Chinese Business Guide Mining Volume China

Transcription

Chinese Business Guide
Mining Volume
China Council for the Promotion of International Trade
Economic Information Department
October, 2007
Chinese Business Guide (Mining Volume)
Contents
1
WORLD MINERAL RESOURCE DISTRIBUTION AND WORLD MINING
INDUSTRY DEVELOPMENT......................................................................................................1
1.1
WORLD MINERAL RESOURCE DISTRIBUTION ......................................................................1
1.2
DISTRIBUTION AND DEVELOPMENT TREND OF FERROUS METAL MINES IN THE WORLD......3
1.2.1 Rich resource of ferrous metal mines in the world .......................................................3
1.2.2 Ferrous metal mines are distributed in a few countries.................................................4
1.2.3 Large-size ferrous metal mines in the world .................................................................4
1.3
WORLD NONFERROUS METAL MINERAL DISTRIBUTION AND DEVELOPMENT TREND ..........7
1.3.1 World copper mine resource..........................................................................................7
1.3.2 World lead and zinc resources.....................................................................................13
1.3.3 World magnesium resources .......................................................................................16
1.4
WORLD MINERAL RESOURCES PROSPECTING ...................................................................17
1.5
DEVELOPMENT OF WORLD MINING INDUSTRY .................................................................20
1.5.1 Development of mining industry in major countries...................................................20
1.6
DEVELOPMENT OF WORLD MINING TECHNOLOGIES .........................................................22
1.6.1 Development of mineral prospecting technologies .....................................................22
1.6.2 Development of mining technologies .........................................................................23
1.6.3 Development of mineral processing and metallurgy...................................................25
1.6.4 Development of mineral utilization technologies........................................................26
1.7
MINING POLICIES IN MAJOR COUNTRIES ..........................................................................27
1.7.1 Developed countries....................................................................................................27
1.7.2 Developing countries ..................................................................................................30
1.7.3 Policies encouraging enterprises to explore foreign mineral resources ......................32
1.8
WORLD MINING MARKET .................................................................................................37
1.8.1 Iron & steel market drives continuous increase in prices of black metal ores ............37
1.8.2 Demand drives continuous increase in prices of major nonferrous metals in
international market ................................................................................................................39
1.8.3 Multinationals dominate world nonferrous metal industry by controlling metal
resources .................................................................................................................................42
1.8.4 Production transferred to low-cost regions .................................................................43
1.8.5 Increasing M&A by world mining powers..................................................................44
1.9
WORLD MINING COMPANIES ............................................................................................47
1.9.1 Global top 25 metal mining companies in 2005..........................................................47
1.9.2 Anglo American Plc ....................................................................................................49
1.9.3 CVRD..........................................................................................................................50
1.9.4 BHP.............................................................................................................................51
1.9.5 Rio Tinto plc................................................................................................................53
1.9.6 JSC MMC Norilsk Nickel ...........................................................................................55
2
CHINESE MINERAL RESOURCES .................................................................................57
2.1
2.2
NATURAL CONDITIONS OF CHINESE MINERAL RESOURCES ..............................................57
PROSPECTING AND EXPLOITATION OF CHINESE MINERAL RESOURCES .............................58
i
2.3
PROTECTION OF CHINESE MINERAL RESOURCES..............................................................59
2.4
DISTRIBUTION OF MAJOR MINERAL RESOURCES IN CHINA ..............................................61
2.4.1 Distribution features of Chinese mineral resources.....................................................61
2.4.2 Main production bases of resource-type minerals.......................................................64
2.4.3 Distribution of ferrous metal minerals ........................................................................68
2.4.4 Distribution of nonferrous metal minerals ..................................................................69
2.5
SUPPLY AND DEMAND TREND OF MAJOR MINERALS IN CHINA .........................................73
2.5.1 Supply and demand status of ferrous metal minerals..................................................73
2.5.2 Supply and demand status of nonferrous metal minerals............................................75
3
DEVELOPMENT OF CHINA’S MINING INDUSTRY ...................................................80
3.1
DEVELOPMENT STATUS OF CHINA’S MINING INDUSTRY ...................................................80
3.1.1 General scale of China’s mining industry ...................................................................80
3.1.2 Investment situation of mining industry......................................................................81
3.1.3 Exploration of minerals and resources reserves ..........................................................82
3.1.4 Mining exploitation and mineral production...............................................................83
3.1.5 Import and export trade of minerals............................................................................84
3.1.6 The price of the mineral products ...............................................................................85
3.1.7 Analysis of future trend of the mining industry ..........................................................87
3.2
MARKET TEND OF MAJOR INDUSTRIES .............................................................................90
3.2.1 Analysis on iron ore market trend ...............................................................................90
3.2.2 Analysis on copper market trend.................................................................................97
3.2.3 Analysis on aluminum market trend .........................................................................100
3.2.4 Analysis on gold market trend ..................................................................................102
3.2.5 Analysis on zinc market trend...................................................................................104
3.2.6 Analysis on lead market trend...................................................................................106
3.2.7 Analysis on nickel market trend................................................................................109
3.2.8 Analysis on tin market trend ..................................................................................... 110
3.2.9 Analysis on platinum and palladium market trend.................................................... 113
4
DEVELOPMENT CLIMATE OF CHINA’S MINING INDUSTRY.............................. 115
4.1
POLICY CLIMATE ............................................................................................................ 115
4.1.1 Transfer of mining rights........................................................................................... 115
TRANSFER OF MINING RIGHT BY MEANS OF AUCTION ............................................ 116
4.1.2 Integration of mineral resources................................................................................ 117
4.1.3 Conservation and comprehensive utilization of mineral resources ...........................120
4.2
OVERSEAS INVESTMENT OF MINING ..............................................................................143
4.2.1 Promotion of overseas investment for Chinese mining enterprises ..........................143
4.2.2 Notable achievements of “going out” strategy in mineral resources exploitation.....145
5
STATISTIC DATA ..............................................................................................................151
5.1
ECONOMIC INDEXES OF FERROUS METAL ORE MINING AND DRESSING INDUSTRY DURING
2004-2006 .................................................................................................................................151
5.1.1 Economic indexes of ferrous metal ore mining and dressing industry during
ii
2004-2006 .............................................................................................................................151
5.1.2 Economic indexes of iron ore mining and dressing industry during 2004-2006.......153
5.1.3 Economic indexes of other ferrous metal ore mining and dressing industry during .154
5.2
ECONOMIC INDEXES OF NON-FERROUS METAL ORE MINING AND DRESSING INDUSTRY
DURING 2004-2006 ....................................................................................................................156
5.2.1 Economic indexes of non-ferrous metal ore mining and dressing industry during
2004-2006 .............................................................................................................................156
5.2.2 Economic indexes of common non-ferrous metal ore mining and dressing industry
during 2004-2006 ..................................................................................................................157
5.2.3 Economic indexes of copper ore mining and dressing industry during 2004-2006 ..159
5.2.4 Economic indexes of plumbum and zinc ore mining and dressing industry during
2004-2006 .............................................................................................................................160
5.2.5 Economic indexes of nickel and cobalt ore mining and dressing industry during
2004-2005 .............................................................................................................................161
5.2.6 Economic indexes of tin ore mining and dressing industry during 2004-2006.........163
5.2.7 Economic indexes of antimony ore mining and dressing industry during 2004-2005
164
5.2.8 Economic indexes of aluminium ore mining and dressing industry during 2004-2006
166
5.2.9 Economic indexes of magnesium ore mining and dressing industry during 2004-2005
167
5.2.10 Economic indexes of other non-ferrous metal ore mining and dressing industry
during 2004-2005 ..................................................................................................................169
5.3
STATISTIC DATA OF IRON ORE IMPORT AND EXPORT IN 2006...........................................170
5.3.1 Statistic data of import and export of iron ore, iron and steel products and steel billet
in 2006 ..................................................................................................................................170
5.3.2 Statistics of iron ore and ore concentrate (including roasting pyrite) export in 2006171
5.3.3 Statistics of iron ore sand and ore concentrate (including roasting pyrite) import in
2006 172
6
BRIEF INTRODUCTION TO ENTERPRISES ..............................................................174
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
7
ALUMINUM CORPORATION OF CHINA (CHALCO) ........................................................174
CHINA MINMETALS CORPORATION ................................................................................176
YUNNAN CHIHONG ZN&GE CO. LTD. ...........................................................................177
CHINA NONFERROUS METAL MINING (GROUP) CO., LTD..............................................179
CHINA NATIONAL GOLD GROUP CORPORATION ............................................................182
SHOUGANG MINING CORP. ............................................................................................183
ZIJIN MINING GROUP COMPANY LIMITED .....................................................................184
JIANGXI COPPER CORPORATION ....................................................................................186
APPENDIX ..........................................................................................................................188
7.1.1 Opinions on Integrating Mineral Resource Exploitation...........................................188
7.1.2 Circular on Printing and Distributing the Working Plan of Rectifying and
Standardizing the Mineral Resource Exploitation Order in 2007 .........................................195
7.1.3 Circular about Further Regulating the Management of Transfer of Mining Right....201
iii
7.1.4 The Circular on Strengthening Reform of the System for Obtaining Mineral
Exploration Rights and Mining Rights for Value..................................................................205
7.1.5 Aluminum industry access conditions.......................................................................208
7.1.6 Cooper smelting industry access conditions .............................................................217
7.1.7 Lead and zinc industry access conditions..................................................................221
7.1.8 Tungsten industry access conditions .........................................................................230
7.1.9 Stannum industry access conditions..........................................................................234
7.1.10
Antimony industry access conditions....................................................................239
7.1.11
Electrolyzed manganese enterprise industry access conditions ............................244
7.1.12
Circular of Standardizing the Lead and Zinc Trade Investment Act,Quickening
Structure Adjustment Guiding Suggestion ............................................................................248
7.1.13 Circular on Adjusting the Applicable Tax Rate of Resources Tax for Lead and Zinc
Ores and Other Ores..............................................................................................................255
iv
1 World mineral resource distribution and
world mining industry development
1.1 World mineral resource distribution
The mine resource is fundamental to social and economic development in all countries. According
to the research of the Information Centre of the Ministry of Land and Resources, geographical
distribution of world mine resource is not proportional. Among 40 major mines, 13 mines
(manganese, chromium, cobalt, molybdenum, vanadium, platinum family metals, lithium, niobium,
tantalum, zirconium, rare earths, sylvite, and natural alkali) have their 3/4 reserve centered in three
countries, and 23 mines (tungsten, magnesite, ilmenite, rutile, tin, stibium, phosphor, boron,
diamond, barite, plus the abovementioned 13 mines) have their 3/4 reserve centered in five
countries. The lowest proportion of the reserve of the top three countries with the largest reserve
of the major forty mines in the total world reserve is 30.7%, and the highest proportion 99.5%.
The lowest proportion of the reserve of the top five countries with the largest reserve of the major
forty mines in the total world reserve is 45.8%, and the highest proportion about 100%.
Table 1-1 World mine distribution by countries in 1999
Mine
Major mining countries and the proportion of the country’s
reserve in the total reserve (%)
Iron
Ukraine
16.2
Russia
14.9
Australia
14.9
China
10.5
USA 8.6
Manganese
South
Africa
54.4
Ukraine
19.9
Gabon 6.6
China 5.9
Australia 4.1
Chrome
South
Africa
81.1
Kazakhstan
11.1
Zimbabwe
3.8
Finland
1.1
India 0.7
Nickel
Russia
16.5
Cuba 13.8
Canada
3.3
New
Caledonia
11.3
Australia 9.3
Cobalt
Congo
46.5
Cuba 23.3
Australia
9.3
Zambia
6.97
New
Caledonia
5.3
Tungsten
China
43.5
Canada 13
Russia
12.5
USA 7
Korea 2.9
Molybdenum
USA
49.1
Chile 20
China 9.1
Canada
8.2
Russia 4.4
1
Vanadium
Russia
50
South
Africa 30
China 20
USA 0.5
Copper
Chile
25.9
USA 13.2
Poland 5.9
Russia
5.9
Indonesia 5.6
Plumbum
Australia
27.3
China 13.6
USA 9.8
Canada
5.3
Kazakhstan 3
Zinc
Australia
18.9
China 17.4
USA 13.2
Canada
7.4
Peru 3.7
Alumyte
Guinea
29.6
Brazil 15.6
Australia
12.8
Jamaica 8
India 6
Magnesite
China 30
Russia 26
North
Korea 18
Turkey
2.6
Brazil 1.8
Ilmenite
Australia
24.8
South
Africa 19.3
Norway
12.2
Canada
9.5
China 9.2
Rutile
Australia
39.5
South
Africa 19.3
India 15.3
Sri Lanka
11.2
Sierra Leone
7.2
Tin
China
27.3
Brazil 15.6
Malaysia
15.6
Thialand
12.2
Indonesia 9.7
Stibium
China
42.9
Russia
16.7
Bolivia
14.8
South
Africa
11.4
Kyrgyzstan
5.7
Hydrargyrum
Spain
63.3
Kyrgyzstan
6.3
Algeria
1.7
USA
Italy
Bismuth
China
18.2
Australia
16.4
Peru 10
Bolivia
9.1
Mexico 9.1
Gold
South
Africa
41.1
USA 12.4
Australia
8.9
Russia
6.7
Uzbekistan
4.4
Silver
Canada
13.2
Mexico
13.2
USA 11.8
Australia
10.4
Peru 8.9
Platinum
series
South
Africa
88.7
Russia 8.7
USA 1.0
Canada
0.4
Lithium
Chile
88.2
Canada 5.3
Australia
4.4
USA 1.1
Zimbabwe
0.7
Niobium
Brazil
94.3
Canada 4.0
Nigeria
1.8
Congo
0.9
Australia 0.3
Tantalum
Australia
57.9
Nigeria
16.8
Canada
9.5
Congo
9.5
Brazil 4.7
Zircon
South
Africa
39.7
Australia
25.3
Ukraine
11.1
USA 9.4
India 9.4
Rare earth
China 43
CIS 19
USA 13
Australia
5.2
India 1.1
2
Sulphur
Canada
11.4
USA 10
Iraq 9.3
Poland
9.3
China 7.1
Phosphor
Morocco
and West
Sahara
49.2
South
Africa 12.5
USA 10
Jordan
7.5
Brazil 2.8
Potassium
Canada
52.4
Russia
26.2
White
Russia 9.5
Germany
8.6
China 3.8
Boron
USA
23.5
Russia
23.5
Turkey
17.6
China
15.9
Kazakhstan
8.2
Data source: Information Centre of the Ministry of Land and Resources
1.2 Distribution and development trend of ferrous metal mines
in the world
1.2.1 Rich resource of ferrous metal mines in the world
According to a report of the USGS (U. S. Geological Survey), the iron ore reserve in the world is
160 billion tons, reserve base 370 billion tons, iron metal reserve 80 billion tons, and reserve base
180 billion tons at the end of 2004. The iron mines are centered in Australia, Brazil, Russia,
Ukraine, Kazakhstan, India, USA, Canada, and South Africa.
The manganese resource is rich in the world. The manganese reserve on the land is 900 million
tons (metal weight is used below). The USGS predicted the annual manganese demand in 2000
would be 807-1379 tons based on the manganese demand increase speed of 1.4% in 1983, and the
current reserve was enough for use for over 50 years. The reserve base is four times of the reserve.
The benthal manganese reserve is richer. There are 400 billion tons on the bed of the Pacific
Ocean. Moreover, 10-15 million tons of manganese nodule are generated per year.
The chromite reserve in the world is 1,056,890,000 tons (commercial ore). The original chromite
demand was 2.49 million tons in 1983. If the average annual increase speed was 4.9%, the demand
volume is 5.66 million tons in 2000. The chromite reserve can be used for over 150 years from
now on. Someone estimates the mining time is 346 years.
The nickel reserve in the world is 52.62 million tons. In 1982, the nickel consumption volume was
680,000 tons in the world. If the average annual growth rate was 3.1%, the demand volume would
be 1.3 million tons in 2000. The current reserve can be used for over 53 years. Someone estimates
that the mining time of static reserve of nickel in the world is 76 years.
3
The reserves of cobalt, tungsten, molybdenum, and nickel are respectively 3.63, 2.8, 5.44, and
4.35 million tons, and the guarantee mining time is long. The mining time of cobalt on the land is
105 years, tungsten and molybdenum 50 years, and vanadium 50 years.
1.2.2 Ferrous metal mines are distributed in a few countries
Iron ores are reserved in the former Soviet Union, USA, Brazil, Australia, Canada, India, South
Africa, Sweden, France, Venezuela, and Liberia. The reserve in these countries accounts for 90%
of the total reserve in the world, and the reserve in the former Soviet Union, USA, Brazil,
Australia, and Canada accounts for 75% of the total reserve.
Manganese mines are mainly reserved in South Africa, the former Soviet Union, Cabon, Australia,
Brazil, and India. The reserve in these countries accounts for 99% of the total, and 80% of the
reserve is located in South Africa and the former Soviet Union.
Chromite mines are reserved in South Afirca, the former Soviet Union, Zimbabwe, Finland, India,
and the Philippines. The reserve in these countries accounts for 96% in the total, and the reserve in
South Africa and the former Soviet Union accounts for 91% in the total.
Nickel mines are mainly located in Cuba, Canada, the former Soviet Union, Indonesia, South
Africa, Greece, and Australia. The reserve in these countries accounts for 82% in the total.
Besides, reserves of cobalt, tungsten, molybdenum, and vanadium are centered in a few countries.
The reserves in top five countries with the largest reserve volume of the four metals account for
90%, 80%, 95%, and 99% in the total reserve in the world, and the reserves in top three countries
with the largest reserve volume of the four metals account for 76%, 70%, 96%, and 94% in the
total reserve in the world (Table 2).
Among iron and ferroalloy metal mines, the former Soviet Union, Australia, South Africa, Canada,
Brazil, India, China, and the USA have more than three kinds of metal, and the reserve of each
kind of metal ranks among the top 10 in the world, where the former Soviet Union has 10 kinds of
metals, Australia 6, South Africa 5, Canada 5, India 4, Brazil 4, China 3, and the USA 3.
1.2.3 Large-size ferrous metal mines in the world
There are quite a few large-size or super large-size iron mines and ferrousalloy metal mines in the
world. Super large-size iron mines include Kursk magnetic anomaly area in Russia with
prospected reserve of 42.6 billion tons, Krivoy Rog iron mine basin in Ukraine with surplus
reserve of 20.1 billion tons, Hamersley iron mine area in Australia with the reserve of 32 billion
tons, Minas Gerais Iron Quadrangle area in Brazil with 100 iron deposits and reserve of 22 billion
4
tons, Carajas iron ore area in Brazil with proven reserve of 17.7 billion tons of rich iron ore, and
Labrador iron ore area in Canada with the reserve of 20.6 billion tons of iron ore. In Kursk
magnetic anomaly area in Russia, iron-carried quartzite has 32-36% of iron, and rich ore has
54-62% of iron. The proven and predicted reserve of rich ore is estimated to be 82 billion tons,
and the resource amount within 600m is estimated to be 290 billion tons. According to the
documents in 1970, the proven reserve of iron ore is 42.6 billion tons, including 26.1 billion tons
of rich ore reserve. In Hamersley iron mine area in Australia, hematite ore and hematite-goethite
ore has 54-62% of iron, and limonite ore has 50-54% of ore. The total reserve is 32 billion tons.
There are 24.9 billion tons of ore with the iron content proportion at 54-64%. Besides, there are
6.4 trillion tons of jaspilite that has over 30% of iron, and the jaspilite can be exploited in open-pit
mining.
Super large-size manganese mines at above one billion tons include Kalahari deposit in Kuruman
area in South Africa, which is a degenerative deposit, and Nikopol-Great Tokamak deposit beside
the Dneper River in Ukraine, which is a sediment bed.
Large-size chromite mines include the chromite deposit in Bushved complex rocks in South Africa,
chromite deposit in the large rock wall in Zimbabwe, and Kempirsai chromite deposit in Southern
Urals in Russia.
Large-size mines and deposits of other ferrousalloy metals include New Caledonia ruddle nickel
deposit, Sudbury copper sulphide nickel mine in Canada, Norilsk copper sulphide nickel mine in
Russia, Kambalda copper sulphide nickel mine in Australia, Kamoto Musono copper-cobalt
deposit in Zaire, tungsten mine in the south of Junggar-Balkhash area in Kazakhstan, Telnel-Aoz
tungsten-molybdenum mine in Caucasia, Maktoum tungsten deposit in Canada, Climax
molybdenum
deposit
in
Clolrado,
USA,
Endako
molybdenum
deposit
in
Canada,
vanadium-titanium magnetite layer in Bushved complex rocks in South Africa, and
kaqikanel-Gushevog vanadium-titanium magnetite layer in East Urals in Russia.
Table 1-2 Large-size iron mines in the world
Country
Mine
Reserve/
Grade
Percentage
Relevant famous iron mining
100
Fe%
/% in the
company
M
tons
reserve of
the
country
Australia
Hamersley
320
57
91
Hamersley
Corporation
and
BHP
Brazil
Iron
300
35—69
65
CVRD and MBR
Quadrangle
5
Brazil
Carajas
180
60—67
35
CVRD
Bolivia
Mutun
580
50—53
and Brazil
(Bolivia)
67
>60
29
MMTC
Not exploited due to hard traffic
Urakum
(Brazil)
India
Bihar
and
Orissa
Canada
Labrador
206
36-38
51
IOC and QCM
USA
Superior
163
31
94
Minntac, Empire Iron Mine,
Hibbing
Corporation,
and
Tilden Corporation
Russia
Kursk
and
575
46
50
kaqikanel
Ukraine
Kryvyy Rih
Lebkin, Mikhailov, Stoilian, and
kaqikanel
194
36
17
Engulez, South, North, and Mid
Mining
France
Lorraine
77
33
95
Sweden
Kiruna
34
58—68
66
LKAB
Venezuela
Bolivar
20
45—69
99
CVG Ferrominera Orinoco CA
Liberia
Ninba
20
57--60
and
area
mine
Guinea
Three important iron mines in the world will be put into production in 2007, and the three mines
are all located in Western Australia State, Australia.
1. Pilbara open-pit mining project (60% of Iron Ore Australia and 40% of Fortescue Metals
Group): The ore resource amount is 2.367 billion tons, the ore grade is Fe58.18%, the annual ore
throughput during initial phase is 45 million tons and can be increased to 60 million tons, and
production starts at the end of 2007. The project investment is US$1.51B, where US$0.621B is
used for port construction, US$0.435B for railway and vehicles, US$0.093B for ore loading
equipment at the port, and US$0.365B for construction management. In addition, US$0.272B
(exclusive to US$1.51B) is needed for mining and separation.
2. George Palmer open-pit mining project（International Minerals 100%）: The ore reserve is 800
million tons, the ore productivity is seven million tons per year, and the mine lifespan is 30 years.
Mine construction started in 2005, and the mine will be first put into production at the end of 2007.
The project investment was US$1.33B. The company and China Wuhan Iron and Steel Group
signed a long-term ore supply memo of US$20B. The company supplies five million high-grade
6
iron ore each year, and the provision period is 25 years. Wuhan Iron and Steel will 50% shares of
the company.
3. Extension Hill open-pit mining project（Shougang Group 50% and Asia Iron Holding 50%）:
The ore resource amount is 268 million tons, including 255 million tons of magnetite ore and 13
million tons of iron ore. Ore grade is Fe45.46%, and mill run throughput is five million tons per
year. High-grade magnetite includes 68% of Fe, and mine lifespan is 20 years. The project
investment is US$582M, where US$497M is used for mining and mill run in Western Australia,
and US$85M is used to set up a ball agglomeration factory in China. A bank feasibility research
report of US$7.75M was completed in October 2005, and the start date is March 2007.
1.3 World
nonferrous
metal
mineral
distribution
and
development trend
1.3.1 World copper mine resource
In the past decade, the output of copper mines in the world increased continuously. In 2004, the
output of copper concentrate was 14,488,000 tons, which was the highest annual output in the
history. The average annual growth rate was 2.29%. Major mine copper manufacturers comprise
of Chile (accounting for 37.4% in the total output of the world), the US (8.0%), Peru (7.1%),
Australia (5.9%), Indonesia (5.7%), Russia (5.1%), and China (4.2%). At present, the copper
output of copper concentrate in Chile accounts for 1/3 in the world, and the output in China ranks
at the seventh place in the world. States whose copper output of copper concentrate decreased
compared with 2000 include the US (decreasing by 5.74%), Indonesia (5.12%), Canada (3.0%),
Papua New Guinea (4.03%), and South Africa (14.4%). Large-size and super large-size copper
mines that have been prospected in the world are under exploitation, so the mine copper output
grows stably in the world.
Copper mines are divided into porphyry type, sand shale type, copper-nickel sulfid type, pyrite
type, copper-uranium-gold type, natural copper type, pulse type, carbonic acid rock type, and
silicon rock type.
Porphyry copper mine has high reserve and low grade, and can be mined opencast with large-scale
machinery. The reserve of this kind of copper mine is several hundred million tons, and the copper
grade is often less than 1%. The average ore amount of each mine of 103 porphyry mines in the
world is 550 million tons, and the average copper grade is 0.6%. This is one of the important
copper industry type in the world. Prospected porphyry copper mines are distributed: a) around the
Pacific Ocean, including the narrow belt at the edge of South America and North America, such as
7
Lonex and Falicpa in Canada, Bingham, Butte, Morenci, Yily, and Santa Rita in the US, Cananea
and Racridera in Mexico, Cerro Colorado in Panama, Mechigily, Cerro Verde, and Cuajone in
Peru, El Abra, Chuquicamata, La Escondida, EI Salvador and El Tester in Chile; b) Tethys
porphyry copper mine belt, including Lexsk in Hungary, Maidan Pek in Yugoslavia, Sar
Cheshmeh in Iran, and Chargy in Pakistan; and c) Middle Asia, including Mongolia, Karl Makel
in the east of Uzbekistan, Kounrad to the north of Balkhash Lake in Kazakhstan, Charganz Bulga
in the south of Eldertu Janelb and Alenel in the east of Eldertu Janelb in central northern Mongolia
Sand shale copper mine refers to the layer-control copper mines in sediment of different ages. The
deposit is generated from a set of sediment rock or sediment transformation rock. Sand shale
copper is one of the major copper mine types in the world, accounting for around 30% of world
copper reserve. The deposit is characterized by large size, high grade, and multiple satellite
components, so the economic value is very high. Apart from the abovementioned copper mine
belts, deposits of this kind are widely distributed in Udokan and Dzhezkazgan in the former Soviet
Union, White Pine and Belt copper belt that extends to the southwest of Canada in Montana State,
US, Colo Colo copper belt in Bolivia, Akinak large-scale copper mine in Afghanistan, and Saloba
in Brazil. The last two copper mines were found in recent years.
Pyrite copper mine refers to the deposit that relates to seabed volcanism and contains high-volume
copper, lead and zinc, and is called block sulfide deposit in the west. At least 420 such type of
deposits have been found in the world, mainly in Canada, America, the former Soviet Union,
Spain, Portugal, Cyprus, South Africa, and Japan.
