimal allocation of global resources. The essence of the economic globalization is that all kinds of production factors and resources flow freely and allocate optimally across borders in the global scope, among which global optimal allocation of mineral resources is one of the most important parts. Only in this way can China attract the resources around the world to be allocated in China, and China will “go out” to allocate the global resources.
Thirdly, the government departments should play the role in strengthening the land and resources management especially the top-level design of mine administration management. We need to improve the relevant laws and regulations and provide legal protection for the comprehensive utilization of mineral resources. A non-profit team should be organized to research the comprehensive utilization of mineral resources to guarantee government investment in science and technology, concentrate efforts on carrying out the basic research in mineral resources developing and applying and comprehensive utilization and shoulder the dual responsibility of protecting resources and supervising the development and utilization. The local government’s illegal manipulation of the mining right, extensive and inefficient predatory developing and even waste of precious resources should be punished seriously and corrected promptly.
Fourthly, encourage and urge enterprises to carry out independent innovation, raise the scientific and technological level of comprehensive utilization of mineral resources by adopting energy saving technology, and accelerate the technique reform and update of mineral extraction and processing equipment. Geological conditions of metallogenesis of most minerals in our country have decided that most of them are lean ore and many are coexist and associated minerals resources. Among the proven mineral resources, there are many low grade and refractory mineral resources without the proper technical and economic conditions for developing and utilizing, and there are also residual ore, tailings and waste formed in the developing process. According to the comprehensive analysis of primary mineral resources, secondary mining resources and regenerated metal resources, the comprehensive utilization potential is up to 60%; even the minimum is higher than 40%, with an average of about 50%. Therefore, it is especially important to strengthen the technology research and developing and carry on the independent innovation.
Fifthly, make research in developing new technology and alternative resources. At present, a batch of new technology in resources research spring up, showing a good prospect for large-scale industrialization. The essence is to change stone or industrial waste into useful resources with high value through the technological innovation. Under the background of the current international financial crisis and economic downturn, the new resources industrial cluster forced by the new technology, as well as the new energy industry, becomes a new engine to pull economic growth. Therefore, research and developing of new energy technology need conscious planning, cultivating and funding support of the whole society, especially from the government. This is also an important part of building a creative country. It is suggested that the government form a fund for new energy technology relaying mainly on government capital and supplemented by enterprises capital and social donation.
Sixthly, dissolve the serious overcapacity problem in steel, cement, electrolytic aluminum, flat glass, ship and other industries in accordance with the “Instruction on Resolving the Problem of Severe Overcapacity” printed and distributed by the state council. Respect the market rule and improve macroeconomic regulation and control, strive to play the role of market mechanism, and strengthen the study and judge in the trend of market supply and demand as well as information guide. Enterprises should play the role as the market’s body and strengthen their sense of responsibility; make comprehensive use of legal, economic, and macro-control means if necessary to perfect the supporting policies, strengthen policy coordination and join forces to resolve the serious overcapacity and guide the healthy development of the industry, so as to get the overcapacity “digested, transferred, integrated, and eliminated” respectively; focus on mechanism innovation, accelerate the change of government function, and promote industrial transformation and upgrading. (Translated by TLRHVC)
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