Block sulfide mine was first found on the raphe of east Pacific Ocean, north latitude 21°, in 1978.
The grades of copper (6%) and zinc (29%) are high. On the raphe, a multi-metal block sulfide
deposit was found. The bed is 970m long, 200m wide, and 35m high, and has 250 million tons of
mineral amount. This was the first bed that qualified for industrial exploitation. The highest
copper content is 11%, and zinc 0.8%. The ore also contains silver (PPM), molybdenum (0.03%)
and tin (0.03%). Important deposits of this type consist of Sudbury, Thompson, and Linlyc in
Canada, Duluth complex rock in the US, Pechenga, Noril’sk-Talnakh, and “October” in the former
Soviet Union, Kambartel complex rock in Australia, Goderah belt in Finland, and super-large-size
Baijiajuzi mine in Jinchuan, China.
Apart from the above types, there are also pulse type, natural copper type, carbonic acid rock type,
and silicon rock type, and these types account for 3.6% of world total copper reserve. These types
are important for some countries. Silicon rock type is an important industrial type in China, and
the copper of this type accounts for 28% of the total copper reserve in China. East state should
seek high-quality deposits with high value, high grade, large size, proper shape, and clear mine
boundary according to specific geological conditions. The ore should be easy to process, and
8
should have valuable by-products in order to make high profit and realize long-term production.
The most important factor is high grade, and high-grade copper deposit mainly comes from pyrite
copper mine caused by volcanism, layered deposit, and some silicon rock deposit.
Global or regional copper mine zones and belts comprise (1) Mid Cenozoic copper-gold belt
around the Pacific Ocean, in particular porphyry copper mine zones in Chile-Peru Andes in east
Pacific Ocean, southwest of America, and southwest of Canada, and porphyry copper-gold mine
zones in the Philippines, Indonesia, and Papua New Guinea in southwest Pacific Ocean; (2)
Alps-Himalayas Mesozoic porphyry copper mine belt, including porphyry copper mines in
Yugoslavia, Iran, Pakistan, and Tibet, China; (3) Mid Asia-Mongolia Paleozoic porphyry copper
mine belt including Uzbekistan, Kazakhstan, Mongolia, and northeast China. (4) Sand shale
copper mine belt in Zambia and Zaire in central Africa; (5) Five-lake area in the US and Canada;
(6) Pyrite copper mine zone in Canada; (7) Shale copper mine zone in Poland and Germany in
central Europe; (9) Copper-nickel sulfid mine zone in Siberia in Russia; (10) Udokan sand shale
copper mine zone in Siberia in Russia; (11) Pyrite copper multi-metal mine zone in Urals, Russia
and Altai Mountains, Kazakhstan; (12) Copper mine zone in Malan Jkhand in India; (13) Sand
shale copper mine zone in Akinak, Afghanistan; (14) Copper-uranium-gold mine zone in Olympic
Dam in South Australia; and (15) Sand shale copper mine zone in Caro Jacksrob, Brazil.
Table 1-4 Major copper mines in the world
Discovery
Mine name
State
Mine ownership
time
Main
Copper
Total
metals
amount
asset
(ton)
value
(US$1M)
1992
Tampakan
The
WMC
Cu
6750000
16071.6
Philippines
Sepon
Laos
Rio Tinto
Cu
1028000
2548.9
Big Gossan
Indonesia
Freeport-McMoRan
Cu
1004688
1927.0
Cu
4950000
11486.0
80%
Government/Local
20%
1993
Agua Rica
Argentina
BHP Minerals 70%
American Resource
30%
1994
Voisey’s Bay
Canada
Diamond Fields
Ni
1010000
15089.4
Cadia Hill
Australia
Newcrest Mining
Au
743784
5718.2
Rio Blanco
Peru
Newcrest
Cu
3463000
6642.0
Mining
40% Phelps Dodge
9
60%
1995
Cadia East
Australia
Newcrest Mining
Au
1233424
4380.9
Coroccohuayco
Peru
Magma(BHP)
Cu
2171400
4376.9
Yanacocha
Peru
Newmont
Au
1924200
9555.4
Mining
40%
Buenaventural/FC
60%
Vizachitas
Chile
General Minerals
Cu
1698000
3613.9
Las Cruces
Spain
Rio Tinto
Cu
1051000
2015.8
Mantos De La
Chile
Lzquierdo
Cu
550000
1054.9
Luna
1996
Menendez
Toki Cluster
Chile
Codelco
Cu
10000000
19180.0
Spence
Chile
Rio Algom
Cu
4484000
8600.3
Sossrgo
Brazil
Phelps Dodge 50%
Cu
3194000
7212.9
Cu
3150568
6042.8
CVRD 50%
Kucing Liar
Indonesia
Freeport-McMoRan
45% Rio Tinto 40%
Government/Local
15%
1997
Gaby Sur
Chile
Codelco
Cu
2700000
5178.6
Ridgway
Australia
Newcrest Mining
Au
737000
4220.8
Reko Diq
Pakistan
BHP Minerals
Cu
5413000
13670.0
Mirador
Ecuador
Billiton(Shell)
Cu
4553000
10430.8
El Morro
Chile
BHP Minerals 50%
Cu
2837000
8186.4
67%
Cu
2720000
6987.8
Teck 55% Westen
Zn
2008000
5349.5
Metallica 50%
Alemao
Brazil
CVRD
BNDES 33%
San Nicolas
Mexico
Copper45%
1998
Salvador
Chile
Codelco
Cu
1143000
2192.3
Tintaya
Peru
BHP Minerals
Cu
3408700
7247.2
Conchi
Chile
Antofagasta
Cu
2347000
4501.5
Los Chancas
Peru
SPCC
Cu
2000000
4113.8
Cristalino
Brazil
CVRD
Cu
1568000
3525.8
Au
954000
11411.2
50%
BNDES50%
Telfer
Australia
Newcrest Mining
10
118 Target
Brazil
CVRD
50%
Cu
800000
1534.4
Cu
1200000
2533.1
2791000
10360.0
Cu
1500000
5770.6
BNDES50%
1999
Tuwu-Yandong
China
Xinjiang
Nonferrous Metals
2000
Esperanza
Chile
Antofagasta
Boyongan
The
Anglo
Philippines
70% Philex Gold
American
30%
Afton
Canada
DRC Resources
Cu
811000
2147.7
2001
Oyu Tolgoi
Mongolia
Ivanhoe
Cu
8385000
18268.7
2002
Lufua
Dominica
First Quantum
Cu
1025000
1966.0
97306764
255112.9
Total
Source: Metal Economics Group-Strategic Report，May/June 2004
Note: The total figures have errors caused by decimal carry.
From 2005 to 2007, nine copper mines with annual output of over 50,000 tons were put into
production in the world except for China. The total output of the nice mines is about 1.04 million
tons. If the output goals can be achieved, the output of the nine mines will account for around 7%
of the total world output.
The total sum of the reserve and resource amount of the nine mines is 26.36 million tons.
Feasibility research on the mines should be in accordance with current industrial standards, and
exclude non-economic reserve (inferred resource amount).
The average exploitation cost in cash is US$0.46/pound (US$1,013.13/ton). The cash operation
costs of five mines are below the average level, and the total reserve and resource amount of the
five mines is 12.84 million tons, accounting for 48.7% of the total amount of the nine mines. See
the following table:
Table 1-5 Newly exploited copper mines in the world from 2005 to 2007
Mine
Ownership
State
Reserve
and
resource
amount
(Cu ton)
Output
(ton/year)
Construction
time
Operation cost
(US
dollar/pound)
Milpillas
Industrias
Penoles
100%
Mexico
736000
55000
Q4 2005
0.32
Spence
BHP
Billiton
Chile
4040000
200000
Q3 2006
0.34
11
100%
Sepon
Oxiana
100%
Laos
970000
60000
Q1 2005
0.38
Rio
Blanco
Menterrico
Metals
100%
Peru
4224000
220000
Q3 2007
0.38
Kansanshi
Fiest
Quantum
Minearls
Zambia
3533000
145000
Q2 2005
0.45
80%
，
ZCCM 20%
Salobo
CVRD
100%
Brazil
7526000
100000
Q4 2006
0.47
Chapada
Yamana
Gold 100%
Brazil
1273000
59000
Q5 2006
0.51
Lumwana
Equinox
Minearls
100%
Zambia
3858000
150000
Q2 2007
0.7
Phu
Kham
Government
of
Laos
10%
Laos
864000
50000
Q4 2006
0.7
27024000
1039000
Total
/
average
0.46
Basic information of the nine mines:
Milpillas: This open-pit mine was constructed in 2002. In Q4 2005, the output reached the
expected goal. The life span is 12 years. The investment is US$205B.
Spence: Opencast, wet smelting (chemical method and bacteria method). Feasibility research was
finished in July 2005, and construction started in Q3 2006. In 2007, the output reached the
expected goal. The life span is 19 years. The investment is US$990B.
Sepon: pencast, wet smelting. Construction started in March 2005, and the output reached the
expected goal at the end of 2005. According to the resource amount and prospecting potential, the
future output can increase to at least 120,000 ton/year.
Rio Blanco: Feasibility research was finished in early 2006. Investment amount is US$789B.
By-products include molybdenum and silver.
Kansanshi: Commercial production started at the end of 2004. Copper concentrate from
November 2004 to April 2005 was 6,792 tons, and crude copper 1,941 tons. In 2005, US$2.9M
12
was invested to expand production, and the output reachs the expected goal in 2006-2009.
Salobo: The opencast mine has been put into commercial production. The productivity was
increased in October 2005. The life span is 42 years. The copper concentrate grade in the first ten
years of production is Cu38%.
Chapada: The opencast mine was put into commercial production at the end of 2006.
Lumwana: The opencast mine was expanded at the end of 2005, and was put into commercial
production in February 2007. The life span is 17 years, and the investment amount was US$387M.
By-products, such as cobalt, gold, and uranium, can help reduce cost.
Phu Kham: The feasibility research was finished in October 2005, and the output reached the
expected goal in 2006. The life span is 10 years. The investment amount is US$174B
There are another two mines without operation cost data. One is Escondida Norte in Chile
(ownership: BHP Billiton 57.5%, Rio Tinto 30%, Japanese consortium 10%, and International
Finance Corp 2.5%). The annual output can be heightened from 1.15 million tons per year to 1.25
million tons per year. The life span is 17 years, and the investment in production expansion is
US$400M. The other is Safford wet smelting project in Arizona, US (ownership: Phelps Dodge).
The productivity is 108,000 tons per year. It started production between end 2007 and early 2008.
The development of two deposits of Dos Pobres and San Juan needs investment of US$400-450M.
1.3.2 World lead and zinc resources
A bright prospect can be found in the prospecting of lead and zinc resources, which are abundant
in the world. By the end of 2005, lead mineral resources worldwide amount to over 1.5 billion
tons, including an extractable reserve of 67 million tons and a reserve base of 140 million tons;
Zinc mineral resources total more than 19 billion tons, including an extractable reserve of 220
million tons and a reserve base of 450 million tons. The measured lead and zinc mineral resources
are mainly distributed in such countries as Australia, U.S.A., Canada, Peru, South Africa,
Kazakstan and Mexico.
Table 1 Distribution of worldwide lead and zinc mineral resources
Unit: metal quantity: 10,000 tons
Country
Lead
Zinc
13
Reserve base
Proportion to the
Reserve base
Proportion to the
world total
world total
Australia
2800
20%
8000
18%
U.S.A.
2000
14%
9000
20%
Canada
900
6%
3100
7%
Peru
400
3%
2000
4%
South Africa
300
2%
Kazakstan
700
5%
Mexico
200
1%
2500
6%
World total
14000
100%
45000
100%
Data source: MINERAL SUMMARIES, 2006
Based on the actual exploitation volume in 2005, currently measured reserve base of lead and zinc
mineral resources alone may satisfy need of the whole world for another 43 years and 50 years
respectively.
Industrial types of lead and zinc deposits worldwide mainly include exhalative sedimentary
deposit, Mississippi valley deposit, sandstone deposit, pyrite deposit, skam deposit,
pyrometasomatic deposit and vein filling deposit, with the first four types of deposits as the main
ones. Measured lead and zinc reserves account for over 85% of the world total, being the key
target of current geological reconnaissance and exploitation. Particularly, exhalative sedimentary
lead and zinc ores boast not only huge reserve in a single deposit, but high grade as well.
Lead and zinc mineral resources worldwide are mainly distributed in the following areas:
Belt-Purcell Basin in west of North America, including Sullivan lead and zinc deposit located in
Canada (the extractable reserve of which surpasses 20.83 million tons and the grade of which is
11.9%) and Keerdarlanyin lead and zinc ore belt located in the U.S.A. (the extractable reserve of
which surpasses 10 million tons and the grade of which is 11.8%).
Selwyn basin in Yukon, Canada, with lead and zinc reserves totaling 900 million tons, which
includes Howards mineral area on the eastern edge of the basin (the extractable reserve of which
surpasses 8.5 million tons and the grade of which is 7.7% ).
The world-famous Kiddcrick deposit, which is located in Timins mine of the Canadian Shield,
boasts a lead and zinc reserve of 9.52 million tons and a combined grade of 6.42%; It also boasts a
14
copper reserve of 3.88 million tons and an average grade of 2.46%. Phil Flynn deposit, which lies
in Amisk ore belt, boasts a zinc reserve of 2.48 million tons and an average grade of 4.25%; It also
boasts a copper reserve of 1.35 million tons and an average grade of 2.185; Meanwhile, the
accompanying gold found in the deposit is 2.19 g/tons and accompanying silver is 40 g/ton.
Clanton deposit located in Superior structural area boasts a zinc reserve of 3.9 million tons and an
average grade of 6.5%; It also boasts a copper reserve of 0.85 million tons and an average grade of
4.82%.
More than 30 deposits have been measured in Bathust-Newcastle mineral area located in
Appalachian Region, Canada, among which, Brunswick No.12 deposit boasts a lead and zinc
reserve of over 10.7 million tons and a combined grade of 13%. About 100 deposits have been
found in Newfoundland ore belt, but most of them are medium and small size ones. Parkens,
located in the belt, boasts a zinc reserve of 1.08 million tons and an average grade of 6%; It also
boasts a lead reserve of 0.234 million tons and an average grade of 1.3%, and a cooper reserve of
0.374 million tons and an average grade of 1.57%; The accompanying gold is 1.5 g/ton and
accompanying silver is 100 g/ton.
The Red Dog deposit, located in the lead and zinc mineral area northwest of Alaskan, boasts a lead
reserve of 6.67 million tons and an average grade of 4.3%; It also boasts a zinc reserve of 24.95
million tons and an average grade of 6.1%. The accompanying silver boasts a total reserve of
12,865 tons and an average grade of 83 g/ton.
Lead and zinc mineral area in South America also includes Mississippi valley mineral area.
Multi-metal ore belt, located in middle and northern part of Peru, South America, is 1,000
kilometers long. And recent reports said huge lead and zinc deposits might lie in the belt. San
Gregorian alteration ore belt found in the 1990s, for instance, boasts a lead and zinc reserve of
6.93 million tons and a combined grade of 9.52%; Antamina skam deposit boasts a lead and zinc
reserve of 5.75 million tons and a combined grade of 10.3%.
Lead and zinc mineral areas in Australia mainly include: Mount IsaInlier, where at least six huge
and large sized multi-metal deposits are located, boasts a lead and zinc reserve of 11.69 million
tons and a combined grade of 13.2%; McArthur lead and zinc deposit, located on the eastern edge
of Patton trough area, boasts a reserve of 25.8 million tons and a combined grade of 13.6%;
Broken Hill mineral area boasts a lead and zinc reserve of at least 55 million tons and a combined
grade of 25%; More than 60 deposits have been measured in Redd volcanic-shaped ore belts
located in Tasmania Island, and at least four large-sized deposits can be found there, boasting a
15
lead and zinc reserve of 8.6 million tons and a silver reserve of 74 million tons.
Kazakhstan, which is the major area of lead and zinc concentration in Middle Asia, boasts three
ore belts: (1) In Altay copper-lead-zinc ore belt lie several large multi-metal deposits and some of
the deposits even extend into the territory of P.R.C. Among them, Leninnuogelsk deposit boasts a
lead and zinc reserve of 3.8 million tons, and grades of the compact ores are 15.25%(lead), 28.8%
(zinc), 248 g/ton (silver) and grades of the disseminated ores are 2.5% (lead), 5.1% (zinc), 0.11%
(copper) and 25.4 g/ton (silver); Jiliangnov deposit boasts a lead and zinc reserve of over five
million tons and grades of primary ores are 1.7% (lead), 2.9 %(zinc), 0.3% (copper) and 3.9%
(sulfur), and average grades of the massive ores are 12.34% (lead), 18.4% (zinc), 1.53% (copper)
and 19.16% (sulfur); (2) More than ten lead and zinc deposits have been found in Jungar Alatao
mineral area, which is in the eastern part of Kazakhstan, and one of the ore belts is 150 kilometers
long and 20-50 kilometers wide; Jeckli deposit boasts a lead and zinc reserve of 5.5 million tons
and a combined grade of 11%; (3) Kalatao multi-metal mineral belt, which is in the southwestern
edge of the country, is 600 kilometers long and a couple of kilometers wide. There are several
important deposits in the ore belt, and one of them, known as chalkia super large deposit, boasts a
lead and zinc reserve of 12.39 million tons and a combined grade of 4.13%.
Jiande lead and zinc deposits, the greatest deposit in the world, is located in Korean Motianli
mineral area. It consists of three ore belts and nine mineral beds, and boasts a lead and zinc
reserve of 70 million tons and a combined grade of 7%-10%. Due to such reasons as poor
exploitation, however, the reserve of the deposit has been recognized by the world. The deposit,
together with Huangshangou lead and zinc deposit in Jilin, China, and Qingchengzi lead and zinc
deposit in Liaoning, composes the famous China-Korea Proterozoic lead and zinc ore belt.
Currently, the measured reserve of lead and zinc, based on reserve base, only accounts for 9.3% of
lead and zinc resources worldwide, therefore, the potential of mineral searching is huge.
1.3.3 World magnesium resources
Magnesium, the element that represents 2.1%-2.7% of the crust, ranks the sixth of all elements
and is the fourth metal element that next to aluminum, iron and calcium. It mainly comes from
seawater, natural salt lake water, dolomite, magnesite, manasseite and olivine. It is estimated that
magnesite worldwide is 12 billion tons in amount, and manasseite contained in the seawater is
about 6×1016 tons; Furthermore, there are a large amount of dolomite and magnesium contained
in salt lakes, which makes magnesium a huge treasure to us.
16
Magnesium and its alloys, by far the lightest metal structural material applied in industry, is
characterized by light weight, low density, high intensity, good rigidity and good performance in
pressing and casting, as well as such functions as noise reduction, electromagnetism shielding,
shock absorption and being recyclable. Reputed by material experts as the green engineering
material with the hugest developing and applying potential in the century, magnesium and its
alloys have been used as the substitutes for aluminum and steel and widely adopted in aircrafts,
airplanes, missiles, cars, computers, communication products and consumer electronics
manufacturing, showing a trend of rocketing production and consumption.
Since the middle 1990s, as the huge demand for magnesium in various fields, R&D and
application of magnesium and its alloys have entered a rapid growing period, receiving special
attention from developed countries. In a recent decade, the annual output of magnesium
worldwide grows by 8% on average, and the global output exceeded 0.6 million tons in 2004, with
such main countries of production as China (0.45 million tons), Canada (55,000 tons), Russia
(50,000 tons), U.S.A. (43,000 tons), Serbia (40,000 tons), Israel (33,000 tons), Kazakstan (18,000
tons) and Brazil (11,000 tons).
1.4 World mineral resources prospecting
According to the statistics from the annual reports of Canadian MEG, the input of solid mineral
resources prospecting worldwide has climbed steadily since 1993, reaching its peak of US$ 5.2
billion in 1997 but shrinking in the following five consecutive years: the input dropped by 29%
and 24% in 1998 and 1999 respectively; it declined with the smallest margin of 7% to US$ 2.6
billion in 2000 and fell substantially by 15.4% to US$ 2.2 billion in 2001. The investment dropped
to its lowest of US$ 1.9 billion in 2002 and climbed by 26% to US$ 2.4 billion in 2003.
The prospecting budgets of 917 mineral prospecting companies with investment bigger than US$
100,000 in 2003 show the regional distribution of current prospecting costs is as follows:
Rank
Country/region
Prospecting costs (US$)
1
Latin America
517.9 million
23.6
2
Canada
471.4 million
21.5%
3
Africa
374.2 million
17.1%
4
Australia
339.3 million
15.5%
5
Other regions (Europe and CIS)
6
U.S.A.
244.4 million
153.4 million
proportion to the world total (%)
11.1%
7%
17
7
The Pacific and Southeast Asia region 92.7 million
4.2%
On November 8, 2006, Canadian Metals Economics Group announced its 17th annual report of
prospecting budgets of world mineral companies: The budgets of 1,620 mineral companies (with a
prospecting budget exceeding US$ 100,000 each) total US$ 7.13 billion; Given the prospecting
budgets of the surveyed companies account for 95% of the world total, MEG estimated that
commercial prospecting costs worldwide will reach US$ 7.5 billion in 2006, up 47% than 2005
and three times as much as the lowest in 2002, reaching a record high since 1989 when the budget
survey was started by the company.
The mineral prospecting surge since 2002 was caused not by large and medium-sized mineral
companies but by primary prospecting companies, and since 2002 when investment in mineral
resources prospecting dropped to its lowest level, the investment made by primary prospecting
companies has grown by 600%, accounting for a majority of the prospecting cost increments. In
2004, the primary companies exceeded large mineral companies in prospecting budgets for the
first time, with US$ 7 million more budgets than the latter; Prospecting budgets of the primary
prospecting companies have taken up more than 50% of the world total in 2006.
As for regions, various parts of the world witnessed a rising prospecting budgets in 2006. Latin
America, the place attracting huge sums of investment for more than a decade, remains as a
paradise for prospecting investors and is followed by Canada. Europe, Middle East and part of
Asia (which are called by MEG as “other regions”) take the second place, emerging as new
highlights in recent years, and the surge in prospecting costs of Russia, China and Mongolia make
“other regions” outpace Africa as the third winner. Africa ranks the fourth, and Australia, U.S.A.
and the Pacific/Southeast Asia regions ranked the fifth, sixth and seventh respectively.
As for prospecting stages, prospecting input in detailed prospecting stage (or late Stage) has taken
a vital part in the new prospecting surge, with an average growth speed exceeding that of
grassroots prospecting. Since 2005 when input in detailed prospecting overran that in grassroots
prospecting for the first time (a margin of US$ 3 million), input in detailed prospecting has
obviously exceeded that in grassroots prospecting, while in the decade before 2004, input in
grassroots prospecting was 50% more than that in detailed prospecting stage annually.
The year 2006 witnessed a big progress in world mineral resources prospecting. Pebble Copper,
Molybdenum & Gold Mines, which is located in Alaska, U.S.A. and owned by Northern Royal
Corporation, is a case in point. The mine is composed of Pebble western bed demanding only
surface mining and eastern bed that is buried much deeper and provides metal with higher grade,
18
and copper, gold and molybdenum contained in both beds are first class in quality. The east bed of
Pebble mine was found through drilling at the end of 2005 and the drilling turned out as a great
success in 2006. Further drilling of the east bed is expected to begin in the middle of February
2007. The mineral resources of Pebble (completed on January 24, 2006) is estimated to be 3.026
billion tons, and the grades of copper, gold and molybdenum are 0.28%, 0.32 g/ton and 0.01%
respectively; The estimated mineral resources (completed on March 4, 2005) is 1.832 billion tons,
and the grades of the above three metals are 0.60%, 0.37 g/ton and 0.04% respectively. Pebble has
become the largest porphyry copper & molybdenum mineral bed in North America.
In 2006, Ord River Resources made a great progress in Copper Flats, which is located on the
eastern part of Kimberly, Australia. Grade of the seven samples got within the scope of 60 meters
averages 24.49% (an ordinary deposit with a grade of 0.5% can be explored), and the highest
grade even reaches 42.5%, possibly making the deposit one of the greatest discoveries in
Australian copper history. The deposit, controlled by specific stratum and structure, is at least 1.5
kilometers long, a couple of kilometers wide and 3-8 meters deep, extending one kilometer
upwards. Based on current exploration area of 692 kilometers, Ord River Resources applied for
another 2,000 square kilometers for exploration, and planned to implement drilling to determine
the grades and scale of the deposit. The company will conduct detailed prospecting in drought
seasons of 2007, and the deposit scale is estimated at five million tons.
Canadian Ivanhoe Mines Ltd., following its great discoveries known as Canadian Isabel nickel
deposit and Mongolian Oyu Tolgoi deposit, found another world-class copper-gold-uranium
deposit in Amethyst Castle, Queensland, Australia. The mineral resources are possibly buried 200
meters deep under the earth, and the types of the resources are extremely similar to DC deposit
owned by BHP Billiton.
Jabal Sayid copper deposit, located in Saudi Arabia on the shore of the Red Sea, boasts an average
mineral grade of 2.74% within the scope of 122-meter radius (the first drill), therefore, it is
estimated to be a world-class deposit. The finding of the copper deposit may make Saudi Arabia
an important copper production country. Algerian Oued Amizour zinc mineral project may also
become a world-class zinc deposit. The first drill completed in 2006 showed that the average zinc
grade reaches 6.58% at the depth of 184 meters, and the average grade is 10.69% at the depth of
64 meters.
19
1.5 Development of world mining industry
1.5.1 Development of mining industry in major countries
The developed countries with high degree of industrialization, represented by the U.S.A. and
Japan, as well as Russia, a country experiencing economic transition (also called “developing
country”), are both characterized by huge consumption of mineral resources. As for oil
consumption in 2002, U.S.A., Japan and Russia posted the consumption of 894 million tons, 243
million tons and 123 million tons respectively, and the combined oil consumption in the said three
countries accounted for 35.8% of the world total. As for steel output and consumption in 2002,
Japan posted steel output of 107.25 million tons and consumption of 129.09 million tons; U.S.A.
posted steel output of 91.59 million tons and consumption of 63.95 million tons; Russia posted
steel output of 59.78 million tons, which are mainly used to support its own iron ore production
(84.3 million tons). Facing such a huge demand for mineral resources, the said three countries,
except Russia that barely can rely on itself, have to depend heavily on import. In 2002, U.S.A.
produced 51.5 million tons and imported 12.5 million tons of iron ores; Japan relied on import for
all the iron ores it needed and imported 129.09 million tons. The above countries, U.S.A. and
Japan in particular, not only attach great importance to exploitation of mineral resources in their
own countries, but also pay their attention to global mineral resources.
The said countries, abundant in mineral resources, boast large amount of mineral products and
huge export. The mineral industry plays a crucial role in the national economy of the countries.
Canada ranks the world’s first regarding its huge silver, indium, potassium salt and sulfur reserve,
and takes an important part in the world as well as for its nickel, tungsten, columbium, uranium,
cadmium, selenium, lead and zinc. The mineral products produced in Canada, a large part of
which are used for export, amounted to US$ 54.4 billion in 2001, representing 7.78% of Canada’s
GDP total.
Australia takes the world’s first place regarding its uranium, lead & zinc, tantalum and cadmium
reserve, and plays an important role for such mineral reserve as bismuth, zirconium, hafnium, coal,
ilmenite, bauxite, gold, diamond, iron ore, silver and rare earth elements. Australia is not only the
largest producer of many important mineral resources, but also the world’s No.1 exporter of
alumina, coal, ilmenite, iron core, refined lead, monazite, rutile and zircon. In 2001, Australia’s
mineral output amounted to US$ 40 billion, accounting for 8.6% of the country’s GDP total. South
Africa ranks the first in the world regarding its gold, platinum group metal elements, chrome,
manganese, vanadium and titanium reserve, and takes an important part as for its zircon,
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vermiculite, phosphate, fluorite, diamond, lead & zinc, nickel, antimony and asbestos reserve.
South Africa is not only the world’s No.1 producer of andalusite, chromite, gold, platinum group
metal elements, vanadium and vermiculite, but also a major supplier of antimony, manganese,
titanium and zirconium. South Africa posted its mineral output of US$ 7.8 billion in 2001, which
represented 7.5% of its GDP total.
The developing countries like Brazil, Chile, Peru and India as well as such countries in economic
transition as Mongolia and Kazakstan are also abundant in mineral resources, and mineral
production plays a crucial role in their national economy, the first four countries in particular. Due
to relatively poor social development, however, the prospect of mineral resources exploration is
bright, which makes the said countries the most attractive countries in the world for mineral
exploration.
Brazil is extremely abundant in mineral resources, playing a crucial role in the world regarding its
iron, aluminum, manganese, precious stone, niobium & tantalum, gold, tin and kaolin reserve.
Brazil, the largest mineral producer in Latin America, boasted iron ore and aluminum outputs of
240 million tons and 13.19 million tons respectively in 2002, and mineral output accounted for
8.3% of its GDP total.
Chile, reputed as the “Nation of Copper Mines”, is the world’s largest copper producer and
exporter, and is also abundant in other mineral resources like gold, silver, molybdenum and
rhenium. As a country with many salt lakes, Chile ranks the first in the world regarding its lithium
reserve and the sixth regarding its boron reserve. In the past years, the output of Codelco
(Corporacion Nacional del Cobre de Chile) alone has represented 3.4% of Chile’s GDP total.
Peru, abundant in nonferrous metals and noble metals, especially boasts its copper, lead & zinc,
silver, molybdenum and tin reserve. Peru posted its mineral output of US$ 5.98 billion in 2001,
which accounted for 11.2% of its GDP total.
As a country abundant in resources in Asia, India boasts plentiful iron, aluminums, coal, dolomite,
gesso, calcareous rock and mica, being the world’s largest producer of pinite and mica splitting.
India ranks the first in the world regarding its chromite, coal and barite output, and the sixth
regarding its iron, aluminum and manganese. In 2001, India’s mineral output amounted to 595.09
billion rupees (US$ 13.03 billion), which accounted for 2.6% of its GDP total.
Though Mongolia is a nation economically dominated by stock raising, the mineral industry has
played an important role in its national economy during past years, accounting for 11.7% of the
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country’s GDP total in 2001. Fluorite, copper and gold produced by Mongolia take a certain part
in the world, and almost all of Mongolia’s refined copper ores and refined fluorite ores are used
for export.
As a nation in economic transition, Kazakstan is abundant in mineral resources like oil, natural gas
and coals. It also boasts huge amount of chromite, iron, aluminum and lead & zinc reserves.
Kazakstan’s mineral output represented 9% of its GDP total in 2001.
1.6 Development of world mining technologies
Rapid development of mining globalization since 1990s has greatly boosted progress in mining
technologies and resulted in revolutionary changes in global mining industry. Scientific progresses
in terms of mineral prospecting, exploration, melting, processing and utilization lead to
remarkable expansion of resources that serve as the base of mining industry as well as a big rise in
production efficiency and a sharp decline in cost. With greater respect for environment and health,
high-tech mining industry is more competitive and sustainable.
1.6.1 Development of mineral prospecting technologies
Technological progresses in the field of global mineral resources prospecting mainly include deep
prospecting, ocean and polar prospecting, resources representation, data translation, geophysical,
chemical and remote integrated prospecting, application of information technology as well as field
data collection and translation, etc. Large-scale application of advanced technologies makes
mineral prospecting go further and deeper geographically: As for land prospecting, mineral
prospecting extends into the cold arctic region; And as for ocean prospecting, mineral prospecting
in offshore areas and deep water areas, oil prospecting in particular, develops rather quickly.
Currently, most part of the newly-added measured oil reserves and output comes from the sea, and
ocean oil reserve and output have respectively accounted for 25% and 36% of the world’s total.
Brazil has produced oil in ocean area at the depth of 1,709 meters (5,607 feet) in May 1997, and
the sea drilling can go as deep as 3,000 meters; Mineral prospecting go further as for mining depth.
For instance, the mining depth of gold mines in Transvaal, South Africa has reached nearly 5,000
meters. In 2000, Cementatlon Mining Ltd., based on established contracts, drilled a
4,000-meter-deep hole for Avgold in Orange Free State, South Africa.
Geophysical technologies are progressing rapidly towards the following aspects: low costs, faster
data collection and translation, high resolution and low frequency technology, etc. U.S.A., for
instance, has shorten the translation period of earthquake materials by 40% through the application
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of super computers, which has greatly saved time and costs; 3D seismic imaging technology and
technology of drilling for horizontal well have saved billions of dollars for mineral companies, oil
companies in particular; TopeyeTM, an airborne laser mapping system that can collect 7,000
points per second and was developed by Britain 3DLM, also boasts a bright prospect.
Drilling technologies are progressing rapidly towards six aspects: safer and deeper, underwater
operation, high core recovery rate, better orienting performance and lower costs. Changnian
Corporation has made several breakthroughs in recent years, and CAPP drills (processed by
computer-aided products) designed by Sandvlk also boasts an optimistic outlook.
Satellite communication technologies and information processing technologies make costs of
reserve representation decline remarkably, and precision technologies minimize the senior
engineering operation that is needed in prospecting and resources geographical determination,
which has lowered costs of resources exploration, minimized ground perturbation related to
prospecting and obviously improved the measurement of resources quantity and quality, thus
greatly shortened the resources exploration cycle. Currently, prospecting persons have used
satellites to map the geological formation hidden underground. Links among technology
progresses, such as breakthroughs in computer technology, make new imaging technology
economically feasible. Each technological progress has enhanced efficiency of other technologies.
For example, 3D integrated analysis and mapping technology that can be directly applied in the
field or in the neighborhood may substantially improve prospecting efficiency.
1.6.2 Development of mining technologies
Mining technologies have contributed a lot to sustainable development of the mineral industry.
Senior simulation and information technologies have been widely used currently. Robots and other
artificial intelligence technologies help operators improve output and reduce potential danger.
Enhancement of mining efficiency lowers ore depletion rate, thus cutting down ore dressing cost
and minimizing waste discharge. Advanced simulation technologies improve resources assessment
and mining planning as well. Energy efficiency in production and processing process among
global mineral sectors improves fastest among all the industrial industries. Improved technological
sensor control, online analysis, cutting-edge communication technologies and robots controlled by
orders contribute elements of information technologies that may reduce employee risks, and
enhance mining and energy efficiency and production efficiency. Application of those
technologies to transportation may improve mining equipment efficiency, make workers in safer
environment and lower costs as well. Such progresses as those made in global orientation, infrared
remote sensing, man-machine interaction and obstacle-shielding technologies enable the
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application of auto transportation equipment. Enhanced efficiency of mineral substances
separation or stripping reduces wastes and energy consumption needed in transportation;
Representation ores respond to improved ore-dressing technologies, thus cutting down energy
consumption in processing; Progress in mining technologies reduces depletion factors as well as
necessary transportation and waste that needs processing;
Enhanced mining technologies control waste discharge effectively. Environmental goals have been
completely integrated into overall planning for mining production. Prospectors tried to conduct
ore dressing and processing in mines or in the neighborhood using in-situ technologies as much as
possible, thus minimizing environmental impacts, localizing management and reducing
transportation. Prospectors are also sparing no effort to minimize solid, liquid and gas pollution
and waste discharge. Improved dust containment and control technologies make mining safer and
environment better.
Modern mining technologies are developing towards the following aspects: massive exploration
stressing economy of scale, competitive and lower mining costs, safety first, being conducive to
ecology and environment, reducing waste as much as possible and attaching great importance to
managerial techniques that encourages team work, etc. Information technology, a great case in
point, cuts down mining costs remarkably. According to the research done by UBS Warburg
Group, electronic technology may bring mining costs down by 5%, thus saving 5% of the total
sales amount of mineral products and 15% of the cash flow. E-business positively contributes to
declining mining costs as well. In May 2000, 15 large multinational mining corporations jointed
hands to establish global electronic mining markets, where equipment from small parts to large
tramcars are traded. Even a very small innovation may substantially lower costs. For instance,
GPS equipment navigation system, which was developed by Lycra Company, has helped
SanMignel Mines located south of Texas, U.S.A. lower costs greatly.
Opencast mining technologies are progressing towards nine aspects: bigger size of mining areas,
steeper
slopes,
deeper
pits,
larger
production
machinery/technologies;
mechanization/automatization, advanced conditioned monitoring and forecast, remarkably smaller
operation areas and greatly enhanced utilization ratio, extremely short time interval between
stripping and production; automatic sampling of drilling cuttings and remote control sampling
after exploding, and wide application of simulation in production planning.
Underground mining technologies are developing towards the following aspects in recent years:
deeper and safer ventilation and heat treatment, lower cost and better atomization. For instance,
“Intellimine”, a Modular mining system installed by Falconbridge Ltd. in Craig Mines, which is
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located in Sudbury copper-nickel mineral area, Ontario, Canada, enhances mining efficiency by
10-15%. Intellimine includes three parts: (1) Central computer system, which enables advanced
multi-processing exchange and real-time data access, and control mining operation as well; (2)
On-site computer system HllbS that enables wireless multi-frequency communication and
operation; (3) Communication networks for underground pits such as multi-frequency wireless
system, infrared-based Modular token rings and micro-cell wireless communication system.
Recently, the narrow-vein mining technology, developed by CANMET under Canadian NRCna,
boasts a bright prospect.
1.6.3 Development of mineral processing and metallurgy
Breakthroughs in mineral processing and metallurgy may be exciting: Grades of available ores
and corresponding production costs fall remarkably; Low-grade, small and super-small ores that
are hard to be processed have been used rationally; Processing and metallurgy techniques are
optimized and integrated, which helps identify and separate small and super-small substances,
improve efficiency of grinding materials and reduce adverse impacts of extraction upon
environment; New materials and compressing methods as well as material processing system
obviously reduce energy consumption and pollution during grinding processes; Airborne grinding
apparatus enables direct contact of apparatus with raw materials, lowering transportation cost and
energy consumption as well; Wastes decrease and recycling rate of by-products increased through
reducing quantity of impurities entering ore-processing plants and changing ore-processing
techniques; Waste flow decreases through adopting underground water treatment and pollution
treatment plans and through reducing waste quantity based on waste water concentration.
SX-EW method has been widely used in copper industry. In 1968, SZ-EW was introduced in
Bluebird Mines located in Arizona, U.S.A. for the first time. Copper output produced using the
method amounted to 6,000 tom/year. A decade later, based on SX-EW method, copper output
increased by 35 times to 200,000 tons/year in 1978, and increased by five times to one million
tons/year in 1988. Copper output jumped to two million tons in 1998, accounting for 17.5% of the
world total (1.15 million tons). New method may cut down workable grade of copper ore to
0.2-0.4% and to a minimum of 0.04%. Recently, the application of SX-EW method to low-grade
ores that are hard to be processed like uranium, nickel, cobalt, zinc, tungsten and vanadium has
accelerated remarkably.
The prospect of the new aluminum smelting technique is cheerful. In 2001, American Alcoa
greatly improved the traditional Hall—Heroult technique (which has remained basically
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unchanged during the past 100 years) by using an inert anode instead of the traditional prebaked
carbon anodes, thus cutting down aluminum production cost by 0.11-0.25 dollars/pound, and
reducing cost of constructing “Greenland” Smelting Plant by 25%. Comalco Ltd. (purchased by
RTZ), Resnolds Ltd. (purchased by Alcoa) and Kalscr Ltd. are also trying a wettable anode to
enhance smelting efficiency and reduce production cost.
Great progresses have been made in bio-oxidation and bio-extraction technologies. BIOX, a
bio-oxidation technique developed by Gencor Ltd. in South Africa (merged with GoldFields) in
1980s, is especially suitable for treatment of gold ores that are hard to smelt. Currently, the BIOX
technique has been successfully used in Australian Wiluna gold mine, Brazilian Sac Bento mine
and Fairview mine in South Africa, and recently adopted in NIVOI mine in Uzbekistan and
Obuasi mine, which is owned by Ashanti, the biggest gold mine corporation in Ghana. BACOX
bio-oxidation technique, which is developed in 1990s jointly by Australian BacTech Ltd., a
company listed in Canada, and Minteck, a research institute of mineral technologies in South
Africa, has been used in Australian Youanmi mine, remarkably improving recycling rate of gold.
BioPro technique, which is suitable for low-grade gold granules and developed by American
Newmont Mining Corp., has improved recycling rate to 60% from the previous 20%. Progresses
in bio-oxidation and bio-extraction enable development of low-grade gold, copper, nickel and
cobalt deposits. The workable grade of old ores, for instance, has decreased to 0.7 g/ton and to a
minimum of 0.257 g/ton.
1.6.4 Development of mineral utilization technologies
Development in mineral utilization technologies helps emergence of clean and recyclable
advanced mineral products that are easily transported and may be competed with other materials,
which mainly include the following three aspects:
(1) Green mineral products. Even “black” coals may be turned into “green”. Advanced coal
utilization technologies make removal of most sulfur dioxide and over 90% of particles possible.
Recent international conventions regarding treatment of hazardous waste and metal products and
long-distance transportation of gas pollution, as well as implementation of national regulations
regarding other environmental issues, imply that a global method will be adopted as to solving
environmental issues, and green mineral products constitute an effective way.
(2) Technologies that capable of enhancing mineral utilization rate. Low-cost, high-quality
products with tiny environmental impacts are heavily needed in markets. Market changes have a
series of effects upon mineral products, driving better utilization of natural resources in particular.
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Optimization of resources utilization, either improving secondary recycling rate through
enhancing resources efficiency, or reducing utilization strength of materials, has been a major
driving force to those developed countries. It is also the case with emerging countries, which are
adopting cutting-edge techniques and products as well.
Technological progresses create new markets for mineral products. For example, zinc
consumption is climbing following years of drops, which mainly lies in the increase of application
zinc to metal corrosion-resisting layers. Zinc-based fuel tank, a technique developed by Comlnco
Ltd. recently, is another case in point. Without discharge, it can entirely substitute traditional
lead-acid batteries, thus shaping another emerging market for zinc. Due to high conductivity and
relatively low cost, copper wins an increasingly big market share. For instance, more copper is
used in high performance cars and high performance integrated circuit as well. Gold, due to its
good corrosion resistance and high conductivity, rapidly develops as a basic element of sensitive
electronic components and other advanced products (air bag, satellites and scientific apparatus).
1.7 Mining policies in major countries
As the base of social and economic development in all the countries worldwide, mineral resources
are objects of some super powers as well. With the development of world economical
globalization and social scientific and technological progress, world mineral resources and mining
industry are adjusting and changing towards sustainable development. Many countries have
adjusted and amended their respective mineral resources policies in succession since 1990s to
ensure the sustainable development of mineral industry and sustainable supply of mineral products,
thus further adapting to such new trends as world economic globalization and sustainable
development. Based on mineral resources and current mining situation of some representative
developing countries like Brazil, Peru, Chile, India and countries in economic transition like
Russia, Kazakstan and Mongolia, we have analyzed characteristics of mineral resources utilization
in those countries as well as the changes of their mining policies in recent years.
1.7.1 Developed countries
Developed countries like U.S.A., Canada, Australia, Japan and South Africa stress protection of
domestic resources and environment, control and development of global resources as well as
recycling utilization of strategic reserve and mineral resources.
Increasingly great importance is attached to protection and rational utilization of resources. In the
U.S.A., mining policies are adjusting with social and economic changes. Mining exploration is
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changing from “free entrance” policies that simply encourage exploration to renting policies that
encourage resources protection and control exploration speed, and changing from emphasis on
value of mineral resources in land to emphasis on overall value of land utilization. Russian Law of
Underground Resources specifically stipulates underground resources shall be utilized and
protected rationally. According to such requirements, Russia has reformed and improved its
national management departments, made and improved codes for rational utilization of resources,
implemented license system for resources protection, restricted or called off production
characterized by ineffective resources consumption, popularized resources-saving techniques as
much as possible, and restricted, suspended or terminated right of using underground resources
regarding those disobey rational resources utilization and protection policies.
Rigid environmental protection policies have been adopted. Since 1970s, such developed
countries as U.S.A., U.K, Germany and Japan have made a series of laws and regulations
protecting environment, which have imposed rigid restrictions on prospecting and exploration of
mineral resources. All or almost all of the mining activities are cancelled for the sake of
environmental protection in some places. The sustainable development of environment plays an
overwhelmingly important role in the society, and no mining activities that are conducted at the
cost of environment are allowed.
Global mineral resources are taken into account. Mineral resources policies characterized by
globalization constitute an important feature of current mineral resources policies of developed
countries represented by the U.S.A. Some American and Britain MNCs control global resources
markets. Alcoa, for instance, has grown into the world’s largest nonferrous metal industrial
enterprise after years of global merging and expanding, with output of manganese oxide and
aluminum electrode as well as aluminum material processing capacity ranking the first in the
world, and boasting annual sales of more than US$ 20 billion. Large-sized MNCs and oil
companies have been based on global oil and gas resources all along. Shell, for instance, conducts
energy prospecting and exploration in 45 countries worldwide, and conducts oil and gas
production in 28 countries; Exxon carries out energy prospecting and production in over 30
countries; American Mobil involves in 34 countries in five continents and Chevron involves in
more than 20 countries.
Strategic resources reserve policies are adopted. Mineral product reserve systems are commonly
adopted in developed countries. Reserves in the U.S.A. number 80 sub-categories under 25
categories. The reserve object is to supply resources domestically needed in three months in time
of emergency. In France, copper, lead & zinc, nickel, cobalt, chrome, tungsten, molybdenum,
zirconium and hydrargyrum reserves are sufficient to meet its need in two months, and the volume
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is calculated on the basis of its average consumption per month; In Germany, chrome, manganese,
vanadium, cobalt and blue asbestos reserves are equivalent to its domestic consumption volume in
one year, and in Japan, nickel, chrome, tungsten, molybdenum, cobalt, manganese and vanadium
reserves are as much as the consumption in 60 days. Besides these categories, oil reserve systems
are also established in the said countries. It is noteworthy that in addition to reserve system for
mineral products, strategic base reserve system for mineral resources are in place in the U.S.A.
Recycling utilization of resources has become one important aspect of mineral resources policies
in developed countries. Recycling has extended to everything that can be recycled besides waste
iron & steel and waste metal. A series of laws and regulations have been promulgated in many
countries to promote recycling utilization of resources. For instance, in 2001, “Law of Designed
Home Appliances” was issued in Japan. Based on the principle that responsibility of producers
shall extend further and consumers shall pay for such extra service, the law stipulates that
manufacturers shall manage to improve the recycling rate of refrigerators and washing machines
to 50%, that of televisions to 55% and air-conditioners to 60%; Retailers shall be responsible for
recycling and transportation of electronic appliances, and consumers shall pay recycling tax
correspondingly. Such laws and regulations not only enable recycling of resources, but also
alleviate environmental pressure.
Such countries as Canada and Australia are those oriented by mineral resources export,
encouraging export of mineral products and getting the most out of it constitute an important
aspect of the mineral resources policies of those countries. Therefore, tariffs of mineral products
and metal products are lowered as much as possible in those countries to remove obstacles that are
not conducive to integration of domestic mining industry with international markets. They are also
trying to take advantage of current systems for trade compensation and dispute settlement to
remove or amend unreasonable standards discouraging trade, and sparing no efforts to expand
North America Free Trade Area, establish framework for multi-lateral trade rules, and achieve
agreements aiming at protect foreign investment through avoiding dual taxation. By adopting
those measures, they are expecting more exports and further development of domestic economy.
These mineral powers have been fully aware of the impact of mining activities on human health
and ecological environment. The most important thing in mining policies is to well protect mines
and make mining exploration in harmony with environmental protection. Therefore, many laws
and regulations regarding mining environmental protection have been issued in recent years in
Canada and Australia, and many measures have been adopted as well to alleviate adverse impact
of mining exploration on ecological environment.
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1.7.2 Developing countries
As for such developing countries as Brazil, Chile, Peru and India as well as countries in economic
transition like Russia, Kazakhstan and Mongolia, the most pressing issue is to attract more foreign
investment and domestic private capital in mineral prospecting and exploration to revive domestic
mining industry. Mining policies that are not suitable for the new trend therefore have been
modified or adjusted in those countries since 1990s.
For instance, Brazilian government has adopted three measures to change the slow development of
its mining sector, which is a crucial sector of Brazil: (1) adjusting mineral laws and canceling
restrictions on foreign equity mentioned in mineral projects; (2) encouraging foreign investment in
Brazilian mining sector; and (3) encouraging individual mining and privatization of mining
organizations. In 1995, an amendment to the constitution was passed in Brazil Congress, allowing
entrance of private departments into such fields as mining, oil prospecting and sales of natural gas.
The change in policy ended the 40-year monopoly of Brazilian government on oil and gas sectors.
Restrictions on foreign investment in mining sector was cancelled as well in August 1995,
allowing foreign companies to explore Brazilian mineral resources in various forms like joint
ventures, cooperative or wholly foreign-owned enterprises, and stipulating that foreign investors
may be registered by law as Brazilian legal person that enjoy the same treatment as that enjoyed
by Brazilian companies in respect of laws and taxation. The franchise law passed in 1995 created
more chances for Brazilian private sectors so as to enhance Brazil’s economic competitiveness
internationally and create a good environment for domestic and foreign investment.
Peruvian government has once again implemented policies promoting mining development by
attracting foreign investment since 1980s. By the end of 1980s, foreign investment in Peru’s
mining sector has accounted for over 50% of the total foreign investment in Peru. In 1992, the
government promulgated a new mining law and issued new regulations regarding mining cadastral
administration in 1996. The new laws made by Peruvian government were regarded as the most
exciting ones in South America, ensuring quicker acquisition of mineral right, and specifying that
mineral right is a transferable property right, and the person owning the mineral right may freely
arrange it as to investment amount and date, and determine investment project to his discretion.
Peruvian government also popularizes privatization of mineral organizations. Indian government
promulgated new national mining policies in 1993, and twice (in 1994 and 1999) amended its Law
of Mines and Mining Administration made in 1957. India’s new mining policies give highlights to
several aspects as follows: (1) The 13 mineral resources including iron ores, manganese ores,
chromites, sulfur, gold, diamond, copper, lead & zinc, molybdenum, tungsten, nickel and platinum
group metal that were previously exclusive to state-owned organizations are open to private ones;
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(2) Encouraging entrance of foreign investment into Indian mining companies; (3) Preparing to
attract foreign technologies, and allowing foreign companies to participate in prospecting of
high-value and rare mineral resources. With the amendment to the Law of Mines and Mining
Administration, terms of the prospecting license and mining license have been extended, thus
expanding rights of individual states, which are authorized by Indian central government.
Categories of mineral resources allowed to be explored reduced to 11. Those holding prospecting
licenses have the priority right to acquire exploration licenses, and those holding exploration
licenses have the priority right to acquire mining licenses. Land rented for mining may be
transferred.
Mongolian government revised its Law of Mining in 1997 to improve mining investment
environment, thus further attracting foreign investors with preferential laws and regulations. Great
adjustments have been included in the new mining law compared with the law promulgated in
1994, including: prospecting persons holding prospecting license may conduct prospecting
activities of various kinds in specific areas, and have the rights to explore any mineral deposits
that are found in the area; The prospecting license may be transferred as an asset of the holder, and
all royalties of mineral products deceased to 2.5% from 12.5%; The term of validity and term of
extending of mining licenses were extended. The new mining law simplified approval procedures,
shortened the approval period for rights of mining, and provided that the approval decision
regarding prospecting licenses shall be made within ten days from the application, and the
decision regarding mining licenses shall be made within 20 days from the application. The
amended Law of Mining also stipulated that all investors with various nationalities shall be treated
equally and foreign investors may get 100% of ownership. Proceeds and dividends may be freely
sent abroad.
Privatization process in Kazakstan has remarkably accelerated since 1993. The government
promulgated a new Law of Underground Resources and Utilization of Underground Resources in
1999 to substitute the old one issued in 1996. The new law mainly included three amendments: (1)
Changing the dual track system concerning authorizing license of using underground resources
and signing contracts to single track system providing the domination of signing contracts with
Kazakstan Investment Committee, which means mineral prospecting and exploration may be
conducted only based on the contracts inked between investors and Kazakstan Investment
Committee; (2) Detailed clauses and directions were included as to transfer of mineral rights; (3)
Mineral rights may be mortgaged without prior consent from Kazakstan Investment Committee,
but shall be registered in Kazakstan Investment Committee.
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Adjustment of mineral policies and amendment to laws of foreign investment in these countries
have created good environment for development of the mining industry, and positive results have
been achieved as well.
1.7.3 Policies encouraging enterprises to explore foreign mineral
resources
Prospecting and utilization of foreign mineral resources have been greatly supported in major
countries worldwide. Such supports include legal and information services, and especially fiscal,
tax and financial services. As for those countries that heavily lack in mineral resources but face
great domestic demand such as Japan, France, Germany, U.K. and South Korea (including U.S.A.
to some degree), prospecting and utilization of mineral resources shall be conducted on the basis
of ensuring safe supply of domestic mineral resources and increasing domestic control of global
mineral resources. Developed countries like Canada and Australia that are abundant in resources,
however, positively participate in global mining business mainly for development and flourish of
domestic mineral economy and enhancement of competitiveness internationally.
Financial support
One major financial measure regarding prospecting and utilization of foreign mineral resources in
major countries worldwide is to establish overseas risk prospecting fund, and give direct subsidies
to enterprises or organizations that conduct multinational mineral business according to different
proportions. Japan, Germany, South Korea, France and U.K are typical countries adopting such
measures. Funds are often included in national fiscal budgets in the said countries. The fund may
come from many sources, which lies on actual situation of each country. Establishment of fund is
usually guaranteed by laws. For instance, the fund for overseas mineral resources exploration in
South Korea was established in May 1978 based on the Law of Overseas Resources Exploration,
and the fund for overseas risk prospecting in Japan was established according to the Law of
MMAJ and relevant laws and regulations. Relevant laws and regulations usually provide funding
ways, operation mechanism, operation and management, supplement to losses, fund objects,
granting conditions, procedures, management and recycling, as well as proportions and ways of
subsidies. Sizes of overseas risk prospecting funds vary with different countries. Subsidy objects
of funds include MNCs and organizations established by law. In Germany， the subsidy object of
the overseas risk-prospecting fund established for oil in 1969-1989 is DeMinex Oil Group, which
is organized by eight Germany oil companies; And subsidies of the overseas risk-prospecting fund
32
established for solid mineral resources during 1971-1990 go to prospecting or mining companies
registered in Germany (410 projects have been funded, including dozens of successful ones
covering 31 categories of mineral resources). In Japan and South Korea, generally speaking, the
subsidies in the primary stage involving the highest risk go to organizations that are established by
law and conduct overseas prospecting and exploration (MMAJ and Japanese National Oil
Corporation in Japan and Korea Resources Corporation in South Korea). In prospecting stage, the
object swifts to mines enterprises at home. The subsidies in France go to BRGM, equaling direct
investment. (French-based BRGM presently has branches/subsidiaries directly conduct mineral
prospecting and exploration in Peru, Guinea, New Guinea, Burkina Faso, Cote Divoire, Gabon
and Senegal.)
Tax support
major countries worldwide is to give mineral companies preferential taxes regarding prospecting
expenses involved in overseas investment. There are three major ways:
1. The system for mineral resources depletion represented by the U.S.A. The depletion allowance,
as an allowance form typical of mineral resources industry, was first adopted in the U.S.A. in 1913.
The said “depletion” means consumption or decrease of natural resources caused by exploration.
In the depletion allowance system, part of the net profit in each taxable year is deducted and given
to owners of oilfields/mines or operators to help them search for new mineral resources that can
substitute those in depletion. As a deduction, the allowance effectively cut down tax levied on
mining enterprises. There are two forms of allowances. One is cost completion allowance, a fixed
nominal allowance given based on ores per ton explored, and the other is percentage depletion
allowance, which allows deduction of a certain percentage of revenues to make up for depletion of
resources, that is to say, mining enterprises report less revenues (a fixed percent of revenues) when
reporting revenues. In the U.S.A., a 14% depletion allowance is levied on all the mineral
prospecting companies involving in overseas operation. (Actually, depletion allowance is
implemented for domestic prospecting and exploration activities in the U.S.A, and the allowance
ratio vary between 5-22% based on categories of mineral resources. According to World Watch
Institute, adoption of American depletion allowance system for mineral resources in the past
decade cut down tax levied on mining industry by more than US$ 5 billion less.)
2. Cost system for overseas prospecting expenses represented by Canada. Canada government
encourages mining enterprises to make use of foreign funds through preferential tax. Funds used
for overseas mineral prospecting may be deducted from income tax of Canadian companies.
33
Relevant Canadian laws regarding income tax include specific clauses providing deduction of
overseas prospecting investment. Deduction rate for the first year is 30%, and year-on-year
amortization is effected based on the declining balance method. Investment made in overseas
prospecting and exploration reduces tax paid to Canadian federal government and provincial
governments. Meanwhile, there are special provisions regulating enterprises’ revenues from
overseas economic activities.
3. Japan and South Korea, which are heavily short of resources, provide more preferential tax
support to overseas risk prospecting activities by using lengths of the above two systems for
reference. Three major measures are implemented in Japan: (1) Overseas prospecting provision
system, allowing legal persons conducting mining activities overseas use 50% of the mining
revenues as public reserve funds, which are tax-free and may be used up within three years. The
system has been implemented since 1975.
(2) Special deduction system for new overseas deposit prospecting expenses, which follows the
special exemption system for new domestic prospecting expenses. According to the system, loss
expenses may be calculated based on the maximum expenses of the following three ones: expense
for new deposit prospecting and depreciation expense for prospecting equipment, amount of
prospecting provision fund left after using, and amount got in the period. The system has been
implemented since 1965. (3) Provision system for loss in overseas investment provides the limit of
public reserve fund as follows: 30% for legal persons of resources exploration projects and legal
persons of resources exploration investment, 100% for legal persons of resources prospecting
projects and legal persons of resources prospecting investment. The public reserve fund, after a
five-year fixed period, may be used up within five years (equal amount used in each year). The
term of application of the system extended to March 31, 2002.
Four major measures are adopted in South Korea: (1) Provision system for loss in overseas
investment, which is intended to deal with loss in overseas investment. According to the system, a
maximum of 20% of fund in overseas investment is set aside as the loss provision that is tax-free.
In case that no loss occurs in the next three years following the accumulation of provision, the
provision will be calculated as proceeds in the next four years. (2) Overseas taxable income
exemption system, which is intended to avoid dual taxation. Companies that conduct overseas
investment may not pay domestic corporate tax based on overseas income if they pay corporate
tax to foreign governments. (3) Foreign tax system is intended to boost overseas investment. Even
if income tax and corporate tax are exempted based on the agreement made to avoid dual taxation,
the exempted part is regarded as tax paid overseas and free from domestic tax. (4) Dividends got
from investment in overseas resources are tax free, which is intended to boost overseas investment.
34
Even if companies are exempted from dividend tax in host countries, they are regarded to have
paid tax overseas and exempted from tax domestically.
Financial support
major countries worldwide is to grant preferential and stable long-term loans. Loan modes vary
from special funds and special institution to national policy banks established for loan granting.
Besides loans, loan guarantees are also provided in many countries to render insurance for
overseas investment. In Japan, four kinds of loans are available for overseas mineral prospecting,
including general loans, designated loans, special loans and investment. (1) General loans, which
are designed to fund enterprises that conduct resources exploration in developed industrial
countries. The loan proportion is below 70% in principle and reaches 80% in special cases. And
the loan interest is 2.85% (which is the interest on February 1, 1999, and it is the same in
following contents). The term of loan lasts no more than 15 years and loans may be repaid five
years after the loan is granted. (2) Designated loans, which are designed to fund enterprises
conducting mineral exploration worldwide. The loan proportion is below 50% in principle and
reaches 70% in special cases. And the loan interest is 2.85%. The term of loan last no more than
15 years and loans may be repaid five years after the loan is granted. (3) Special loans, which are
designed to fund enterprises conducting uranium exploration. The loan proportion is below 50% in
principle and reaches 70% in special cases. And the loan interest is 2.85%. The term of loan last
no more than 18 years and loans may be repaid eight years after the loan is granted. One kind of
loan that may be repaid when resources exploration turns out successful is also available, with
loan proportion between 60%-70%. (4) Investment, the proportion of which is below 50% in
principle and reaches 80% in special cases. The said loans are managed by MMAJ. In addition,
Overseas Economic Cooperation Fund (OECF) also provides loans to enterprises conducting
overseas mineral exploration. The fund generally helps those conducting mineral exploration in
developing countries. The loan proportion is 70% in principle, and term of loan lasts no more than
eight years and loans may be repaid five years after the loan is granted. Japanese government also
provide debt guarantee to enterprises conducting normal mining activities through MMAJ, and the
guaranteed capital is 50%-80% of the total with a 0.4% guarantee fee. Furthermore, Export-Import
Bank of Japan also renders loans to mining enterprises at the mining stage. The loan proportion is
below 70%, and the term of payment is 5-10 years.
In South Korea, four kinds of loans are available for overseas mineral prospecting, including fund
loans of various kinds, overseas investment fund loans (loans granted by Export & Import Bank of
Korea and Industrial Bank of Korea), foreign economic cooperation loans and foreign exchange
35
loans of overseas investment fund. (1) Fund loans, which are intended to alleviate capital risk of
investors conducting overseas resources exploration and managed by Korea Resources
Corporation. Supporting capital includes: capital that secures mining rights, investigation capital,
exploration capital and operation capital. The standard currencies are foreign currencies. The loan
proportion is below 80% with an annual interest of 5%. The maximum term of loan is 15 years
(the loan may be repaid five years after the loan is granted). (2) Overseas investment fund loans,
which are intended to secure main materials and resources needed in a country and managed by
Export-Import Bank of Korea. Supporting capital includes investment made by local corporations
and project fund. The loan proportion is 60%-80% with an annual interest of 9% (8% for SMEs).
The maximum term of loan is ten years (the loan may be repaid three years after the loan is
granted). (3) Foreign economic cooperation fund loans, which are intended to boost investment in
mineral resources exploration in developed countries involving certain risk and small proceeds
and managed by Export & Import Bank of Korea. The loan proportion is below 80% with an
annual interest of 5%-6%. The maximum term of loan is 15 years (the loan may be repaid five
years after the loan is granted). (4) Overseas investment fund loans and foreign exchange loans of
overseas investment fund, which are managed by Industrial Bank of Korea and Bank of Foreign
Currency Exchange respectively. Respective loan proportions are 50%-70% and 40%-60% with an
annual interest of 9% (8% for SMEs) and 1% higher than London Inter-bank Offered Rate. Terms
of payment are eight years and ten years respectively (the loans may be repaid three years after the
loans are granted.
Overseas mining investment is also provided with insurance in such countries as Japan, U.K.,
Canada, France, Germany, U.S.A. and South Korea. British overseas investment guarantee (a
system managed by Export Credit Guarantee Department), for instance, provides insurance
applied to conditions including confiscated property, devastating wars and remittance restrictions.
The insurance remains valid in 15 years, covering over 90% of risks. It is applied to security
investment and loan investment, with a premium between 0.7%-1% of the total investment.
Guarantee is provided in Germany to overseas exploration companies, so is the guarantee of
minimum investment recycling rate, which includes credit guarantee, investment guarantee and
insurance for political risks involving in overseas prospecting. In Japan, debt guarantee is offered
to enterprises conducting overseas mining, with a credit line of 50%-80% and a guarantee fee of
0.4%. In South Korea, overseas investment insurance is offered by Export & Import Bank of
Korea. According to the insurance system, the insured amount is 90% and compensation limit is
90% as well.
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1.8 World mining market
1.8.1 Iron & steel market drives continuous increase in prices of black
metal ores
Iron & steel output worldwide in 2005 amounted to 1.132 billion tons, up 6.1% than the previous
year. Countries (regions) with steel output reaching over two millions tons total 41, with combines
output accounting for 97.95% of the world total. China has ranked the first in the world for ten
consecutive years in terms of its steel output, which represents 31.1% of the world total from
15.2% in 2000 and is even greater than the combined output of the second, third and fourth largest
producers. In 2005, steel output in China exceeded 300 million tons, a 24.6% increase over the
previous year. World steel output in the first five years of the 21st century increased by 284.8
million tons, with China representing 78.6% of the increment. Japan ranked the second in the
world in terms of its steel output, which was 112.5 million tons in 2005. The U.S.A. took the third
place with an output of 93.9 million tons in 2005 (a 5.8% decrease over the previous year). As for
steel output by continents, Asia remains as the most important region for steel output, with a
year-on-year increase of 149% to 566 million tons in 2005. North America, South America and
Eu-15 respectively posted an output of 127 million tons, 45.3 million tons and 164 million tons,
with a respective decrease of 5.3%, 1.2% and 2.5%. Steel output in Africa reached 17.41 million
tons, up 5.7% year on year, and output in Oceania amounted to 8.61 million tons, up 3.7% over
the previous year.
As a result of the accelerated capacity expanding of iron ore producers driven by robust demand
for raw materials, world iron ore output in 2005 reached 1.274 billion tons, up 11.4% over the
previous year. Despite the increase, iron ores are in short supply in world market, making major
iron ore producers once again increase iron ore price in the price negotiation in 2005. China, as a
power in iron ore trade, directly participated in 2006 iron ore price negotiation, however, it has to
accept the agreement allowing a 19% increase in price due to its disadvantage position in
negotiations with world major iron ore suppliers that occupy 70% of global iron ore trade by sea
(Global top ten steel companies represent 25% of the world total)). The long-term contract price,
following a 19% increase, has almost been equal to spot price of iron ore.
World iron ore trade is presently controlled by several big mining corporations, including CVRD,
Rio Tinto and BHP Billiton, which control 70% of global iron ore supply. China has gradually
substituted Japan and Western European countries as world major importer of iron ores. Despite
that China boasts a super large iron ore industry, it has to import a huge amount of iron ores to
37
satisfy its increasingly growing demand that is hard to be met by its domestic output, thus causing
continuous remarkable increase in iron ore import in China. In 2005, China saw a continuous big
rise in its iron ore import, which amounted to 2.752605 billion tons and rose by 11.5%. China
accounted for 43% of world iron ore trade by sea in terms of its import, and took up the major part
of increment in global iron ore trade in 2005. As the largest iron & steel producer and consumer in
the world, China is also the largest iron ore importer with foreign-trade dependence of iron ore
exceeding 50% and having great impact on world iron ore trade.
World production, consumption and price of ferro alloys in 2005 changed a lot compared with
those in 2004. Global stainless steel market was extremely weak in 2005. Rapid growth in iron &
steel industry in 2004 boosts demand for stainless steel. Facing robust market demand, producers
expanded capacity in succession, causing substantial rise in output in 2004. However, due to
rocketing cost of raw materials for stainless steel and oversupply in market that causes jumping
price in 2005, stainless steel producers and traders had to alleviate pressure resulting from cost
increase by cutting down storage remarkably. Because of weak demand, many stainless steel
producers had compressed capacity substantially since the third quarter, resulting in a 8.6%
decrease year on year. Drop in world stainless steel output imposes different impact upon
production and consumption of such alloys as chrome, nickel and vanadium. According to
statistics in World Metal Statistics-Yearbook 2006, world nickel consumption in 2005 totaled
1.3195 million tons, up 5.1% than 2004. Nickel price fluctuated little around high prices in 2005,
reached a record high since 1980: the spot price averaged US$ 14738/ton, and forward price was
US$ 14533/ton. In 2005, output of high carbon ferrochrome totaled 5.967 million tons and
consumption totaled 5.951 million tons. Supply (output + storage change) reached 6.043 million
tons and oversupply was 92,000 tons. As a result, ferrochrome price in international market
climbed in the first half of the year 2005 and jumped in the second half of the year. The main
reason behind the price increase in the first half of the year is the rising demand for stainless steel
and short supply of ferrochrome. Ferro-Alloy of Mn-series market had been in its downturn period
both at home and abroad in the first three quarters of 2005, causing significant drop in prices. At
the end of 2005, high carbon ferrochrome produced in China sold at US$ 650/ton in Japan market,
down 38% compared with US$ 1,050/ton at the beginning of the year. Enterprises producing
Ferro-Alloy of Mn-series experienced descending profits and increasing losses, resulting in
shifting to ferrochrome production in succession. Refined cobalt output worldwide totaled 53,689
tons in 2005, and China accounted for 25% of the total. World cobalt market was in short supply
facing robust demand reaching about 54,000 tons, thus causing rising cobalt price, which once
rose to US$ 30/pound. According to CRU’s latest report concerning world molybdenum market,
the total consumption was estimated at 176132.88 tons in 2005, up 0.6% over the previous year.
Demand for tungsten increased by over 10% in 2005, overtaking its supply and causing rocketing
38
prices, which hit a record high.
1.8.2 Demand drives continuous increase in prices of major nonferrous
metals in international market
According to World Metal Statistics, world output of six kinds of metals totaled 67.7467 million
tons in 2005, up 4.6% than 2004. Lead output grew by 8.9%, the greatest margin among the said
six metals; Aluminum and copper outputs increased by 6.6% and 5.1% respectively, and nickel
and tin outputs rose by 4.5% and 2.1% respectively. The combined consumption of the above six
nonferrous metals totaled 68.0259 million tons, up 4.9% over the previous year. Lead and
aluminum outputs rose fastest by 68% and 5.8% respectively. Copper, lead, zinc and nickel are in
short supply, and aluminum is somewhat oversupplied.
With continuous growth of world economy in 2005, countries including China, India and Russia
posted rapid economic development. Demand for nonferrous metals increased remarkably,
meanwhile, storage of some metals declined, thus resulting in short supply of many nonferrous
metals and rising prices. General prices of nonferrous metals hit a record high for the past decade.
As for the six major nonferrous metals, copper and lead were priced at US$ 3684/ton and US$
976/ton, reaching a record high for the past 17 years and respectively increasing by 28.5% and
9.9% over the previous year; Aluminum and zinc were priced at US$ 1898/tonand US$1382/ton,
hitting a record high for the past ten and eight years respectively, and up 10.5% and 31.9% year on
year respectively; Nickel was priced at US$ 14733/ton that reached a record high for the past 15
years; The price of tin, however, fell by 13.4% in 2005 following a record high for the past 15
years which was hit in 2004. Driven by the high prices, output and consumption of world major
nonferrous metals grew at different margins, and relation between supply and demand further
improved. Other markets of nonferrous metals including antimony and selenium were as flourish
as copper, aluminum, lead and zinc markets, developed remarkably. Some enterprises profited
from other accompanying nonferrous metals rather than from major nonferrous metals with huge
output and high price.
According to World Metal Statistics, primary aluminum consumption worldwide reached 31.62
million tons in 2005, increased by 7.1% (1.73 million tons) year on year. China contributed about
62% (1.08 million tons) to the increment, while consumption in western countries only increased
by 540,000 tons. Therefore, primary aluminum consumption was mainly driven by China in 2005.
It was estimated that the gap between demand and supply in the primary aluminum market was
around 200,000 tons in 2005. As a result, aluminum price in international market continued to rise
39
in 2005 based on the substantial increase in 2004. The average price of three-month aluminum
futures in London Metal Exchange (LME) exceeded US$ 2,000/ton in November, reaching US$
2,236/ton at the end of 2005.
Table 2 Outputs of world large aluminum producers in 2006
Unit: million tons
Output of primary aluminum
Output of alumina
Company names
2006
United Company Rusal
-
United Company Rusal
-
ChinaAlco
9.488
ALCOA
3.581
Alcan Inc.
5.713
Alcan Inc.
3.296
Glencore International *
4.418
Russian Aluminum *
2.835
BHP Billiton
4.294
ChinaAlco
1.810
Russian Aluminum *
3.047
Hydro
1.798
Siberian-Urals Aluminum Company *
2.231
BHP Billiton
1.406
CVRD
2.220
Siberian-Urals Aluminum Company
1.408
Hydro
1.877
ALCOA
0.852
AWAC**
14.027
Notes: Russian Aluminum, Siberian-Urals Aluminum Company and Glencore International have
merged as United Company Rusal; ALCOA holds a 60% stake in AWAC. According to the
performance report announced by ALCOA in 2006, alumina produced totaled 15.128 million tons.
Data from CRU may be different because some outputs haven’t been calculated repeatedly.
Refined copper output reached 16.665 million tons in 2005, up 5.9% than 2004, and the
consumption was 16.817 million tons, up 2.8% year on year. A gap of 200,000 tons existed
between demand and supply. Whereas world major copper consumers including U.S.A., Japan,
Germany, South Korea, Italy and Mexico saw declining consumption to different extents, China
posted robust growth in copper consumption. Asia accounted for almost half of the global copper
consumption among all the major consumption regions. Copper consumption grew by 2.7% in
China but by 0.3% in Europe, for weak construction sector and strong Euros in Western Europe
didn’t drive copper consumption, while common growth in Eastern Europe counteracted such
decrease. In America, copper consumption declined by 4.7% resulted from decrease in U.S.A. As
for the whole world, China served as the major driving force for copper consumption. Short
supply of copper in international market led to substantial increase in copper price. In 2005, spot
price of copper averaged US$ 3,684/ton, up 28.5% year on year. Continuous tension in spot
copper supply and decline in exchange storage for the past decade were regarded as the major
40
reasons besides capital that pushed for the big rise in copper price.
World refined copper output increased remarkably in 2005, reaching 7.31 million tons in the
whole year and rising by 8.8% year on year. China posted a lead output of 2.38 million tons, up
31.3% over the previous year. China has boasted year-on-year increases since 2003 when it
overtook U.S.A. as the world’s No.1 producer of refined lead, and accounted for an increasing part
(31% in 2005) of the world total refined lead output. China has become the world’s refined lead
melting center. Meanwhile, China overtook U.S.A. as the world’s largest refined lead consumer
with a consumption amount of 1.9397 million tons in 2005, contributing a lot to world
consumption, which totaled 7.5298 million tons in 2005, up 6.8% over the previous year.
Increment in world refined lead consumption was almost attributed to China, which posted an
increase of 540,000 tons. China accounted for 25.8% of the world total in terms of refined lead
consumption in 2005. As a power of refined lead production and consumption, China directly
affects international market through its refined lead export, which totaled 455,000 tons in 2005
and approximately represented 26.4% of the world total. However, the limited refined lead export
is incapable of alleviating the tension of short supply in international market. Spot lead in LME
was priced at US$ 976/ton on average in 2005, up 9.9% than 2004, and three-month future lead
was priced at US$ 941/ton, increasing by 10.7% year on year.
World zinc output amounted to 10.2152 million tons, up 1.1% over the previous year. zinc output
in western countries declined by 0.4%, reaching 6.6203 million tons. World zinc consumption was
10.39 million tons, up 2.6% than 2004. Zinc consumption in western countries fell by 1.2% year
on year, reaching 6.9947 million tons and caused by weak galvanized zinc market. Increase in
world zinc consumption is attributed to big rise in China and India markets. Zinc in international
market is in short supply, with a gap of around 200,000 tons in 2005. Spot zinc in LME was priced
at US$ 1382/ton, up 31.9% over the previous year; And three-month future zinc was priced at US$
1393/ton, up 30.9% year on year. Rise in zinc prices was attributed to huge import of zinc by
China and continuous decrease in commercial storage.
World tin market was basically balanced in terms of relation between demand and supply (a little
oversupplied), with a small rise in output and consumption. Tin was the only nonferrous metal
with dropping prices in LME in 2005. Spot tin was priced at US$ 7370/ton, down 13.4% than
2004. Tin price rose by over 70% in 2004, driving production greatly. Global tin output has
increased remarkably since the second half of the year 2004, and output in Indonesia rose by the
biggest margin. Emerging small-sized crude tin melting plants sprang up like mushrooms, with
output reaching around 25,000 tons in 2004 and over 45,000 tons in 2005. Crude tin produced by
those plants exported heavily to Thailand, Malaysia and China. World tin output amounted to
41
353,400 tons in 2005, up 2.1% year on year. Increment mainly came from Asia countries including
Indonesia, China, Thailand and Malaysia. Most of raw materials used in Thailand and Malaysia
were from Indonesia, so the rising output was mainly related to climbing output of crude tin in
Indonesia. China also imported 13,000 tons of crude tin from Indonesia as raw materials.
Therefore, Indonesia was the source for oversupply in international market, and effective control
of production in Indonesia serves as the only way to balance tin market.
Continuous declining in gold output in South Africa, the world’s largest gold producer, is counted
as the major factor contributing to rising gold price. Following a 13.1% decrease in 2005, gold
output in South Africa once again fell by 278 tons in 2006, which is the smallest output since 1922.
The output is expected to decline in 2007. At present, gold in South Africa mainly comes from
deep mines, some of which are over two miles (3.2 km) in depth. Major gold producers include
AngloGold Ashanti, Gold Fields and Harmony Gold. With extending of roadways, gold mining
cost climbs continuously, making big gold mining corporations find it hard to make profit. In May
2005, gold price in international market rose to US$ 730/ounce, hitting a record high for the past
26 years and rising by 41%. Despite the big decrease afterwards, the final closing price was US$
635/ounce in 2006, a 23% increase compared with US$ 517/ounce in 2005.
1.8.3 Multinationals dominate world nonferrous metal industry by
controlling metal resources
Resources are indispensable to the development of world economy. Consumption of primary
resources will keep increasing in the long run in developing countries, where industrialization and
modernization are highlighted. Countries worldwide attach great importance to nonferrous metals,
which are important raw materials. Thus, control and occupancy of mineral resources have
become one of the focuses in current nonferrous metal industry.
Due to long-term exploration of nonferrous metals, some developed countries either face
resources exhaustion or climbing exploration cost, which causes loss of economic value. In order
to have the upper hand in the development of nonferrous metal industry, multinationals, relying on
their capital strength and technological advantages, take the lead to invest in and transfer their
production capacity to countries and regions with abundant resources, low production cost and
stable political environment, thus controlling resources and occupying favorable positions. Alcoa
and Alcan Inc. as the two aluminum corporations with most powerful strength in the world, have
conducted a series of foreign resources exploration projects since 1980s, achieving great success
in terms of Australian aluminum exploration. Australia, with a total of six alumina plants and a
42
combined output of 16 million tons, boasts the largest alumina production scale and the lowest
cost in the world. Of the said plants, four are respectively controlled by Alcoa and Alcan. Inc., one
plant is largely held by Alcan. Inc. and the other one is controlled by other multinational
aluminum corporations.
Multinational corporations aim to control and occupy nonferrous metals with advantages in
international market, thus taking up the favorable position in world nonferrous metal industry. By
far, the most advantageous mineral resources including copper, aluminum and lead & zinc have
been occupied by multinationals.
Facing stimulus of market demand and impact of M & A, world multinationals further focus on
potential regions with nonferrous metal resources that are not so important as the major ones and
accelerated their paces of occupying and exploring nonferrous metals worldwide in a bid to take
up and reinforce their favorable positions in the new round of resources control.
1.8.4 Production transferred to low-cost regions
Nonferrous metal industry is a resource-intensive and energy-intensive industry with
advantageous mineral minerals and low-cost energy, determining efficiency and competitiveness
to a large extent. To cut down production cost and enhance competitiveness as well as market
control and influence, world major nonferrous metal enterprises, multinationals in particular, spare
no effort to implement globalization of resource allocation, which greatly pushes
internationalization of nonferrous metal industry. Governments worldwide have adopted measure
boosting foreign investment and utilization of domestic mineral resources in order to promote
economic development, resulting in transfer of production of nonferrous metals as raw materials
to low-cost regions abundant in resources.
Australia and other countries and regions with abundant aluminum resources and low-cost power
supply have witnessed a rapid development in aluminum sector in the past two decades, growing
as the most important alumina and electrolytic aluminum producers in the world. In 2005,
Australia boasted an alumina output of 17.92 million tons, which was 2.5 times of that in 1980 and
accounted for 28% of world total from 2.2% in 1980. Meanwhile, alumina and electrolytic
aluminum outputs in developed countries like U.S.A. showed a declining trend.
Electrolytic
aluminum output was 2.48 million tons, representing only 53% of that in 1980 and accounted for
7.8% of the world total from 29% in 1980.
International lead & zinc market have fluctuated in recent years with growing fierce competition.
43
Furthermore, with increasingly rigid environmental protection restrictions, developed countries or
regions in Europe and America have seen a sharp rise in cost of lead & zinc production and a
shrinking scale. Refined lead melting capacity reaching 190,000 tons was closed permanently
during 2000-2004, and a total of 400,000 tons of lead melting capacity and 600,000 tons of zinc
melting capacity was shut down in Europe. While in such developing countries as China,
Kazakhstan and India saw a rapid development of lead & zinc production, and the increment has
made up for the reduced output in European and American countries, contributing to the moderate
growth worldwide. During 1996-2004, refined lead output have decreased by 0.9% annually in
U.S.A., and zinc output have been basically stable; Lead output in Japan declined by 0.4% and
zinc output increased by 0.4% annually; Refined lead output in France fell by 12.4% and zinc
output dropped by 2.7% annually; Lead output grew by 0.4% and zinc output fell by 3.6% in Italy
year on year. Meanwhile. China posted a respective lead output and zinc output growth of 12.4%
and 9.8%; South Korea boasted a respective increase of 9.8% and 9.2%, and India boasted 3.9%
and 6% respectively.
Attracting international investment, besides huge domestic investment and production expansion,
has been counted as the major factor contributing to the fast development of nonferrous metal
industry in countries and regions with abundant resources. International mining enterprises are
willing to expand production in low-cost regions to cut down production cost. World nonferrous
metal exploration has been basically internationalized at present, and multinationals have also
increased their control and exerted greater influence on world market.
1.8.5 Increasing M&A by world mining powers
With continuous climbing of nonferrous metal prices, competition centering on such nonferrous
metals as iron ores, copper and nickel has become increasingly fierce. Following the new round of
M&A climax driven by international mining powers, international metal and mining sectors have
become increasingly monopolized by a handful of enterprises. Continuous M&A among mining
powers leads to expansion of advantageous enterprises, complete industrial chains, bigger market
shares and enhanced technological and innovative capacities. World multinationals dominate
world nonferrous metal industries through capital operation and restructuring of enterprises in
forms of alliance and merging.
Aluminum industry: Alcoa has effected 32 M&A cases during 1995-2000, with 16 cases
completed in 2000 alone. Following Alcoa’s acquisition of Alumax, the fourth largest aluminum
enterprise in U.S.A. in 1998 and Reynolds Aluminum Company, the fourth largest aluminum
enterprise in the world in 1999, Alcoa became the world’s largest aluminum power with annual
44
sales reaching US$ 20 billion and controlling about 20% of the world’s alumina production
capacity, 15% of the world’s electrolytic aluminum production capacity and 12% of the world’s
aluminum processing capacity. In addition, Alcan Inc. purchased Aluminum Company of
Switzerland and Aluminium Pechiney; Hydro Aluminum merged with VAW; Rio Tinto Group
purchased Comalco. Multinational aluminum corporations further have established their positions
in economic globalization through M&A among enterprises. While improving industrial chains,
they spare no effort to reinforce effective control of the aluminum industry by being expert in
certain part in the industrial chain and cultivating advantageous enterprises and core businesses.
Currently, six international aluminum corporations including Alcoa, Alcan, Hydro, Russian
Aluminum, BHP—Billiton and Rio Tinto have controlled almost 48% of the world’s alumina
production capacity and 43.8% of the world’s electrolytic aluminum production capacity, and
arranged 70% of alumina trade in international market.
Copper industry: Multinational copper corporations and mining corporations have accelerated
merging and restructuring paces, forming larger copper corporations including Codelco, Phelps
Dodge and G rupo Mexico and large mining corporations like BHP—Billiton, AngloAmerican
and Rio Tinto. Such multinationals conduct copper prospecting and exploration on a large scale in
countries and regions abundant in copper resources. At present, an overwhelming majority of
copper mines with bright prospect in the world have been controlled by such multinationals. The
said six powers boasted a combined copper output of 6.058 million tons in 2004, accounting for
43.3% of the global total and dominating world refined copper supply.
Lead & zinc industry: Canadian Teck—Cominco have bought stakes in two of the world’s six
largest lead & zinc mines in recent years, aiming to occupy lead & zinc mineral resources with the
lowest cost in the world and control prices of global refined lead & zinc resources. Glencore
purchased stake in zinc melting plants and mines through asset operation, and Xstrate, a company
held by Glencore with an annual production capacity exceeding 600,000 tons, currently is the
major controller in international lead & zinc futures and spot metal markets as well as refined ores
markets. Belgian Umicore, with businesses mainly in Europe and Asia, presently boasts an annual
zinc ingot output of 650,000 tons, 70% of which are intensive processed products like zinc alloys
and zinc oxides. Korea Zinc, which increased its production capacity in Australia and South Korea
by building new plants, merging and acquisition, boasts a worldwide zinc ingot production
capacity of nearly 900,000 tons took the world’s first place in terms of refined zinc output. Finnish
Outokumpu replaced lead & zinc mines and melting assets with Swedish Boliden to complement
each other and secure supply of raw materials, thus maintaining their competitive edge in Europe
market.
45
According to Thomson Financial, M&A transactions with value totaling at least US$ 3.5 trillion
were effected worldwide in 2006; Dcalogic, a research institute, estimates that global M&A
transactions is expected to a record high of US$ 3.8 trillion in 2006, exceeding the historical high
of US$ 3.330 trillion in 2000.
In January 2006, Canadian Barrick Gold acquired Placer Dome Inc, the second largest gold
producer in Canada with US$ 10.4, and grew as the world’s largest gold producer. On June 25,
Mittal and Arcelor inked an agreement in Luxemburg, incorporating a new corporation named
“ArcelorMittal”, which is a super large iron & steel power with annual output exceeding 100
million tons and transaction amount reaching US$ 32 billion. On September 11, Gold Fields in
South Africa, the world’s fourth largest gold producer announced to purchase a 50% stake in
South Deep gold mines so as to take control of the latter and secure its top position in world
mining industry. On October 9, Rusal (a 66% stake), the third largest aluminum corporation in the
world and the largest in Russia, reached an agreement with Sual (a 22% stake), Russia’s second
largest one and Glencore International (a 12% stake) in terms of acquisition of alumina business.
With an annual electrolytic aluminum output of four million tons and alumina output of 11 million
tons following the merging, the new corporation overtook Alcoa as the world’s largest aluminum
corporation, having 110,000 employees in 17 countries across the world. The acquisition case
shows Russian government’s resolution of helping mining powers compete in world mineral
resources market, and President Putin explicitly supported the acquisition case in his talk with
presidents of Rusal and Sual.
American Freeport-McMoRanCopper & Gold Inc. announced to acquire Phelps Dodge with US$
25.9 (both in cash and stocks) on November 19. The new corporation will grow as the world’s
largest listed copper corporations, and the largest metal and mining corporation in North America.
Merging of the two corporations will make global copper supply more monopolized. CVRD
reached an initial agreement with ICI, and CVRD’s acquisition of ICI with US$ 17.12 billion in
cash has been approved by Canadian authority. CVRD will establish CVRD Inco, a global nickel
enterprise located in Toronto, Canada.
On December 18, Norsk Statoil announced to aquire Norsk Hydro, its domestic rival through
stock swap. Hydro stocks will be exchanged as Statoil stocks at the proportion of 1:0.8622, and
the transaction amount will total US$ 28 billion. Statoil will thus grow as the world’s largest
offshore crude oil producer and natural gas producer with crude oil production capacity reaching
1.9 million barrels. The market value of the new corporation will amount to US$ 9.2 billion.
In October 2006, Rio Tinto invested US$ 1.5 billion to hold a stake in Oyu Tolgoi super large
46
copper & gold mine located in Omnogovi, which is owned by Ivanhoe Mines Ltd., and purchased
9.95% of Ivanhoe’s shares with a price of US$ 8.38 per share based on its previous shares totaling
US$ 303 million, thus holding 19.9% of Ivanhoe’s shares. It is estimated that copper output in the
mine will reach 210,000 tons in 2010 and 550,000 tons in 2015.
1.9 World mining companies
1.9.1 Global top 25 metal mining companies in 2005
Based on the proportion of production value of all the metal mining companies to that of global
mining industry, Swedish Metal Team listed global top 25 metal mining companies in 2005, which
is shown in the table below. Of the top 25 companies, five come from Canada, four are from U.K.,
three from South Africa and two from Russia. Brazil, Chile, Poland, Mexico and Switzerland each
boast one. The listed companies are all multinationals, with capital coming from consortia in
developed countries including Brazilian Cia Vale do RioDoce. Japanese consortia take up a large
part of equity.
Table 3 Global top 25 mining companies in 2005
Unit: US$ 100 million
Rank
Company names
Countries
Proportion
Revenue
Asset
to
Net
profit
product
ion
value
of
world
metal
mining
industr
y
1
Anglo American plc
U.K.
5.23
344.72
518.9
35.21
2
Cia Vale do RioDoce
Brazil
4.52
86.11
135.85
20.19
3
BHP Billiton Group
Australia
4.30
311.07
421.10
62.41
4
Rio Tinto plc
U.K.
3.99
207.42
298.03
52.15
5
Norilsk Nickel (MMC) JSC
Russia
2.96
70.33.
136.32
18.32
47
6
Corporacion Nacional del
Chile
2.52
82.03
88.33
11.34
Cobre de Chile
7
Newmont Mining Corp
U.S.A.
1.67
45.24
127.62
4.35
8
Phelps Dodge Corp
U.S.A
1.55
70.89
85.94
10.46
9
Anglogold Ashanti Ltd
South
1.33
24.08
72.64
0.89
Africa
10
Grupo Mexico SA de CV
Mexico
1.32
10.70
42.05
75.40
11
Noranda Inc
Canada
1.25
69.78
96.11
5.51
12
Inco Ltd
Canada
1.25
45.18
120.10
8.3
13
Impala Platinum Holdings Ltd
South
1.17
19.68
32.67
8.24
Africa
14
Barrick Gold Corp
Canada
1.08
19.32
62.74
2.48
15
Placer Dome Inc
Canada
1.04
18.880
55.44
2.84
16
Gold Fields Ltd
South
0.91
18.45
34.35
0.28
Africa
17
WMC Resources Ltd
Australia
0.87
30.51
62.21
10.11
18
Freeport McMoran Copper &
U.S.A
0.84
41.79
55.50
9.95
South
0.84
12.27
43.64
-5.42
Gold
19
Harmony Gold Mining Co Ltd
Africa
20
Xstrata plc
Switzerland
0.84
64.65
122.86
12.25
21
Lonmin plc
U.K.
0.82
11.28
21.84
1.63
22
Alrosa Co Ltd
Russia
0.81
26.10
50.35
4.06
23
KGHM Polska Miedz SA
Poland
0.75
21.16
30.75
4.80
24
Teck Cominco Ltd
Canada
0.69
34.28
60.59
6.17
25
Antofagasta plc
U.K.
0.62
19.09
31.51
5.58
Data source: http://www.lrn.cn/, Zhang Mei
The original author’s notes to the data source: Different parameters may be adopted for ranks of
the metal mining companies, including total asset value, total annual revenue and annual net profit,
which may result in different results: Ranks in a single year are meaningless, which may be
affected by certain factors. For example, if annual net profit is adopted as parameters for ranking,
a company that invests its profits of current year in future production may gets lower net profit.
New Mont Mining, for instance, invested US$ 1.15 billion in future exploration (mainly in
building new mines) in 2005, ranking the first among top seven gold companies in the world; In
addition, Barrick Gold and Anglogold Ashanti input US$ 734 million and US$ 655 million
48
respectively in 2005 for future production. Ranks in consecutive years may show operation of
various companies, but the final results need to be converted based on foreign exchanges and tax
rates, for price changes of mineral products in international market in each year may affect
operation results of the observed companies. It is noteworthy that the above statistics is
incomplete (data related to China and India are absent). Certain metal mining companies in China
may be included in global top 25 in terms of their net profits in 2005.
1.9.2 Anglo American Plc
As the global leader in mining and natural resources field, Anglo American plc Mainly involves in
eight core businesses including pt, gold, diamonds, coals, nonferrous metals, industrial mineral
products, paper-making and paper package as well as balck metals. Anglo American plc was
incorporated in May 1999 on the basis of merging of AACSA and Minorco, and listed in London
Stock Exchange, with a majority of shares held by British institutions. The corporation has eight
core businesses and is headquartered in London. It also establishes branches worldwide, doing
businesses in Africa, Europe, South America and Australia. Its stocks are traded in London Stock
Exchange. Anglo American plc ranks among the top 15 listed on London Stock Exchange based
on assets in the stock market, with sales exceeding US$ 34 billion in 2005 and profits prior to
deduction of extraordinary item amounting to US$ 3.7 billion.
Following Anglo American plc’s Beijing office established in 2002, AngIo Coal, AngloGold
Ashanti, Anglo American Platinum Corp. and De Beers set up their offices in Beijing in
succession. At present, all business sectors of Anglo American plc are expanding their businesses
in China actively. Anglo American plc presently has 300 employees in China working in over ten
branches distributed in Beijing, Shanghai, Inner Mongolia, Zhejiang, Gansu, Xinjiang, Shaanxi,
Hong Kong and Taiwan. Anglo American plc boasted a sales amount of US$ 2 billion (main
products includes pt., gold, diamond, iron ore and nonferrous metal) in China market in 2006, and
invested US$ 20 million in promotion campaigns in China jewelry market. Anglo American plc
has by far input US$ 400 million in China.
The pt. prospecting project jointly initiated by Anglo American Platinum Corp. (Anglo American
plc holds 74.8% of its shares) and Sichuan Geological and Mineral Corp. was approved by
Ministry of Commerce in April 2005. Anglo American Platinum Corp. has presently established
cooperative companies in Chengdu and the prospecting work has started since April 2005.
AngloGold Ashanti (Anglo American plc holds 41.5% of its shares) has searched for gold
prospecting cooperation in China for years, and is presently conducting gold cooperative projects
49
in Xinjiang, Gansu and Qinghai. De Beers (Anglo American plc holds 45% of its shares) has two
membership positions in Shanghai Diamond Exchange, selling rough diamonds and cut diamonds.
It also has diamond marketing centers in Shanghai, Hong Kong and Taiwan.
AngIo Coal (Anglo American plc holds 100% of its shares) has conducted businesses in China for
years. Its coal cooperative project in Yulin, Shaanxi, which was reached in August 2005, has
entered the stage of feasible study. If the result of feasible study is positive, a comprehensive
enterprise integrating coal, coal & electricity and coal chemistry characterized by high efficiency,
energy saving, environmental protection and high added-value will be developed in Yulin. In
addition, Anglo American plc has invested US$ 150 million in Shenghua Group that is listed in
Hong Kong, and inked an agreement with Yankuang Group in 2005, applying top coal caving
technology to coal mines in South Africa. At present, Anglo American plc is conducting a feasible
study for the coal and processing comprehensive project located in Xiwan, Shaanxi. With a total
investment of US$ 4 billion, the project, which is expected to be operational in 2009, will become
one of the largest foreign investment projects in China. Anglo Nonferrous Metal Corp. (Anglo
American plc holds 100% of its shares) is actively conducting nonferrous metals prospecting in
China, exporting huge amounts of nonferrous metal minerals to China annually and boasting an
increasing growth in import in recent years. Anglo Industrial Minerals (Anglo American plc holds
100% of its shares) has a wholly-owned stone pit in Huzhou, Zhejiang, which has been put into
formal operation. In addition, it has two precast concrete component joint ventures in Shanghai.
Anglo Black Metal Corp. (Anglo American plc holds 100% of its shares) exports huge amounts of
iron ores to China through its Kumba Resources Limited in South Africa, and also made
investment in Qingdao.
1.9.3 CVRD
CVRD is the world''s largest producer and exporter of iron ore, is also the Latin America’s largest
mining company, known as “the jewel in the crown” and the “engine in the Amazon region”.
Established in June 1, 1942, in addition to produce iron ore, it also produces manganese ore sand,
bauxite, gold and other minerals products as well as pulp, ports, railways and energy. Privatized on
May 7, 1997, the company began to annex ironsand enterprises. In early 2000, CVRD acquired
SOCOIMEX, and 100% of Inco's shares. CVRD’s iron ore output accounts for 80 percent of the
total output in Brazil. Its iron ore resources are concentrated in the “four golden areas” and
northern part of Brazil, with Ting Bopeibei iron ore, Kapan Nimah iron ore and Kalajiashi iron ore,
etc. The recoverable iron ore deposits are about 40 million tons. Its main minerals exploitation can
be maintained for nearly 400 years. CVRD explores minerals all over the world, including: mining
coal, bauxite, copper, iron and diamonds in Venezuela; mining aluminium and copper in Peru;
50
mining aluminium and copper in Chile; exploitation of potassium, aluminum and copper in
Argentina; mining manganese in Gabon; mining aluminium and copper in Mozambique, mining
diamond, aluminium, copper, potassium and iron in Angola; mining aluminum, copper, nickel,
platinum ore mining manganese, diamonds, bauxite and kaolin in Brazil; aluminum, copper and
coal in Mongolia; and mining copper, aluminum and bauxite in China.
The gross income of CVRD reached 20.4 billion US dollars in 2006, a year-on-year increase of
52%. The net profit reached 6.5 billion US dollars, a year-on-year increase increase of 52%. Its
annual mineral products output hit a record in 2006, of which, the output of iron ore and pellets
reached 276 million tons in 2006, the alumina reached 3.2 million tons, the primary aluminum
reached 485,000 tons, the copper reached 169,000 tons, the potassium reached 733,000 tons, and
the kaolin reached 1.3 million tons. Its sharesof business sales in various countries and regions of
the world: 29.0% in Europe; 27.5% in Brazil; 12.4% in China; 8.9% in Japan; 4.4% in the United
States; 4.8% in other Asian countries, and 13.0% in other countries.
CVRD sets up five offices in the world.
It set up offices in China in 1994; it develops its
business activities and mineral exploration activities in 15 countries and regions; and is
developing feasible study in two countriese.
1.9.4 BHP
Formed from a merger between BHP and Billiton, BHP, now is the world's biggest mining
company, was established in 1885 and headquartered in Melbourne. It is one of the oldest and
largest-scale companies in Australia. Billiton is the pioneer in the international mining industry,
known as its innovate and intensive manner of operation. In 2001, the two companies merged to
form BHP BILLITON, BHP holds 58% stake and Billiton holds 42% stake. BHP Billiton has
operation in 20 countries in the world with more than 90 business partners. It headquartered in
Melbourne and set representative offices in London. In addition, it set up business centers in
Johannesburg and Houston and some offices throughout the world. It has 35,000 employees all
over the world. The main products are iron ore, coal, copper, aluminium, nickel, petroleum,
liquefied natural gas, magnesium and diamonds, etc. In fiscal year 2003-2004, the company's net
income was 34.087 billion Australian dollars, ranking No. 1 among the top 10 enterprises of
Australia. On August 26, 2004, the company announced that its market value hit 58.3 billion US
dollars. BHP listed on the Australia, London and New York stock exchanges.
The mines of BHP Billiton are located at Pilbala region, west of Australia. They are Newman,
Yangdi and Gedewoshi mine areas. The total proved reserves of there three mines are about 2.9
billion tons, and the total iron ore output is more than 70 million tons. In the south of Australia, it
51
has undeveloped Mining Area C with retained reserve of 4.5 billion tons. All of the iron ore is
transported through the 426 km-long railway line to Port Hedland, and then shipped outward to
the international iron ore market.
BHP Billiton is a famous oil and gas producer. Its main production bases are located in Australia,
the United Kingdom, the Gulf of Mexico (United States), Algeria and Pakistan. BHP Billiton's
high-quality and high-profit assets have a strong potential for growth, and provide substantial
returns on capital. The oil and gas business have provided diversified products for BHP and made
it take up a place in this industry.
BHP is engaged in every link of the virgin aluminium industry chain actively: bauxite mining,
alumina refining and metallic aluminum smelting. BHP Billiton is a major supplier of alumina and
metallic aluminum. Its the main assets are located in Australia, Brazil, Mozambique, South Africa
and Suriname.
BHP Billiton is one of the world's top three copper producers and one of the world's top five silver
and zinc producers. BHP provides high-quality metal concentrate to Europe, Asia and South
America, and provides high-quality cathode copper plate to brass and copper wire manufactures. It
has large-scale and low-cost fine assets with great development potential.
BHP Billiton provides the main raw materials (iron ore, caking coal and manganese ore) and
services to the global steel industries. BHP Billiton is the world's first largest supplier of caking
coal and manganese, and the world's third largest iron ore supplier.
BHP Billiton produces diamonds, perovskite, rutile and zircon. BHP Billiton's Ekati Diamond
Mine is the world's largest producer of high-quality diamonds. Its Diamonds and special products
departments also own the metals distribution business in North American and technological assets.
BHP Billiton is the world’s one of the largest producers and exporters. BHP offers competitive
power solutions to the electric power clients. Its business structure includes the world's advanced
portfolio, unique multi-resources capacity, and is able to provide services for the primary
electricity market in Europe, Asia and the United States. The large-scale, low-cost mine
production, good infrastructure, as well as global logistics and distribution capacity have further
enhanced BHP's competitiveness, and provide a platform for its future development.
BHP is the fourth largest nickel producer and the second largest manufacturer of chromium irons
in Western countries. BHP Billiton provides nickel and chromium irons to the stainless steel
52
industry companies - BHP's main customers; and also provides nickel, chromium irons, irone ore
and cobalt to e special alloys, chemical and refractory industries.
BHP Billiton boasts long-term strategically cooperative relationship with China. It began to export
vanadium to China in 1891. In the 1970s, BHP exported iron ore and steels to China. In the
meantime, the company also imported fluorite, calcined bauxite and flint clay from China. In 1979,
BHP signed a Production Allocation Contract to develop the petroleum of South China Sea. In
1983, BHP established BHP Petroleum Office in Guangzhou. In 1984, BHP established BHP
Beijing Office. In 1985, BHP began to study on establishment of joint venture prospecting
company in China. In 1989, BHP was responsible for the design of a cement plant in Shunchang,
Fujian Province, and put forward some suggestions for its construction and preliminary operation.
In 1993, it set up China's first Sino-foreign joint venture mining enterprise - Kangdian JV of BHP
and explored lead and zinc in Sichuan Province. In 1992-1993, the Department of Transportation
of BHP supervised the design, building work for eight self-discharging barge carriers in Jiangsu
Province. In 1994, BHP invested in manufacturing in China for the first time and obtained
business license for developing color steel board processing and figuration business in Shanghai
and Guangzhou. The two factories were put into operation in 1995. In 2001, after merger of BHP
and Billiton, the two factories were still controlled by BHP Billiton. In May 2003, BHP Billiton
and the other North West Shelf joint venture participants signed an equity agreement with an
entity of the China National Offshore Oil Corporation with regard to equity participation by
CNOOC in the North West Shelf Project. Under the equity agreement, CNOOC will purchase a
25% interest in a new joint venture that is being established within the NWS Project to supply
LNG to the Guangdong LNG Project. In March 2004 BHP Billiton announced its intention to
enter into the Wheelarra Joint Venture with four of China's leading steel mills. The joint venture
will secure the sale to the mills of approximately 12 million tonnes per annum (Mtpa) of iron ore.
The joint venture will be BHP Billiton's largest ever commercial agreement with Chinese steel
mills, with sales of iron ore expected to total US$9 billion over the next 25 years.
BHP Billiton currently has around 75 staff in China, most of who are located in the China Head
Office in Shanghai. Around 90% of these employees are Chinese nationals. In the financial year
ended June 2005, BHP Billiton's total commodities sales to China surged by 64% to US$4.0
billion, which accounted for 13% of whole company's EBIT.
1.9.5 Rio Tinto plc
The Rio Tinto plc was formed in 1873 to mine ancient copper workings at Rio Tinto in southern
Spain. “Rio Tinto” is Spanish, means yellow river. In 1954, the company sold most of businesses
53
in Spain. From 1962 to 1997, the company annexed several mining companies having influential
in the world and acquired Rio Tinto announced an aggressive takeover bid for fellow Australian
multinational miner North Ltd in 2000, becoming the world leader in the exploration, mining and
processing of mineral resources. At present the company is headquartered in the United Kingdom
and the headquarter of Australia is located in Melbourne. In 2004, the Rio Tinto separated part of
non-core assets the main company, and eventually realized a net profit growth of 86%, and 2.8
billion US dollars sales amount. The business scope of the company is mainly engaged in iron ore,
energy, industrial minerals, aluminum, copper, diamonds, etc. In 2006, the net profit of Rio Tinto
was 7.779 billion US dollars. The Australian business accounted for 45% of the company, North
American accounted for 40%, and South America accounted for 5% of the company. The
company's sales revenue sources: North America accounted for 28%, Europe accounted for 23%,
Japan accounted for 22%, Australia and New Zealand accounted for 4%, China accounted for 5%,
and other Asian countries accounted for 14%.
The iron ore producing countries mainly include Hamersley Iron located in western Australia (Rio
Tinto Iron Ore wholly owns Hamersley Iron's six mines and 60% percent shares); Robe River Iron
Ore (two mines, 53% shares held by Rio Tinto); Canada Mining Company (acquired in 2000 and
59% shares held by Rio Tinto); Brazil iron ore company; Rio Tinto also established companies in
India and Guinea and other regions; the net profit of the company in 2006 was 2.279 billion US
dollars and 1.722 bullion US dollars, a increase of 557 million US dollars. China’s import turnover
increased 18% over last year.
The energy industries include: Rio Tinto Energy America, Rio Tinto Coal Australia, Namibia
Uranium Corporation (69 percent shares held by Rio Tinto) and Australia energy company (68
percent shares held by Rio Tinto), which produce thermal coal, coking coal and uranium for the
supply of uranium oxide. The net profit in 2006 was 711 million US dollars, and 733 million US
dollars in 2005, a decline of 2.2 million US dollars. The industrial minerals produced by the
company are boric acid, talcum powder, industrial salt and raw materials such as titanium dioxide.
The net income was 243 million US dollars and 187 million US dollars in 2005, an increase of
30%. The aluminum industry of Rio Tinto is mainly in Australia, New Zealand and the United
Kingdom, including Gladstone’s Queensland (38.6% shares held by Rio Tinto), Penguin Island
near Gladstone (59.4% shares held by Rio Tinto), Tasmania’s BellBay and New Zealand’s Tiwai
Point (79.4% shares held by Rio Tinto), Wales’ Anglesey (51% shares held by Rio Tinto) and
Gladstone Power Station (42.1% shares held by Rio Tinto). The net profit in 2006 was 746 million
US dollars and 392 million in 2005, an increase of 90%. Rio Tinto's copper industries include the
Kennecott Utah Copper Corporation and Kennecott Minerals Company in Britain, Chile's
Escondida (30% shares held by Rio Tinto), Indonesia's Grasberg (40% shares held by Rio Tinto),
54
Australia's Northparkes (80% shares held by Rio Tinto) and Korea's Palabora Mining Company
(57.7% shares held by Rio Tinto). The net profit in 2006 was 3.562 billion US dollars, and 2.02
billion shares held by Rio Tinto, an increase of 84%, and a year-on-year increase of 2% in output.
Rio Tinto's diamonds industries include Australia's Argyle, Canada's Diavik (60% shares held by
Rio Tinto), Zimbabwe's Murowa (78% shares held by Rio Tinto), and sales agents in India and
Belgium. The net profit in 2006 was 205 million US dollars and 281 million in 2005, a decline of
7.6 million.
1.9.6 JSC MMC Norilsk Nickel
The full name of the company is Open Joint-Stock Company Mining and Metallurgical Company
NorilskNickel, JSC MMC Nofilsk Nickel for short. JSC MMC Nofilsk Nickel has abundant raw
material resources, is Russia's largest, and the world's one of the largest non-ferrous metals and
precious metals produces. The company produces nickel, copper, cobalt, precious metals
(platinum group metals, gold and silver), tellurium, selenium, sulfate industrial, coal and other
industrial products. Its products’ share in the world: 20% of nickel, 10% of cobalt, and 3.1% of
copper. Of the Russian domestic output, the company's share of products: more than 96 percent of
nickel, 95% of cobalt, and 55% of copper. JSC MMC Nofilsk Nickel is Russia's one of the
mainstays of the national economy. Its turnover accounted for 1.9 percent in Russia’s GDP, 2.8%
in Russia’s industrial output, 27.9% in the non-ferrous metal industries, and 4.3% of Russian
export volume.
JSC MMC Nofilsk Nickel’s main products are divided into two major categories of non-ferrous
and precious metals. The non-ferrous metals include cathode nickel, nickel based powder, cathode
copper, cobalt, cobalt powder and cobalt sulfate. The precious metals include platinum, palladium,
rhodium, iridium, ruthenium, gold, silver, etc.
The main subsidiaries and affiliates include: RAO Norilsk Nickel (Moscow); Severenickel
Combine; Pechenga Mining- and Metallurgical Company (Pechenganickel Combine); JSC
Olenegorsk Engineering Factory; Tuimsky factory on processing non-ferrous metals; Scientific
Research Institute Gipronieke1; and Polar Division of JSC MMC "Norilsk Nickel." Moreover ,
JSC MMC Nofilsk Nickel also includes JSC KolaMining & Metallu cal Company (Jsc Kola
Mining and Metallurgical Company), the subsidiary is attached to Scverenickel and
Pechengan.ickel tombincs. JSC MMC Norilsk Nickel has all of the shares of these subsidiaries.
The Norimet Limited is an exclusive trading partner of the JSC MMC Nofrilsk Nickel in overseas
markets for sales of nickel and copper.
55
Severenickel Combine, one of the large producers of nickel and copper, established in 1938, and
has about l.3 million employees. The materials used for the production are imported materials, that
is ore contained copper and nickel and converter matte produced by the "MMC Norilsk Nickel"
and "MMC Pechenganickel", and the damaged parts, waste products and the original material
provided by foreign suppliers.
Pechenganickel Combine is made up of four open pits, one concentrate plant, one baking
workshop, smelting workshop and sulfuric acid workshop, has about 10,000 employees. It mainly
process their own produced nickel sulfide and sulfide copper ore (containing 0.6-1.7% nickel and
0.3-0 .77% copper), as well as high-grade ore from other major companies in Norilsk. Its main
products are matte and sulphuric acid. JSC Olenegorsk Engineering Factory is Russia's only
enterprise producing cast titanium pump. The main products of Tuimsky factory on processing
non-ferrous metals include: brass wires, brass rods produced by coldworking, brass rods produced
by extrusion processing and copper lacquered wire, etc. Polar Division of JSC MMC “Norilsk
Nickel” is an integrated enterprise combined with industry and economy, the principal
organizations include: a geological company; six underground mines and two open-pit mines; two
concentration plants, one sintering plant; 3 metallurgical plants and one factory producing
platinum concentrate; it is equipped with modern subsidiary bodies: transport companies, repair
companies, thermal dynamics companies, metal factories, repair shops, construction materials
companies, construction companies, non-metallic companies , scientific research institute of
"Norilskproject", Gold Harbour, as well as residential areas, supermarkets, hospitals and other
logistical facilities. The finished products of Polar Division include: cathode copper, nickel
cathode, pyrogenic process and electrolytic cobalt, platinum concentrate, industrial silver, high
purity industrial selenium, high purity tellurium and sulfate blocks. The non-ferrous metals and
precious metal products of Polar Division account for about 40 percent of the world, and nickel
products account for a fifth of the world.
It is reported that the income of JSC MMC Nofilsk Nickel in 2006 was 11.55 billion US dollars,
7.17 billion US dollars higher than previous year, and the net income had doubled, reaching 5.97
billion US dollars.
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2 Chinese mineral resources
2.1 Natural conditions of Chinese mineral resources
China is located in the east of Asia and the west of the Pacific Ocean. China embraces beautiful,
magnificent and grand mountains, rivers and lakes on the vast land. In the west, there are many
high mountains, and in the east, there are many hills and plains. Rich mine resources are beneath
the spacious earth and complicated relief. Various cross-age stratums can be found in China, from
remote antiquity to Cenozoic. Over more than three billion years from the remote antiquity to
Cenozoic, Chinese terrain experienced a number of large-scale magma activities, as a result of
which, various kinds of magma rocks were formed all over the country. China is a major part of
Europe-Asia continent, and is generated through global crustal movement and evolution. From the
point of view of block structure hypothesis, China is in the southeast of Europe-Asia block,
connected with Pacific block and Philippine block in the east and Indian block in the south.
Chinese block is influenced by several different earth structural units, so the geological structure
possesses diversified mines.
Since 1949, China has carried out many large-scale mine prospecting activities. The state has
found 168 minerals, and 153 minerals among them have been prospected with certain amount,
including eight energy minerals, 54 metal minerals, 88 non-metal minerals, and three water & gas
minerals.
Energy minerals are an important part of Chinese mineral resource. Unrenewable energy
proportions of coal, oil, and gas are 93% and 95% in the world and in China respectively. Mineral
energy is predominant in unrenewable energy consumption, and is strategically significant to
national economy and social development. China has rich energy mineral resource all over the
country. Eight energy minerals have been prospected with certain reserve, including coal, oil, gas,
oil shale, uranium, thorium, and terrestrial heat. China has rich coal resource. According to the
survey conducted by geologists, the total coal reserve within the earth’s crust surface layer 2000m
below the horizon is estimated to 5,059.2 billion tons.
China has rich metal mineral resource all over the country, and 54 metal minerals with prospected
reserve contain iron, manganese, chrome, titanium, navajoite, copper, lead, zinc, alumyte,
magnesium, nickel, cobalt, tungsten, tin, bismuth, molybdenum, hydrargyrum, stibium, platinum
family, germanium, gallium, indium, thallium, hafnium, rhenium, cadmium, scandium, selenium,
and Te mines. The mineral reserves vary due to different geological work. Minerals with large
reserves include tungsten, molybdenum, tin, stibium, Hg, vanadium, titanium, rare earth, lead,
zinc, copper and iron. Some minerals have very low reserves, such as chrome.
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The total reserve of major metal minerals is high, and China has complete mineral types that have
been prospected. Major minerals, such as coal, iron, copper, aluminium, lead, and zinc, have high
prospected reserves. Minerals such as coal, rare earth, tungsten, tin, molybdenum, stibium,
titanium, gypsum, bentonite, Glauber’s salt, magnesite, barite, fluorite, talcum, and graphite, have
high reserves in the world. Terrestrial heat and mineral water reserves are high, and the quality of
underground water is high at large. China has a large population and mineral amount per capital,
which is low in the world. China lacks diamond, platinum, chromite, sylvite, and other minerals.
The quality of tungsten, tin, rare earth, molybdenum, stibium, talcum, magnesite, and graphite is
high. For iron, manganese, aluminium, copper, and phosphor mines, there are many lean ores,
symbiotic ores and satellite ores, as well as ores that are difficult to dress.
Western China is vast and spacious with complex geological conditions. A long-term geological
movement brings rich minerals. China has found 168 minerals, and all of them can be found in the
west, with 130 minerals that have been prospected with certain reserves. The coal reserve in the
west is over 380 billion tons, accounting for 38.5% in the total reserve of the state. Guizhou and
Yunnan provinces are important places where coal is produced. The predicted coal reserve in
Xinjiang is 219,000 billion tons, which is the highest reserve among all provinces in China. Oil
reserve that can be exploited in the west is 400 million tons, accounting for 18% in the state. Gas
reserve that can be exploited is 334.6 billion cubic metres. It is predicted that the western area, in
particular Xinjiang, will become a major place where China procures oil, and a strategic
alternative area of oil production. Oil fields with resource amount over 100 million tons are mostly
located in Tarim Basin, Xinjiang. Speeding up exploiting and using mineral resources in the west
and turning resource advantage into economic advantage is an important strategic measure that
reduces the gap between the east and the west and promotes coordinated development of regional
economy in China.
2.2 Prospecting and exploitation of Chinese mineral resources
In 1949, there were only 300-odd mines that have been completely kept. The annual output of
crude oil was 120,000 tons, coal 320,000 tons, steel 160,000 tons, non-ferrous metal 13,000 tons,
sulphur ore 10,000 tons, and phosphor less than 100,000 tons. After over fifty years of efforts,
China established large-scale oil bases such as Daqing, Shengli, and Liaohe, coal bases such as
Datong, Yanzhou, Pingdingshan, Huihe, and Junggar, steel and iron bases such as Shanghai,
Anshan, Wuhan, and Panzhihua, non-ferrous metal bases such as Baiyin, Jinchuan, Tongling,
Dexing, and Gejiu, and chemical mines such as Kaiyang, Kunyang, and Yunfu. A powerful supply
system of energy and raw material ore products has been cultivated. A number of mining cities
emerged and promoted urbanization process in China. At present, the throughput and consumption
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of Chinese mining products are among the top states in the world. In 2002, China had 489
large-size mines, 1,025 middle-size mines, and over 140,000 small-size mines and sand and clay
mines. The number of mining practitioners was 9,070,000, and mining production value was 454.2
billion yuan. The output of crude oil was 167,000,000 tons, natural gas 32.7 billion cubic metres,
exploited amount of ore, sand and clay 4,849 million tons, including crude coal 1.38 billion tons,
iron ore 231 million tons, and phosphorite 23.01 million tons. The output of ten non-ferrous
metals was 10.12 million tons. Currently, the outputs of crude coal, steel, ten non-ferrous metals,
and cement are at the first place in the world, the output of phosphorite is at the second place,
sulphur iron ore at the third place, and crude oil at the fifth place. State-owned mine enterprises
are the main power to exploit mineral resource in China, and are the bases that stably supply
energy and raw material. Crude oil, natural gas, and 36% of other ores are produced by 7,679
state-owned mine enterprises, which contribute to industrial and agricultural development,
people’s lives, and comprehensive national strength. Since middle 1980s, mine enterprises with
various economic sectors developed fast. Nowadays, the number of non-state-owned mine
enterprises is over 140,000, including 132 enterprises invested by Hong Kong, Macao, and Taiwan
enterprises, and 160 enterprises invested by foreign enterprises.
Since China’s reform and opening-up in 1979, geological and mining departments increasingly
opened up, and have established cooperative relations with almost 130 states and regions in the
world and frequent contact relations with 12 UN organizations, and have joined 28 international
geoscience organizations. An opening-up all-round pattern with multiple layers, various forms,
multiple channels and highlighted points has been formed. A series Sino-foreign projects have
been started or are to be started, and many projects have made favourable social and economic
profits, including geological and physical geography investigation and research in the Yellow Sea
conducted by South Korea and China, mine formation discipline comparison research on gold
mines and noble metals conducted by Uzbekistan and China, Qiantongshan lead and zinc mine in
Shaanxi co-exploited with a Malaysian mining company, waste water disposal project in Dexing
copper mine in Jiangxi conducted with Japan, and mine waste management project conducted with
Australia.
2.3 Protection of Chinese mineral resources
Protection and use of mineral resource has been gradually promoted. Over the past fifty years,
mineral resource prospecting technical progress was made in terms of physical prospecting,
chemical prospecting, remote sensing, drilling, pit prospecting, and experiment, testing, and
computing technologies were also advanced. Scientific and technological level was heightened in
mineral resource prospecting. Positive effects of comprehensive use and recycling of mineral
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resource are obvious, and resource use rate is raised. Currently, recycling rate of waste steel is
40%, waste non-ferrous metal 27.70%. All platinum family metals and scattered elements come
from comprehensive use, and almost 1/3 vitriol material is extracted from non-ferrous metals
during the production process. Some mine enterprises exploit gas, oil shale, kaolin, and
high-aluminium clay that co-exist with coal, and processes and uses gangue and coal powder. This
brings favourable economic and environmental benefits.
Comprehensive use of mineral resource is an important measure for exploiting mineral resource,
and a way of using and protecting natural environment. Since 1980s, China strengthened macro
control over comprehensive use of mineral resource, developed relevant policies and regulations,
and promoted comprehensive use of mineral resource. The average comprehensive use rate of
non-ferrous minerals has reached 35% or so. Jinchuan Nickel Factory made great achievements in
comprehensive use. The factory, which is an example for comprehensive use of non-ferrous metal
minerals in China, also procures copper, platinum, palladium, gold, rhodium, iridium, punner and
ruthenium. Currently, the comprehensive use rate of ferrous metal mineral resource is 30-40% in
China, and the rate of iron ore is 36.7%. Panzhihua Iron Mine Factory and Baotou Iron Mine
Factory are remarkable examples. The use of solid waste in relation to mining is promoted. Waste
residue of non-ferrous metal industry is mainly used as exploitation filling, building material, and
other industrial items. The use rate reaches 69%. Residue of steel & iron industry is mainly used
for building material, and the use rate of furnace residue is 85%.Recycling and reuse of waste
metals in China is highlighted. Currently, waste aluminium recycling amount accounts for 17% of
total aluminium output in the state, waste zinc 6%, waste lead 12%, waste copper 34%, and waste
steel 30%. In 2006, the renewed non-ferrous metal amount was 4.53 million tons, increasing by
21% than 2005. Renewed copper amount was 1.68 million tons, renewed aluminium 2.35 million
tons, renewed lead 0.39 million tons, and renewed zinc 0.11 million tons, increasing by 18%, 21%,
39% and 29% respectively than 2005. According to the data of China Customs, China imported
6.78 million tons of waste non-ferrous metals, increasing by 3.1% than 2005. The amount of waste
material containing copper was 4.94 million tons, the amount of waste material containing
aluminium 1.77 million tons, and the amount of waste material containing zinc 70,000 tons,
increasing by 2.5%, 5.3% and -5.3% respectively than 2005. In 2006, China retrieved 680,000
tons of waste copper, 930,000 tons of waste aluminium, and 390,000 tons of waste lead. Since
2005, the import of waste non-ferrous metals to China accounted for about 1/3 in the total world
trade amount. China became the largest import country and distribution centre of waste
non-ferrous metals.
Exploitation and use of mineral resource has serious bad effect on the environment. Mine
exploitation may cause ground sedimentation, which damages underground water, disturbs
ecological system, and triggers earthquakes, mud-rock flow and hill slide. Processing of mineral
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products may cause noise pollution, powder pollution and harmful gas pollution, and further
damage the ecological environment. Therefore, reinforcement of environmental protection in
mining industry is an important issue in mineral resource exploitation in China. The Population,
Environment and Development White Book of China in the 21st Century proposes the objective of
balancing mineral exploitation and environmental protection, aiming at promoting comprehensive
use of waste stones, water and gas of mines, turning gangue, waste stones, waste water, and waste
gas of mines into resource, preventing them from influencing the surrounding, and forming a
system of environmental rectification and plant cultivation after closing the pit. At the same time,
the Chinese government also took measures to coordinate mineral exploitation and environmental
protection, such as testing environmental quality in mines, investigating and evaluating damages
to the nature in mines, developing protection and restoration plans, making use of economic
methods to encourage comprehensive use and recycling of mineral resource in mines, spreading
advanced technologies, reducing wastes, disseminating legal and scientific knowledge to the
public via radio, films, newspapers and magazines, and strengthening the consciousness of
balancing mineral exploitation and environmental protection.
2.4 Distribution of major mineral resources in China
2.4.1 Distribution features of Chinese mineral resources
China has one of the largest mining industries in the world. The annual ore turnout is five billion
tons in the state. State-owned mines exploit 150 kinds of minerals with annual ore turnout of two
billion tons (excluding oil and gas). Nom-state-owned small-size mines exploit 179 kinds of
minerals (sub-minerals) with annual ore turnout of three billion tons. China produces 167 million
tons of crude oil per year. The yields of coal, cement, crude steel, phosphorite, sulphur iron ore,
and ten non-ferrous metals are among the top states in the world. The exploitation scale of solid
minerals is at the second place in the world. Chinese mineral resource is characterized by the
following points:
The total amount of mineral resource is high, and the resource has a wide range of variety, but the
resource amount per capita is low. By the end of 2005, China has discovered 171 minerals, and
159 minerals have been prospected with certain reserves, including 10 energy minerals, 54 metal
minerals, 92 non-metal minerals, and three water and gas minerals. The number of discovered
deposits and beds is over 200,000, and 18,000 have been prospected with certain reserves. More
than 20 minerals, such as coal, rare earth, tungsten, tin, tantalum, vanadium, stibium, magnesite,
titanium, fluorite, barite, graphite, bentonite, talc, Glauber’s salt, and gypsum, have high reserves,
high quality, and high international competitiveness. However, the resource amount per capita is
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low, only accounts for 58% of the average level in the world, and ranks at the 53rd place in the
world.
Most minerals have low quality and low international competitiveness. Compared with foreign
countries with high-volume mineral resources, China has low-quality mineral resources. When ore
grade, ore type, and dressing and smelting performance of ores are taken into account, the quality
of gold, sylvite, oil, lead, and zinc mines is at the middle level, and the quality of coal, ore,
manganese, copper, bauxite, sulphur, and phosphor mines are at the lowest level. In general, the
quality of high-volume minerals, in particular lacking minerals, is low, and these minerals have
low international competitiveness. Therefore, the exploitation and use of these minerals is
restrained.
China lacks some important minerals, and the prospected reserves of some important minerals are
low. China lacks some important minerals such as oil, natural gas, iron, manganese, chromite,
copper, bauxite, and sylvite, and largely depends on importation. In 2006, imported oil accounted
for 47.3% in total oil consumption in China.
There are many symbiotic (satellite) mines in China, so it requires advanced exploitation
technologies. According to statistics, more than 80 minerals are in symbiotic (satellite) mines, in
particular non-ferrous minerals. For instance, lead-zinc mines have over 50 components, and
silver in lead-zinc mines accounts for 60% of the total silver reserve in the state, and for 70% of
the total output. The state has over 10 large-size and super large-size symbiotic copper deposits,
and 76% of symbiotic gold and 32.5% of symbiotic silver come from copper deposits. Although
potential value of symbiotic (satellite) mines is high, and even higher than the value of the main
component, technical requirement is also high. Dressing and smelting is complicated, and the cost
is high, so the competitiveness is low.
The amount of middle and small-size mines and pit mines is high, and the amount of large-size
and super large-size mines and opencast mines is low. This constrains mining scale and benefit.
China has a lot of mines, but the scale of an individual deposit is small. Large-size and super
large-size deposits contain tungsten, aluminium, stibium, lead-zinc, nickel, rare earth, siderite, and
graphite. Important minerals, including iron, copper, aluminium, gold, oil, and natural gas, are
found mainly in middle and small-size mines that are difficult to exploit in a large scale. An
individual deposit has low output, so the general benefit of resource exploitation is affected. No
super large-size high-grade iron mines (500 million tons) or high-grade copper mines (five million
tons) have been found in China, while there were over 60 super large-size copper mines with
prospected metal amount of over 10 million tons in foreign countries. The annual output of 329
copper mines under exploitation in China is 334,000 tons. There are 48 super large-size gold
mines at above 200-ton level, but China has only seven gold mines at above 60-ton level. The
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number of opencast mines is small. The reserve of opencast coal mines accounts for only 7%,
while American and Australian opencast mines account for 60% and70% of the total outputs.
Therefore, the productivity, cost, and recycling exploitation rate in foreign countries are much
lower than that in China. In terms of metal minerals in China, over 70% of bauxite, over 80% of
copper, and over 90% of nickel are exploited in pits. Opencast sulphur iron mines account for only
15%. The deposits are in small scale, and pit mining is used, so exploitation in a certain scale
cannot be realized. These lead to low exploitation rate and low economic benefit in Chinese
mining industry.
Geographic distribution of mineral resource is not average, and production areas are not the same
with processing and consumption areas. Due to different geological mineral formation conditions,
some important minerals are concentrated. Among over 200,000 discovered deposits and beds,
deposits and beds of major minerals are found in each province, autonomous region and city
directly under the state, but some minerals with prospected reserves are centered in some areas.
Coal mines are found in all over the country apart from Shanghai, and 92% of prospected reserve
is centered in 12 provinces, autonomous regions and cities directly under the state. The reserve in
Shanxi, Inner Mongolia, and Shaanxi accounts for 64%. Iron mines can be found in 28 provinces,
autonomous regions and cities directly under the state, while 80% of the total reserve is centered
in 10 provinces and autonomous regions. The reserve in Liaoning, Hebei and Sichuan accounts for
a half. Copper mines can be found in 29 provinces, autonomous regions and cities directly under
the state, 75% of prospected reserve is centered in nine provinces, including Jiangxi, Tibet, Gansu,
Shanxi, Heilongjiang, and Anhui. Phosphor mines can be found in 26 provinces, autonomous
regions and cities directly under the state, and 77% of the total reserve is distributed in Yunnan,
Guizhou, Sichuan, Hubei, and Hunan. Mineral resource is not averagely distributed, so Chinese
strategic stress of mining industry must transfer to the west. The fact that different minerals are
centered in different regions helps building mining bases in a certain scale. Iron ores are mainly
found in the northeast, north and southwest. Copper mines are widely spread, especially in the
middle and lower reaches of the Yangtze River. Phosphor mines are mainly found in the southwest
and middle south. Tungsten, stibium, tin, and some advantageous resources are mainly found in
northeast-southwest mountains at the borders of Hunan, Jiangxi, Guangdong and Guangxi.
More low-grade mines and less high-grade mines and mines that are easy for dressing increase the
cost of commercial mines. Major mineral resources in China suffer from the situation. In China,
average grade of iron ore is as low as 33%, 10% lower than the average grade in the world. In
major iron ore manufacturing countries such as Australia, Brazil, India, and Russia, the iron ore
grade reaches 62% of commercial ore grade before dressing. The average manganese mine grade
is only 22% in China, while the industrial standard grade of world manganese commercial ore is
48%. Most of Chinese manganese mines contain manganese carbonate that is hard for dressing.
The average copper mine grade is only 0.87 in China, while the grade is 1.5 in Chile and 2% in
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Zambia. Chinese bauxite mainly contains diaspore-water, and the production cost in China is
higher than that in America, Canada and Australia, where boehmite is mainly used. The average
grade of phosphor mines is only 17% in China, and the reserve of rich ore accounts only for 6.6%. The
amount of collophane is high, so it is difficult to concentrate. Most sulphur mines are sulphur iron ores.
The amount of lean ore is high and rich ore low. The reserve of first-level rich ore accounts for only
4.3%. In most foreign countries, natural sulphur and oil and gas by-product sulphur are the major part.
China lacks sylvite, and K-Mg salt in salines is used now, but the cost-effective rate is much lower than
that in foreign countries, where solid KCl is used.
2.4.2 Main production bases of resource-type minerals
Many large-size mineral material production bases have been built up in China, including the coal
production bases in Shanxi, Shaanxi, Inner Mongolia, Henan, and Anhui; oil and gas production
bases such as Daqing, Shengli, Liaohe, Xinjiang, Zhongyuan, and North China Oil Fields; ten iron
ore production bases in Anshan-Benxi in Liaoning, Xichang-Panzhihua in Sichuan, and northern
Hebei; copper production bases in the middle and lower reaches of the Yangtze River, the boarder
between Sichuan and Yunnan provinces, Jinchuan-Baiyun in Gansu, and Zhongtiao Mountain in
Shanxi; six gold production bases in eastern Shandong, Litte Qinling, Heilongjiang, west
Guangdong-Hainan, Hebei, and the boundary of Shaanxi, Gansu and Sichuan; sulphur iron mines
in Guangdong, Hunan, Inner Mongolia, and Sichuan, and seven phosphor production bases such
as Kunyang in Yunnan, and Kaiyang-Weng’an in Guizhou.
Chinese geological survey focuses on lacking minerals and entire evaluation of belt. Potential
survey and evaluation of important mineral resource in the west is a priority in order to find new
alternative areas of resource prospecting. Funds are centered on prospecting large and
super-large-size mines to make breakthrough. Science and technology is stressed, and mine
formation discipline and prospecting prediction is strengthened.
New mines were found both in the west where the survey was not widely implemented and in the
middle and east where the survey was energetically carried out. At present, a number of new
state-level resource bases are confirmed in northwest Yunnan and east Tianshan Mountains beside
the Brahmaputra and three rivers in southwest China. Nanling non-ferrous metal production base
is further consolidated.
1. Brahmaputra mineralization belt
Brahmaputra mineralization belt is an important part of Tethys Himalayas mineralization field,
one of the three largest non-ferrous metal mineralization fields in the world. When the Himalayas
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rose, it was influenced by Indian block that continued diving to the north. As a result, Mountain
Kailash volcano-magma rock belt along the Brahmaputra on Qinghai-Tibet Plateau. Large-scale
mineralization effect formed a 400-km east-west large-size porphyry copper mine belt, which is one of
the most potential mineral areas in the world.
Sixteen promising mines at large size and above have been found, and five non-ferrous metal mine
concentration areas have been formed in Qulong-Jiama, Nimu, Jiru, Zhunuo and Dangxiong. The
copper increment is 10.91 million tons, lead-zinc 6.42 million tons, iron 257.47 million tons, silver
105.41 million tons, and molybdenum 500,000 tons. Prospected copper reserve in Qulong copper
mine is 7.89 million tons. Qulong copper mine is a super large-size mine following Dexing
Copper Mine in China. Potentials still exist around Qulong mine. Prospected copper reserve of
large-size Zhunuo mine in Angren County is 1.07 million tons. Prospected copper reserve of
large-size Lawu copper-zinc mine in Dangxiong County is 340,000 tons, and lead-zinc 2.35
million tons. The predicted copper resource amount is over 20 million tons and lead-zinc 10
million tons.
Qulong copper mine: From 1987 to 1994, Tibetan Geological and Mining Bureau carried out
regional chemical prospecting and abnormity investigation, found the green “Peacock River”, and
circled the copper (molybdenum) mineralization body. In 2001, the Bureau confirmed the
potential in Qulong area. China Geological Survey started to deploy survey work in Qulong mine
area and Brahmaputra mineralization belt.
By the end of 2006, drilling length was over 7,000 meters, and five ore bodies were
discovered and evaluated. Prospected copper reserve was 7,896,500 tons, and average copper
grade was 0.496%. Symbiotic molybdenum reserve was 501,000 tons and silver 5,931.80 tons.
Predicted resource amount of Qulong copper mine is 1.4-1.8 million tons, and Qulong mine might
become the largest copper deposit.
When infrastructures such as Qinghai-Tibet railway were improved, resource development in
Brahmaputra mineralization belt was expedited. With Qulong copper mine at the core, a new
state-level non-ferrous metal resource base is being built. The annual output of copper in
Brahmaputra mineralization belt is predicted to be 150,000 tons in 2015, and lead-zinc 100,000
tons.
2. Southwest three-river mineralization belt
Southwest three-river mineralization belt refers to the three-river-flow-alongside area among
Nujiang River, Lancang River, and Jinsha River (Yuanjiang River), including southern Qinghai,
eastern Tibet, western Sichuan and western Yunnan. The belt is between Indian block and Yangtze
block, where geological structure is complex, deposit components are diversified, magma
activities
are
frequent,
and
transformation
effect
is
strong.
Frequent
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formation-magma-mineralization activities constitute an important nonferrous metal and noble
metal mineralization belt in China, which is an important part of Tethys Himalayas mineralization
field.
Since the large-scale geological survey, over ten large-size deposits were discovered, including
Pulang copper mine, Yangla copper mine, Lirenka copper mine, Dapingzhang copper mine,
Baiyangping silver-lead-zinc mine, Luziyuan lead-zinc mine, Chang’an gold mine, and Beiya gold
mine. The copper resource amount is 7.3 million tons, lead-zinc 3.5 million tons, gold 180 tons
and silver 5,600 tons.
Pulang copper mine: China Geological Survey started to arrange prospecting work in details in
Pulang copper mine in 2002. Till the end of 2006, drilling length was 17,468 meters and seven
industrial ore bodies were circled. Prospected copper resource amount was 4,365,100 tons, and
average grade was 0.4%. Symbiotic (satellite) gold was 213.10 tons with average grade of
0.18g/ton, silver 1,503.51 tons with average grade of 1.27g/ton, and molybdenum 118,400 tons
with average grade of 0.01%. Over ten magma bodies containing minerals were found around
Pulang, indicating a promise. The expected copper resource amount in the area is over 10 million
tons.
After a large amount of minerals were found in Pulang copper mine, commercial mineral
prospecting fund was attracted. From 2004 to 2006, the investment in commercial mineral
prospecting was 70.75 million yuan, the drilling length was 36,676 meters, and pit drilling length
was 540 meters. Ore body exploitation was divided into two phases. In the first phase, the
designed mine production scale was 50,000 tons of refined copper per year, and 100,000 tons in
the second phase. The planned investment for the first phase was 1.8 billion yuan and 3 billion
yuan for the second phase. The total investment was 4.8 billion yuan. After Pulang copper mine is
put into production, it will become one of the largest copper mines in western China. The annual
output of refined copper will be 150,000 tons, and tax paid per year will be 470 million yuan, and
the number of employment posts is 7,000. The state-level nonferrous resource base in northwest
Yunnan, with Pulang and Yangla at the core, is under construction.
Apart from Pulang copper mine, other important mineral areas in Yunnan of Southwest three-river
mineralization belt were effectively exploited. Currently, nine mines have been constructed and
three are under construction. The production value is over 911 million yuan and tax 120 million
yuan. The total survey investment is 6.375 billion yuan.
After these mines are built up, the annual output of copper will be 150,000-200,000 tons, lead-zinc
150,000-200,000 tons, gold 8 tons, and silver 100 tons. The annual production value increment
will be 10.6 billion yuan. The mines are significant for easing the situation of resource lack in the
state, promoting regional economic development, and consolidating national unity and social
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stability.
3. Nanling mineralization zone
Fifteen large-size tin mines were found in Qitianling, Xitian, Gupo Mountain and Jiuni Mountain.
The tin resource amount is 560,000 tons, including 420,000 tons in Bailashui mine zone and
140,000 tons in Jinchuantang mine zone. The potential tin resource amount in the whole zone is
over one million tons. Tin-tungsten amount under the control of engineering in Xitian tin mine is
over 140,000 tons, and the expected long-term amount is 500,000 tons. Tin amount in Gupo
Mountain tin mine is expected to be more than 200,000 tons.
Bailashui tin mine: After the new concept of “mineralization in later-phase small rock mass in
large rock mass” was proposed, erosive rock mass tin mines, typically No. 10 ore body, and
conformation erosion belt-silicon rock complex tin mines, typically No. 19 ore body, were found.
This was the first case that a large-size tin deposit was found in large rock mass. Bailashui tin
mine was another breakthrough of geological prospecting in southern Hunan after Huangshaping
and Shizhuyuan.
4. Tianshan Mountains mineralization belt
Tianshan Mountains mineralization belt is in the centre of middle Asia, and is an important part in
ancient Asia mineralization field. The belt ranges from Kazakhstan-Junggar mineralization zone to
Tarim mineralization zone, and has complicated geological conditions as well as rich mineral
resources.
Since the large-scale geological survey, the discovery of porphyry copper mine in eastern part of
Tianshan Mountains has drawn attention from China and foreign countries. Twenty-two mines
were found. Tuwu and Yandong large-size porphyry copper deposits, Lop Nur large-size sylvite
deposit, and Wulagen large-size lead-zinc deposit have been initially evaluated. The prospected
copper resource amount was 3.09 million tons, lead-zinc 1.48 million tons, gold 51 tons, nickel
380,000 tons, and sylvite 71.24 million tons. The expected copper amount in the whole area is
over 10 million tons. The prospected copper amount in Tuwu-Yandong large-size copper deposit
was 2.27 million tons, and commercial mineral survey has been started. Survey in details has been
completed. Commercial survey and exploitation has been started immediately after Lop Nur
large-size sylvite deposit was discovered.
When the large-scale geological survey is deepened, new discoveries are expected in Tianshan
Mountains mineralization belt. Porphyry copper mines have great potential and are expected to
become nonferrous metal resource base in the future.
67
2.4.3 Distribution of ferrous metal minerals
Iron ore:
There are 2,974 prospected iron ore zones, including 121 large-size zones, and 1,248 prospected
copper mines, including 37 large-size ones. Iron ore reserve is 59.385 billion tons in China, and
the iron ore reserve that is under exploitation is 26.664 billion tons, with 32.721 billion tons
remained. Most iron ores are lean ores, and the average grade is 30-35%. Most ores are magnetite,
and there are 1,828 magnetite mine zones. Large-size and super large-size iron ore zones comprise
Anshan-Benxi iron ore zone in Liaoning, eastern Hebei and Beijing iron ore zone, Handan-Xingtai
iron ore zone in Hebei, Lingqiu-Pingxingguan iron ore in Shanxi, Wutai-Feng County iron ore
zone in Shanxi, Baotou-Baiyunebo rust rare earth mine in Inner Mongolia, Luzhong iron ore zone
in Shandong, Ningwu-Luzong iron ore zone, Huoqiu iron ore in Anhui, Edong iron ore zone in
Hubei, Xinyu-Ji’an iron ore zone in Jiangxi, southern Fujian iron ore zone, Shilu iron ore in
Hainan, Panzhihua-Xichang vanadium-titanium magnetite mine in Sichuan, middle Yunnan iron
ore zone, Damenglong iron ore in Yunnan, Lueyang-Yudongzi iron ore in Shaanxi, Hongshan iron
ore in Gansu, Jingtieshan iron ore in Gansu, and Hami-Tianhu iron ore in Xinjiang.
In northeast China, Anshan mine zone is the largest iron ore mine, and has the largest reserve and
exploitation amount in China. Large-size ore bodies are seen in Anshan (including Dahu Mountain,
Yingtaoyuan, eastern and western Anshan and Gongchangling) and Benxi (including Nanfen,
Waitou Mountain and Tongyuanpu), and some beds are seen in Tonghua, Jilin Province. Anshan
mine zone is the raw material base for Angang Steel and Benxi Steel. Anshan mine zone lacks rich
ore, and 98% of the total reserve is lean ore. The grade is 20-40%, averagely 30% or so. Dressing
must be done, and the grade will reach over 60% after dressing. Most ores are magnetite and
hematite, and some are feint magnetite and feint hematite. The ore structure is dense and hard, and
the gangue is even and compact. Dressing is difficult, and restoration performance of ores is bad.
The gangue is mainly made up of quartz, with SiO2 at 40-50%. The ore in Tongyuanpu, Benxi, is
autolyzed ore, and the alkalinity (Ca+Mg/SiO2) is over 1. The ore contains 1.29-7.5% of
manganese, so it can be used as manganese mine. The ore contains a little S and P impurity. The
iron ore in Nanfen, Benxi, contains low-grade P, and is good raw material for smelting pig iron.
In North China, iron ores are distributed in Xuanhua and Qian’an in Hebei, Wu’an and Kuangshan
Village in Handan and Xingtai of Hebei, and other places in Inner Mongolia and Shanxi.
Shougang, Baotou Steel, Taiyuan Steel, Handan Steel, Xuanhua Steel, and Yangquan Steel are
based in the area. Ores in Qianluan mine zone are lean magnetite, similar to Anshan. The ores
contain acid gangue and a little S and P impurities. The ore is easy to dress. Ores in Handan and
Xingtai are mainly hematite and magnetite. The grade is 40-55%. The gangue contains alkaline
68
oxids. Some ores contain high-grade S.
In central south China, Daye iron ore in Hubei is the largest, and mines are also found in Xiangtan
of Hunan, Anyang and Wuyang in Henan, Jiangxi, Guangdong, and Hainan. Wuhan Steel & Iron,
Xiangtan Steel, and local large and middle-size furnaces are based on these mines. Daye mine
zone is one of the earliet mines that were exploited in China, and mainly consists of Tieshan,
Jinshandian, Chengchao, and Lingxiang mines. The reserve is high. Most ores are iron-copper
symbiotic ores. Magnetite is the dominant ore, then hematite, and chalcopyrite and pyrite are also
seen. The iron grade is 40-50%, at most 54-60%. Gangue contains calcite and quartz. Gangue
contains 28% SiO2 (CaO/SiO2 is 0.3). The ore contains low P (0.027%), high S (0.01-1.2%), Cu
(0.2-1.0%) and Co (0.013%-0.025%). The restoration performance of the ore is bad. The ore is
smelted in furnaces after agglomeration.
Manganese mine:
There are 213 prospected manganese mine zones in China, mainly including Wafangzi manganese
mine in Liaoning, Liancheng manganese mine in Fujian, Xiangtan, Minle, Manaoshan, and
Xiangtaoyuan manganese mines in Hunan, Xiaodai and Xinchun manganese mines in Guangdong,
Bayi, Xialei, and Lipu manganese mines in Guangxi, Gaoyan and Qiaodingshan manganese mines
in Sichuan, and Zunyi manganese mine in Guizhou.
Chromite:
There are 56 chormite mines, mainly including Saertuohai in Xinjiang, Luobusha in Tibet, Hegen
Mountain in Inner Mongolia, and Dadaoerji in Gansu.
2.4.4 Distribution of nonferrous metal minerals
China has a great deal of nonferrous metal resource, but the resource amount per capita is low. The
amount of resource that can be exploited is low, and the amounts of some metals, such as tungsten,
tin, stibium, and rare earth, is high. The state urgently lacks copper, aluminium, lead, and zinc that
account for 94% of nonferrous metal output. Chinese nonferrous metal resource quality is low, and
there are more lean, small-size and symbiotic (satellite) ores and less rich, large-size and single
ores. It is difficult to exploit, and the cost is high, the competitiveness low. Chinese nonferrous
metal reserve that can be commercially exploited accounts for less than 30% in the total
prospected reserve. By the end of 1999, the reserve of copper mines is 19.419 million tons,
bauxite 3.7 billion tons, lead 77.14 million tons, zinc 224.91 million tons, tungsten 14.33 million
tons, tin 9.72 million tons, stibium 5.81 million tons, molybdenum 13.29 million tons, rare earth
221.36 million tons, and nickel 2.75 million tons. According to Chinese nonferrous metal ore
output and resource exploitation rate in 1999, guarantee static time of copper is 169 years, lead 67
69
years, zinc 94 years, tin 67 years, stibium 48 years, molybdenum 165 years, and bauxite only 57
years (according to actual exploitation rate V/S>l0). If the increment of the demand of nonferrous
metals due to high-speed economic growth and the damage to the resource caused by random
exploitation are taken into account, the time will be shorter. Mine productivity and resource status
directly constrain Chinese nonferrous metal industry. At present, it is hard for most nonferrous
metal mines, which have low exploitation reserves, low output, and low benefit. More and more
mines have been closed. The state increasingly depends on importation. Among 159 nonferrous
metal mines directly under the central government, 45 mines were approved to close in 1999, and
43 mines were listed in the closing plan for 2001, accounting for 55% of the total mines. There are
722 mines of ten common nonferrous metals at above county level in the state, and the output is
139.33 million tons. By 2010, 335 mines might be closed, and the output might reduce of 49.55
million tons, accounting for 35% of the total output. In 2001, the yield of copper, lead, zinc, nickel,
tin, and stibium was only 2,959,000 tons, decreasing by 5% than 2000. The domestic supply rate
of smelting mineral raw material was as low as 59.7%, and the rate continued decreasing. In 2001,
China produced 4.73 million tons of alumna, accounting for 59% in total consumption, and
imported 3.346 million tons. The imported copper concentrate amount was higher than the output
of copper concentrate in China. The import of lead and zinc reached 20% and 15% in total
demand amount. The mine grade continued decreasing. Compared with the grade in the year when
the highest grade occurred, the average copper mine grade was only 0.61% in 2001, decreasing by
41%. The grade of nickel decreased by 14%, tin 46.7%, stibium 69%, tungsten 55.5%, and
molybdenum 6.3%. At the same time, mine exploitation deepness, difficulty, and cost went up.
Copper mines:
There are 1,248 prospected copper mine zones in China, and the copper mine resource reserve is
85.31 million tons. Major mines are Duobao Mountain copper mine in Heilongjiang, Wunugetu
Mountain and Huogeqi in Inner Mongolia, Hongtou Mountain in Liaoning, Tongling in Anhui,
Dexing, Chengmen Mountain, Wushan, and Shuiping in Jiangxi, Daye-Yangxin in Hubei, Shilu in
Guangdong, Zhongtiao Mountain in Shanxi, Dongchuan, Yimen and Dahong Mountain in Yunnan,
Yulong, Malasongduo, and Duoxiasongduo in Tibet, and Ashele in Xinjiang.
Bauxite mines:
There are 369 discovered bauxite mines in China, and the reserve is 2.658 billion tons, including
460 million tons exploited and 2.198 billion tons not exploited. Major mines are Ke’e, Shigong,
Xiangwang, Xihedi, Taihushi, Guopianliang-Leijiasu, and Kuancaoping in Shanxi, Caoyao,
Maxinggou, Jiagou, Shisi, Zhulingou, Jiagou, and Zhijian in Henan, Zibo in Shandong,
Pingguonadou in Guangxi, and Zunyi (Tuanxi), Lindai and Xiaoshanba in Guizhou.
Table 2-1 Alumyte reserves in major provinces
70
Unit: 10,000 tons
Province
Reserve
Basic reserve
Resource
amount
Resource
reserve
Guangxi
1081920
1366810
3747780
5114590
Guizhou
1552340
2162480
2063340
4225820
39770
265120
304890
Hebei
Henna
1252910
1619430
2085050
3704480
Shandong
10190
66780
406570
473350
Shanxi
1036420
1136430
8771620
9907950
Total
5248260
6820570
17881280
24701750
Yunnan
41270
64960
360040
425000
Chongqing
273210
363910
181760
545670
Lead-zinc mines:
More than 700 places have lead-zinc mines, mainly including Xilin in Heilongjiang, Hongtou
Mountain and Qingchengzi in Liaoning, Caijiayingzi in Hebei, Baiyinnuo, Dongshengmiao,
Jiashengpan and Tanyaokou in Inner Mongolia, Xicheng (Changba) in Gansu, Qiantong Mountain
in Shaanxi, Xitie Mountain in Qinghai, Shuikou Mountain and Huangshaping in Hunan, Fankou in
Guangdong, Wubu in Zhejiang, Lengshuikeng in Jiangxi, Qixiashan in Jiangsu, Dachang in
Guangxi, and Lanping, Huize and Dulong in Yunnan.
By the end of 2005, the prospected lead reserve was 39.35 million tons, including 13.93 million
tons of basic reserve and 25.42 million tons of prospected resource amount. The prospected zinc
reserve was 94.95 million tons, including 42.69 million tons of basic reserve and 52.26 million
tons of prospected resource amount. Major producing areas are Nanling, Sichuan-Yunnan, western
Yunnan, Qinling-Qilian Mountains, and Lang Mountain-Chaertai. Currently, about 75% of lead
mines and over 79% of zinc resource reserves are under exploitation, and the state is short of
lead-zinc mines that can be planned and resource reserve. The estimated lead-zinc resource
amount that has not been prospected is 518 million tons, and the prospected resource amount is
130 million tons, accounting for 20% in the toal resource amount. According to the documents of
Chinese Mineral Resource Availability Research (2001), promising mineralization zones and belts
contain De’erbugan, the middle of the northern edge of the platform in North China, borders
among Hubei, Henan and Shaanxi, Chenzhou in Hunan, Zhaotong-Liupanshui, the middle of
three-river area in the southwest, western part of northern Qilian Mountains, northern edge of
Chaidamu, Habahe-Fuyun, western part of Tianshan Mountains, and western part of western
Kunlun Mountains. The state will carry out cross-century survey, and the predicted lead-zinc
resource amount is over 50 million tons.
71
Magnesium:
Chinese magnesium resource amount is among the top in the world. There are complete
magnesium resource types, and magnesium mines are widely spread. The magnesium resource
ores in china account for 22.5% at the top the world. Magnesite reserve is at the first place in the
world, and the prospected reserve is 3.4 billion tons, accounting for 28.3% in the world. The
output of original magnesium accounts for over 70% at the top of the world. China has many
dolomites containing magnesium throughout the country, particularly in Shanxi, Ningxia, Henan,
Jilin, Qinghai, and Guizhou. The prospected reserve is over four billion tons. The expected reserve
of magnesium salt mineral resource in the four largest saline area in China is over one billion tons.
Inside Qaidam Basin, 33 bittern lakes, half-dry salines and dry salines have the largest amount of
mangesium salt resource in China. Magnesium alloy accounts for 0.13% in the total seawater in
China.
Nickel mines:
The number of producing areas is almost 100, mainly including Hongqiling and Chibaisong in
Jilin, Jinchuan in Gansu, Kalatongke and Huangshan in Xinjiang, Lengshuijing and Yangping in
Sichuan, and Baimazhai and Mojiang in Yunnan.
Molybdenum mine:
The number of producing areas is 222, mainly including Daheishan in Jilin, Yangjiazhangzi and
Lanjiagou in Liaoning, Jinduicheng in Shaanxi, and Luanchuan in Henan.
Tungsten mines:
The number of prospected producing areas is 252, mainly including Xihuashan, Piaotang,
Dajishan, Pangushan, Huamei’ao, Hukeng, Xiatongling, and Kuimeishan in Jiangxi, Xingluokeng
in Fujian, Shizhuyuan, Xintianling and Yaogangxian in Hunan, Jubankeng and Lianhuashan in
Guangdong, Damingshan and Shanhu in Guangxi, and Ta’ergou in Gansu.
Tin mines:
The number of prospected producing areas is 293, mainly including Dachang, Shanhu and
Shuiyanba in Guangxi, Dongchuan in Yunnan, Xianghualing, Hongqiling and Yejiwei in Hunan.
Hydrargyrum and stibium mines:
The number of prospected producing areas of hydrargyrum is 103, and stibium 111. Main
hydrargyrum mines include Wanshan, Wuchuan, Danzhai, and Tongren in Guizhou, and Xinhuang
in Hunan. Main stibium mines include Xikuangshan and Banxi in Hunan, Dachang in Guangxi,
and Yawan in Gansu. Xunyang, Shaanxi, is a hydrargyrum-stibium mine.
72
Gold mines:
The number of prospected mine zones is 1,265, mainly including Wulaga, Da’anhe, Laozuoshan
and Huma in Heilongjiang, Jiapigou and Huichun in Jilin, Wulong in Liaoning, Zhangjiakou and
Qianxi in Hebei, Linglong, Jiaojia, Xincheng, Sanjiadao and Yingezhuang in Shandong, Wenyu,
Tonggou, Jinqu, Qinling and Shanggong in Henan, Hetai in Shandong, Xiangxi in Hunan,
Mojiang in Yunnan, Dongbeizhai in Sichuan, Banma in Qinghai, and Axi and Hami in Xinjiang.
Silver mine:
The number of prospected producing areas is 569, mainly including Yintongzi in Shaanxi, Poshan
in Henan, Yindonggou and Baiguoyuan in Hubei, Shencun in Sichuan, Guixi in Jiangxi, Shanmen
in Jilin, and Pangxidong in Guangdong.
Rare earth and rare metals:
Baiyun’ebo and 801 Place in Inner Mongolia, Weishan in Shandong, western Jiangxi, Yichun in
Jiangxi, northern Guangdong, and Fuyun in Xinjiang.
2.5 Supply and demand trend of major minerals in China
2.5.1 Supply and demand status of ferrous metal minerals
Iron ore is the main material of steel and iron industry, and the supply amount and quality of iron
ore is crucial to the industry. There are 1,161 iron ore mines under exploitation in China, and the
prospected resource reserve is 25.995 billion tons, including 14.062 billion tons of basic reserve.
The prospected resource reserve of mines under exploitation accounts for 45.1% in the total
prospected resource reserve.
In 2005, the original iron ore output was 420 million tons in China, increasing by 25.35 than 2004.
Eight provinces with the output of over 10 million tons were Hebei (152 million tons), Liaoning
(90.05 million tons), Inner Mongolia (29.98 million tons), Shanxi (21.03 million tons), Beijing
(18.34 million tons), Sichuan (16.92 million tons), Anhui (10.99 million tons), and Shandong
(10.77 million tons). The fixed asset investment in iron ore mining was 28.2 billion yuan in 2005.
The growth rate of 2005 was lower than that in 2004, but it remained at a high level, increasing by
114% on a y-o-y basis. In 2005, global iron ore consumption was 1.7 billion tons, and China 524
million tons.
In 2006, the original iron ore output was 588 million tons in China, but the output was behind the
73
production. China imported 326 million tons of iron ore in 2006. For the first time, the import of
iron ore was over 300 million tons. The import amount accounted for 52% in the total
consumption amount. In 2006, ocean trade amount of iron ore was 700 million tons in the world,
and the trade amount concerning China accounted for 42%. The world experienced stable growth
in 2006, and the demand for steel was stable. In 2006, steel and iron throughput continued
increasing in China, but the increment was apparently lower than that in 2005. The demand for
iron ore increased with 70 million tons than 2005.
The iron ore yield from January to September 2007 was 505 million tons. According to the
productivity in the first nine months, the iron ore yield would reach 675 million tons in 2007,
increasing by 15% than 2006. The iron ore import increment might be 40 million tons in 2008,
and the import was predicted to be 370 million tons in 2007. The crude steel turnout would reach
480 million tons in 2007, increasing by 14% than 2006. A high-level insider predicted that the
crude steel turnout would reach 500 million tons in 2007.
Currently, three largest iron ore suppliers are large-size steel & iron enterprises with their own
mines, local key independent mining enterprises, and local private iron mining enterprises. The
first two kinds of manufacturers are owned by the state, and covered by National Bureau of
Statistics. Iron ores exploited by a large number of local private enterprises are not covered by the
National Bureau of Statistics. Therefore, the actual iron ore yield is largely higher than the yield
data issued by the Bureau.
In the future, key factors that influence iron ore demand in China are the change of crude steel
production capacity and the supply of waste steel. From the perspective of waste steel resource
amount, Chinese steel and iron accumulation amount is limited at present. A great deal of waste
steel cannot be supplied in a short period (within 15 years). At the same time, the increment of
international waste steel that can be exported to China is also limited.
Manganese, chromium, vanadium and titanium are important alloy elements in steel and iron
industry. With the development of the industry, the demand for these elements dramatically
increases. In 1996, Chinese manganese ore consumption was 5,998,000 tons, including 4,417,000
tons made in China, which accounted for 73.6%. The high-grade manganese ore import was
1,585,000 tons, accounting for 26.4% in the total consumption. China lacked chromite. In 1996,
Chinese crude chromite yield was 130,000 tons, and the chromium ore consumption was 894,000
tons. The self-support rate was only 14.5%. The ore import was 764,000 tons, accounting for
85.5% in the total consumption. After the 1970s, Panzhihua vanadium-titanium magnetite was
exploited, so the outputs of vanadium and titanium largely increased. The output could satisfy the
demand of Chinese steel and iron industry, and afford export. It should be noted that China has
low-amount high-quality rutile. The production of high-level titanium pigment could not satisfy
74
the demand, and China has to import titanium pigment.
2.5.2 Supply and demand status of nonferrous metal minerals
In recent years, Chinese nonferrous metal output and the demand for minerals rapidly increased.
The output of ten nonferrous metals increased from 1,248,000 tons in 1980 to 13,980,000 tons in
2004, increasing by 10 folds. From 2002 to 2005, the output of the ten nonferrous metals has been
at the first place in the world. The consumption of copper, aluminium, lead, zinc, nickel and tin
increased from 1,360,000 tons in 1980 to 13,420,000 tons in 2004. China has become the largest
consumption state of the six nonferrous metals.
Table 2-2 Basic metals outputs of 2006
Unit: ton
Output in 2006
Increase % on a y-o-y
basis
2,925,000
17.8
9,187,500
19.7
Alumina
13,239,300
54
Zinc
3,151,800
14.8
Lead
2,735,000
15.3
Tin
142,916
22.7
Magnesium
613,200
32.2
Nickel
111,280
22.1
Refined copper (copper)
Original aluminium
aluminium)
(electrolysed
Source: National Bureau of Statistics
However, China is very short of raw material. The contradiction between supply and demand of
minerals is highlighted. China increasingly depends on importation. In 2004, trade deficit of
nonferrous metals in China was US$9.89B, US$2.75B larger than 2003. In terms of copper
product, the trade deficit was US$1.056B, increasing by 42.7% on a y-o-y basis. Copper trade
deficit was the highest one among nonferrous metals. The import of copper, aluminium, lead, zinc,
and nickel was 10.36 million tons, and the foreign currency cost was US5.25B, increasing by
5.4% and 61% than 2003 respectively. The import of crude copper and refined copper was almost
three million tons, and the foreign currency cost was US$2.56B, increasing by 7.2% and 68.3%
respectively. This trend might continue in 2005. From January to May 2005, the import of the
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above five minerals was 5.290,000 tons, and the foreign currency cost was US2.88B, increasing
by 37% and 58% on a y-o-y basis respectively. The import of crude copper and refined copper was
1,606,000 tons, and the foreign currency cost was US$1.46B, increasing by 51.6% and 74.6%
respectively.
Table 2-3 Nonferrous metals apparent consumption in 2006
Unit: 10,000 tons
Output
Import
Export
Apparent consumption
Refined
copper
293
83
24
354
Original
aluminium
919
29
84
862
Alumina
1323
691
3
20
Zinc
31.5179
3
3
30.8179
Lead
27.34583
5
3
25.31551
Refined nickel
97324
22633
111280
185971
Refined tin
22499
21526
142916
143889
Source: www.chinalco.com.cn
Copper:
In 2005, Chinese mines produced 650,000 tons of copper, and 742,000 tons in 2004. The average
annual growth rate in 10 years was 5.84% (4.12% when the figure of 640,000 tons is used in
calculation). The waste copper output was 620,000 tons, and the average annual growth rate was
3.20%. The refined copper output was 2,199,000 tons, and the average annual growth rate was
8.22%. In 2004, Chinese copper consumption was 5,536,000 tons, and the average annual growth
rate in 10 years was 16.47% (See Table 2-1). The growth rates of mine copper output, refined
copper output and copper consumption are much higher than the growth rate of reserve. The
increase rate of consumption largely exceeds the increase rates of mine copper output and waste
copper output (the sum of the two is the domestic supply amount). The increase rate of refined
copper output is two times of the increase rate of mine copper output.
Table 2-4 Output, consumption and trade deficit of Chinese copper products from 1995 to 2004
Year
Chinese copper product output
(10,000 tons)
Consumption
(10,000 tons)
Trade
deficit
(US$100M)
Refined
copper
Mine
Waste
copper
copper
1995
108
44.5
46.7
140.4
17.3
1996
111.9
43.9
42.8
158.2
20
1997
117.9
48.7
37.9
159.1
19.6
1998
121.1
48.7
34.1
175
20.8
76
1999
117.4
52
33.8
202.9
29.3
2000
137.1
59.3
34.8
265
45.8
2001
152.3
58.7
30.8
362
51.6
2002
163.3
56.8
38
414
56.8
2003
183.6
60.4
42.6
466.3
74.9
2004
219.9
74.2
62
553.6
105.7
Aluminium
In the first half of 2006, the demand exceeded the supply in terms of alumina in China.
Electrolytic aluminium enterprises were confronted with closedown. After June, domestic
electrolytic alumina output drastically increased, and the price went down and down. Electrolytic
aluminium manufacturing became a windfall profit industry. Aluminium price stably increased,
and the profit went up tremendously. However, relevant data showed Chinese alumina industry
was not surplus. The market trend turned uncertain. In 2006, the electrolytic aluminium increment
was 1.5 million tons in China, and it was the highest record in the history. It is predicted that
additional two million tons of electrolytic aluminium would be turned out in 2007. According to
the data from National Bureau of Statistics and China Customs, the alumina supply and demand in
China remained the same in 2006. From January to November 2006, alumina output increased by
53.9% on a y-o-y basis, reaching 11,963,900 tons. The import decreased by 1.1% on a y-o-y basis.
Meantime, electrolytic aluminium output increased to 8,443,000 tons, increasing by 19.6%.
According to the alumina supply and demand balance chart, if alumina supply exceeds demand
after June and the price went down largely, alumina supply surplus or inventory is about 200,000
tons as before. In October, the market is pessimistic on alumina price tendency, and the import
reduced by 29.4% than September, but electrolytic aluminium output in October largely increased.
Therefore, alumina supply was much lower than demand. From the perspective of production,
electrolytic aluminium manufacturers should have a reasonable inventory amount, which should
be determined by transportation distance and market supply and demand status. Normally, alumina
inventory period of electrolytic aluminium manufacturers is 15-20 days. If monthly electrolytic
aluminium output in 2006 was 760,000 tons, the inventory of 200,000 tons would support
four-day consumption. Alumina inventory of electrolytic aluminium factories was low. However,
the inventory of electrolytic aluminium factories was full.
Henan and Shandong provinces are the largest alumina producing area. The production capacity
increased so fast that alumyte supply in the area was very short. In Henan, exploitable alumyte is
less than 200 million tons, and high-grade mines have been run out. In Shandong, many large-size
new alumina factories were built up, while local alumyte mines have been exhausted in general.
Therefore, new alumina factories in Shandong had to import alumyte. With the demand increase,
ocean shipping freight also went up, and imported alumyte cost went up. At the same time, the
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competition in Chinese alumyte industry was furious, so the price also largely rose. In 2006,
alumyte price doubled in Henan.
The investment in an alumina factory is high, so new alumina factories should not blindly invest,
focusing on short-term profit. Fast fall of alumina price gave many companies a lesson of the
market. Foreign alumyte resource is also uncertain due to some factors. The import from
Indonesia accounted for 92% in the total import of alumyte, but the social status in Indonesia was
not stable. The concentration of import channels must upgrade production and operation risks.
Lead and zinc
Mine lead output increased from 660,000 tons in 2000 to 1,140,000 tons in 2005, with the average
annual growth rate of 11.5%. Meantime, refined lead output increased from 1,100,000 tons to
2,390,000 tons, with the average annual growth rate of 16.8%. Although recycled lead output
increased from 100,000 tons to 510,000 tons during the period, with the average annual growth
rate of 38%, fast increasing smelting demand could not be satisfied. In 2005, domestic lead raw
material supported only 69% of smelting demand. The lack of high-grade lead ores was as high as
31%, 740,000 tons of metal amount.
Zinc sector was better than lead sector. Mine zinc output increased from 1,780,000 tons in 2000 to
2, 548,000 tons in 2005, with the average annual growth rate of 7.44%. Meantime, zinc metal
output increased from 1,960,000 tons to 2,776,000 tons, with the average annual growth rate of
7.2%. In 2005, the lack of high-grade zinc ores was 8.2%, 230,000 tons of metal amount. In 2006,
Chinese high-grade zinc ore output was 2,142,000 tons, increasing by 17.57% than 2005, 320,000
tons higher than 2005. The increment was mainly contributed by Yunnan, Sichuan, Inner
Mongolia, Jiangsu, Jiangxi and Xinjiang. Concentration zinc output was 3,153,000 tons,
increasing by 16.3%, and the increment was 440,000 tons. The increment was mainly contributed
by Henan, Yunnan, Shaanxi and Guangxi. According to China Non-ferrous Metals Industry
Association, China produced 1,490,000 tons of concentration zinc in the first five months in 2007,
increasing by 21.67% on a y-o-y basis. The increment was mainly contributed by Inner Mongolia,
Guangdong, Liaoning, Yunnan, Guangxi, and Shaanxi.
From 2000 to 2005, refined lead consumption increased from 640,000 tons to 1,920,000 tons, with
the average annual growth rate of 24.6%. Zinc consumption increased from 1,490,000 tons to
3,250,000 tons, with the average annual growth rate of 16.9%. The growth rate of lead-zinc
consumption was much higher than that of mine production. Resource lack got increasingly
obvious. In 2005, Chinese mines produced 1,140,000 tons of high-grade lead ores (actually
1,100,000 tons after the loss caused by smelting is deducted), and the amount of second-time
resource was 515,000 tons. The total supply amount was 1,620,000 tons in China, and the lack
amount was 300,000 tons. China also lacked zinc. Mines produced 2,250,000 tons of high-grade
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zinc ores (actually 2,500,000 tons after the loss caused by smelting is deducted), and there was no
second-time resource available. The total lack amount was 650,000 tons in China. The lack was
made up by importation. In 2005, China imported 1,030,000 tons of high-grade lead ores (actual
amount, also applicable to below), 570,000 tons of high-grade zinc ores, and 80,000 tons of waste
zinc material. Due to high-volume importation, a high-level trade deficit occurred in the whole
zinc industry for successive three years. In 2005, the deficit was over US$80M. The lead sector
was better than the zinc sector, but it suffered trade deficit for successive two years. In 2004, the
trade deficit was over US$60M. Therefore, lead-zinc mineral industry was not among the top any
longer. High-volume export of lead and zinc metals, in fact, depended on high-volume import of
smelting raw material.
Magnesium
In 2006, the production capacity and output of Chinese magnesium industry continued growing,
economic profit grew fast, and energy saving and industrial restructuring were improved.
According to the statistic data of Magnesium Industry Branch of China Non-ferrous Metals
Industry Association, China produced 525,600 tons of original magnesium in 2006, increasing by
12.40% than 2005. The output was at the top of the world for successive nine years. Shanxi,
Ningxia and Shaanxi were the largest three producing areas, and the outputs were 394,000 tons,
68,300 tons, and 49,700 tons respectively. The total output in the three provinces was 512,000 tons,
accounting for 98% in the total output of China. In 2006, asset investment in magnesium smelting
enterprises above statistical threshold in Chin was 7.308 billion yuan, increasing by 8.43% than
2005. The sales revenue was 8.719 billion yuan, increasing by 24.91% than 2005. Total tax
turnover was 471 million yuan, increasing by 48.17% than 2005. Total profit was 122 million
yuan, increasing by 63.89% than 2005. The sales revenue, tax turnover, and profit of magnesium
enterprises above statistical threshold were the highest values, so the economic profit grew
dramatically. Sixty-seven small-size magnesium smelting enterprises at below 5,000 tons suffered
losses, accounting for 41.1% of the total 163 magnesium smelting enterprises. Almost 20
enterprises had to stop production or part-time stop production, and 10-odd enterprises turned to
produce calcium.
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3 Development of China’s Mining Industry
3.1 Development status of China’s mining industry
3.1.1 General scale of China’s mining industry
The data released by the Ministry of Land and Resources show the overall situation of the
development and utilization of the mineral resources by national mining enterprises in 2006: the
number of the mine continued to reduce. By the end of 2006, there were about 126,400 non-oil
mining enterprises nationwide, 325 less than that of 2005. Among which, 352 large-scale mines
increased, 471 medium-sized mines were increased, and 1,343 small mines were increased, while
2,491 small mines were reduced. In the non-oil mining enterprises, there were 125,800 Mainland
mining enterprises, 256 Macao and Taiwan-invested mining enterprises and 338 foreign-fund
mining enterprises.
In 2006, the total ore exploitation of national mining industry was 5.833 billion tons, of which the
coal was 1.962 billion tons, and the iron ore was 424 million tons. The total ore exploitation of
national mining industry in 2007 increased 585 million tons than that of 2005, of which the solid
minerals increased 551 million tons (coal production increased 123 million tons).
In 2006, the total industrial output value of various types of mining enterprises reached 670.973
billion yuan. Of which, the total industrial output value of the non-oil energy resources reached
398.31 billion yuan (total industrial output value of coal amounted to 396.413 billion yuan), the
total industrial output value of ferrous metal mineral amounted to 62.446 billion yuan, the total
industrial output value of non-ferrous minerals amounted to 74.348 billion yuan, the total
industrial output value of precious-metal minerals amounted to 21.515 billion yuan, the total
industrial output value of rare minerals, rare earth and minerals amounted to 1.17 billion yuan, and
the total industrial output value of metallurgical auxiliary material amounted to 5.075 billion yuan.
The total industrial output in 2006 increased of 112.126 billion yuan than that of 2005, of which
the total industrial output value of coal increased of 48.995 billion yuan.
In 2006, the number of employees of various types of mining enterprises was 7.983 million people.
Among which, there were 4,426,600 non-oil energy mineral exploitation staff, 413,700 ferrous
metal mineral exploitation staff, 427,900 non-ferrous mineral exploitation staff, 201,200
precious-metal mineral exploitation staff, 12,900 rare minerals, rare earth and mineral exploitation
staff and 97,800 metallurgical auxiliary material exploitation staff.
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3.1.2 Investment situation of mining industry
In 2006, the accelerated industrialization and urbanization process, particularly the strong
momentum in fixed asset investment and continuous and rapid growth of real estate price of large
and medium-sized cities increased the pressure of supply of energy and mineral raw materials. The
Ministry of Land and Resources was actively involved in macroeconomic control, the
improvement and rectification for mineral resources exploitation was constantly deepened,
geology and mineral exploration work was strengthened, and resources "bottleneck" was eased,
which effectively supported the economic and social sustainable, stable and rapid development.
Overall, the investment in the mining industry increased rapidly, an increase of 289 percent;
mineral resource exploration and exploitation became increasingly active, the West China raised
the upsurge of mineral exploration; the momentum of mining production was very good, the
domestic production and supply capacity of minerals was enhanced; the minerals price was
increased of 10.1%, the rise was gradually reduced and the fluctuation was aggravated; the
minerals trade increased steadily, a growth rate of 20% was maintained.
In 2006, the State Council and relevant departments took various effective measures to strengthen
geological work and mineral exploration, maintain the exploitation order of minerals and provide
resources guarantee for the rapid development of economic construction. The Ministry of Land
and Resources carried out and implemented the spirit of the Notice of the State Council on
Rectifying and Regulating the Mineral Recourse Exploration Order in an All-around Way,
Decision of the State Council on Strengthening the Work of Geology and Some Opinions of the
State Council on Promoting the Sound Development of Coal Industry, carried out the work of
rectifying and regulating focusing on coal resource development continuously, rectified all types
of illegal behaviors during the exploitation of mineral resources, regulated the exploitation
activities of mineral resources, established and maintained good order in the development of
mineral resources, got breakthrough on overall promoting the disorder treatment work and the
permanent cure work was gradually unfolded,
struck hard on a variety of illegal and irregular
acts, overall launched the conformity work of mineral resources, took effective measures to
strengthen geological work, and issued the Provisional Method of Managing Central Geological
Exploration Fund. The Ministry of Finance increased input in mineral resources exploration,
encouraged and guided social capital input, tried its best to establish virtuous recycling mechanism
of mineral resource exploration input to constantly enhance the support capacity of mineral
resources for economic and social sustainable development.
In terms of investment in fixed assets, the investment in the mining industry was 416.8 billion
yuan, an increase of 28.9% on a year-on-year basis. From the trend of changes over the whole year,
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after other types of mining industry reached peak from March to May, their increase showed a
decline month by month, however, the increase in non-ferrous metal mining industry was still too
high. The coal mining and coal washing investment was 147.9 billion yuan, an increase of 27.2%
on a year-on-year basis; oil and gas exploration industry investment were 181.1 billion yuan, a
23.8% year-on-year increase; ferrous metal mining industry investment was 35.6 billion yuan, a
year-on-year increase of 28.2 percent; the non-ferrous metal mining industry investment 30.6
billion yuan, a year-on-year increase of 67.8 percent; the non-metallic mining industry investment
was 20.8 billion yuan, a year-on-year increase of 45.2%. In terms of smelting process, the ferrous
metal mining and smelting and rolling processing investment were 224.7 billion yuan, a 2.5
percent year-on-year decline. In terms of non-ferrous metal smelting and rolling processing
investment were 97.4 billion yuan, a year-on-year increase of 27.9 percent; the non-metallic
minerals investment was 185.4 billion yuan, a year-on-year increase of 33.0 percent; the oil
processing, coking and nuclear fuel processing industry investment were 94.5 billion yuan, a
year-on-year increase of 17.9 percent; the average growth of smelting processing industry was
14.4 percent; and the geologic exploration industry investment was 5.7 billion yuan, a
year-on-year increase of 14.2 percent.
As a whole, downstream smelting processing industry investment remains at a relatively low level
of growth, and black metal mining and smelting and rolling processing investment even show
negative growth under the macro-control measures.
The investment in the mining industry slowed down gradually, but was still higher than the
national average level. Its investment increase declined obviously from the first quarter to the
fourth quarter; the investment increase speed of upstream geologic exploration was lower than
other areas.
3.1.3 Exploration of minerals and resources reserves
In 2006, Decision of the State Council on Strengthening Geological Work was drafted, the whole
country formed excellent situation for strengthening geological work. The Chinese government
and society enhanced their attention and input on minerals exploration. The geological exploration
cost of the whole country was 41.6 billion yuan, a year-on-year increase of 20.6 percent. Since
2003, its exploration investment has maintained double-digit growth for four consecutive years
(Fig. 3-1), of which the state financial appropriation was 4.4 billion yuan, year-on-year increase of
60.1 percent, accounting for 10.5 percent of the total investment in the geological exploration
investment, an increase of 2.6 percent over last year. Chinese government significantly increased
mineral exploration inputs to further improve the supply capability of domestic mineral resources.
The growth trend of China’s mineral exploration inputs is in accordance with the world non-fuel
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mineral exploration inputs.
Fig. 3-1 The mineral exploration investment of the whole country
Oil-gas Mineral Resources Exploration
Non-oil-gas Mineral Resources Exploration
0.1 Billion yuan
The main reserves of mineral resources have a new growth. According to statistics in early 2006,
171 kinds of mineral resources have been found in china, of which 159 kinds of mineral resources
have been proven reserve (one kind of new mineral product, medical stone). Compared with the
previous year, the mineral resources with proven reserves that increased accounted for 47 percent,
the mineral category that reduced accounted for 33 percent and unchanged accounted for 20
percent. Most of the mineral resources with proven reserves have new growth, and a majority of
important mineral resources with proven reserves has increased.
3.1.4 Mining exploitation and mineral production
The major national mineral production continued to grow fairly rapidly, of which, the increase
range of alumna, iron ore, natural gas, pig iron, steel, crude steel, ten kinds of nonferrous metals
and cement production are higher than the national industrial production. The growth range of
some major consumption of steel, copper, aluminum and other industries, such as automobiles,
construction machinery are above 20%, which continue to promote the expansion of minerals
demand. China’s minerals need still maintains rising tendency, and the profits of extractive
industry rise dramatically.
The iron ore production increases rapidly. In recent years, the price of iron ore has shown
significant advances, which stimulated the investment and development of domestic iron ore
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industry and a significant increase in iron ore production. In 2006, China's total output of iron ore
and crude steel were 588 million tons and 423 million tons respectively, year-on-year growth of
38.0% and 18.5%, of which the growth of iron ore output rose 12.7 percent than the same period
last year. Exploitation and utilization of a large number of low-grade and ultra poor iron ore has
eased the tension supply situation of China's iron ore effectively.
Fig. 3-2 Comparison of iron ore output in 2004-2006
In 2006, the total output of 10 kinds of non-ferrous metals amounted to 19.1694 million tons, a
year-on-year increase of 17.2 percent. Of which, the year-on-year increase of titanium, and
magnesium were as high as 45.2% and 32.2%; and tin, aluminum and nickel were 22.7%, 22.1%
and 19.7%; and the increase of copper, lead and zinc were 17.8%, 15.3% and 14.8% respectively.
Since 2003, the copper price both at home and abroad has stepped into bull market. The growth of
electrolytic aluminum output has been restricted to a certain degree under the macro-control, but
the gradual release of new-built production capacity, it still showed a rapid growth momentum.
The output of electrolytic aluminum accumulated to 9.35 million tons, a year-on-year increase of
20.1 percent. The output of alumina was 13.7 million tons, a year-on-year increase of 59.4 percent.
The output of gold was 240.1 tons, a year-on-year increase of 7.2%.
3.1.5 Import and export trade of minerals
In order to protect domestic resources more effectively, control the exportation of high energy
consumption, high pollution, and resource-type commodities, reduce the resource-environmental
pressure of economic development, promote the transformation of the economic growth mode,
and protect the national economic security, the State Development and Reform Commission and
other ministries jointly issued Notice of Relative Measures of Controlling of Some High Energy
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Consumption, High Pollution and Resource Products Exports, from Jan. 1 2006, the export
volume of rare earth and products would be reduced appropriately; the coke export quotas
maintained the level of the previous year; the export of product oil by the mode of processing
trade should be controlled strictly. We should reduce the energy and resource consumption by
technical innovation; extend the industrial chain, improve the structure level, technological
content and added value of export commodities.
In 2006, China's total export-import volume was US$ 380.9 billion, a year-on-year increase of
23.9 percent, a simultaneous growth with the national trade. Among them, the export amount was
US$ 153.61 billion, and import amount was US$ 230.29 billion, year-on-year growth of 32.6%
and 20.2% respectively. The total export-import volume, export amount and import amount of
minerals account for 21.6%, 15.9% and 29.1% of China's total volume of imports and exports,
gross export volume and gross import respectively.
Iron ore imports continue to grow. China imported 326 million tons of iron ore, and the imports
were US$ 20.81 billion, 18.6% and 13.3% higher than that in previous year respectively.
The cost of most bulk minerals increased significantly. Compared with the previous year, the
average cost of import of China's oil increased of 22.8%, the copper increased of 81.4% and the
alumina increased of 18.3%. While the average cost of import of iron ore fell 4.5%, and the
average cost of coal fell 2.5% (Table 3 - l).
Table 3 – l The average cost of import of China’s important mineral products and the average price
changes of coal
Product
Unit
2001
2002
2003
2004
2005
2006
Iron ore
US$/ton
27.1
24.8
32.8
61
66.8
63.8
Copper concentrate
US$/ton
398.2
392
482.5
777
943.3
1656.8
Alumina
US$/ton
186.8
164.7
245.4
347.8
370.1
437.7
3.1.6 The price of the mineral products
The price of mineral products in 2006 continued to increase, and the growth rate slowed down
obviously. The general price level of mineral products continued to rise in 2006. A 10.1 percent
month-on-month increase on average and 0.7 percent link relative ratio increase. The increase
speed of mineral products slowed down in general but its fluctuation was intensified. In view of
the impact of RMB appreciation, the price of domestic energy minerals rose by 4.5% in 2006
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actually, the metal mineral products rose by 23%, and the non-metallic mineral products rose by
3%. The high price of crude oil, copper, gold and others became the major strength leading the rise
in price of China’s mineral products in 2006.
The price of metal mineral rose by 23% year on year in 2006, its increasing range rose by 12
percentage points. The increasing speed showed negative growth in March, June, October,
November and December on a monthly basis. The overall trends showed the characteristic of “low
in earlier period and high in later period”. The price behavior of different types of minerals was
quite different, the price of copper, aluminum and gold increased significantly while the price of
iron ore dropped down sharply.
The iron Ore: the annual average CIF of China's imported iron ore was 63.8 US dollars / ton
calculated in US dollars, a year-on-year decrease of 4.5%. Converted by a floating exchange rate,
it was 511.04 yuan / ton, a year-on-year decrease of 6.5%. The immediate cause of price fall of
CIF was the charges decline of International Ocean shipping, which affected the increase in output
of domestic ore directly. Moreover, the domestic ore price was lower than the imported ore price,
which was a "historical-turning-point", and reduced the demand for the imported ore to some
extent.
The refined copper: the spot price of nine major cities such as Beijing, broke through 70,000
yuan/ton in May, and will remain a high price state of 65,000 yuan/ton in the second half year. The
annual average price was 62,500 yuan/ton, a year-on-year increase of 76.1 percent. The rise in
price of copper made the cost profit ratio of domestic copper mining industry in 2006 rose from
15% to 37%, but the cost of copper smelting industry margins grew by only three percentage
points, to 8%. Internationally, the London Metal Exchange cash price for annual average 6721.6
US dollars / ton, an increase of 82.7%. From the overall trend, the domestic price of refined
copper in the international market of the strong linkage between basic synchronous changes.
Refined aluminum: the average spot price of refined aluminum in nine major cities such as Beijing
was 20,750.38 yuan / ton, a year-on-year increase of 22.3%. With price rise of aluminum, the cost
profit ratio of aluminum smelting industry in 2006 increased by 6 percent than that of 2005, which
was 17%. Internationally, the average spot price of London Metal Exchange was US$ 2813.63 /
ton, a year-on-year increase of 35.4%.
Gold: the spot price of Shanghai Gold Exchange (Au99.95 gold), the annual average price was
154.93 yuan / g, a year-on-year increase of 32.3%. The price rise of gold made “stock-market
fever” in China. The accumulated turnover of the Shanghai Gold Exchange in 2006 rose 39% than
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that of 2005 and the accumulated amount of a deal rose by 85 percent. The annual average
international price was 603.46 US dollars / ounce, a year-on-year increase of 35.7%. In terms of
the overall trends, the domestic gold price changes simultaneously with the international price.
3.1.7 Analysis of future trend of the mining industry
In 2006, China's economy maintained a steady and rapid growth. The high-level operation of fixed
asset investment, industrial production, import and export trade, and other indicators promoted the
high-level operation of rapid increase and price of domestic energy and raw materials production.
It was expected that under the impact of macro-control measures, the GDP growth rate would
decline somewhat between 8 to 9% in 2007. The high-speed economic growth has resulted in high
demand for resources.
With the acceleration of industrialization and urbanization process, and the continuous
development and improvement of infrastructure, the investment in fixed assets will remain at a
relatively high level, thus the growth in demand for resources products is still maintained. Study
on the recent increase trend of investment in fixed assets, the growth rate has maintained more
than 20 percent. Study on the future development trend, various structural factors (assessment
mechanism, investment impetus and attracting investment, etc.) affecting the rapid growth of
investment still exist. The monetary condition will be loose for its commitments to the WTO and
the own funds of enterprises are relatively adequate in recent years, therefore, the investment will
continue to maintain a growth momentum. It is expected that under the influence of macro-control
measures, the growth rate of investment in fixed assets in 2007 will further decline, but will
remain at the high level of more than 20%. The rapid growth of fixed asset investment is bound to
exacerbate the rapid growth rate of resource consumption.
In addition, the change of China's consumption structure will further promote the upgrading of the
industrial structure. The per capita GDP in Beijing, Shanghai and other major cities has already
reached the upper level of developed countries, and basically solved the food and clothing needs
for “eat, wear and use”, and walk towards the process of a well-off society that meet the needs of
“housing and transport”. In the pursuit of “a comfortable life”, housing and automobile and others
are gradually becoming the main line and hot of China's consumption structure upgrading, which
will maintain a huge demand for mineral resources. Driven by basic housing demand and
improvement demand, the real estate investment will maintain a sustained growth momentum, and
will further promote the demand growth of construction site, steel, cement, non-ferrous metals,
chemical products, energy and raw materials such as coal.
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The growth of output of steel, copper, aluminum, cement, and other major minerals will fall. From
November 2003, the investment in steel, electrolytic aluminum, cement, and other overheated
industries was controlled and regulated by Chinese government, the investment in copper smelting
industry was also controlled at the end of 2005 and the export tax rate was also adjusted. It was
expected that the growth of output of steel, electrolytic aluminum and cement will fall
significantly in 2007. It still has 2-3 rise period for copper smelting capacity, but its growth rate
will be no more than that of 2006.
In recent years, the increases in price of iron ore has promoted the domestic enterprises’
enthusiasm for exploitation of iron ore, especially for the low-grade iron ore, which made the iron
ore production rise sharply, thus easing the tense supply situation at domestic effectively. Study on
China’s production of iron ore in 2006, the up-scale enterprises are provided with annual
production of 660 million tons. It was expected that the domestic iron ore would remain the
growth rate of more than 20 percent in 2007. China's major steel industries will maintain rapid
growth. There will be no major changes for the strong demand of steel. It was expected China’s
steel output would rose 11 percent in 2007. In fact, in terms of world’s iron ore resources, there are
abundant resources on the whole, which can fully meet the growing demand in the world. As the
newly increased production capacity of the international iron ore has been put into operation as
well as the effect of China's rectification for iron ore circulation order has become apparent, the
domestic conflict between supply and demand will be eased continuously. It is expected that the
intense supply of global iron ore will come to its end, and China's continuous growth demand for
imported iron ore will be restricted. The production capacity of project under construction of the
steel sector is 50% of the current capacity, and is expected to be in an over supply situation.
The price of China’s minerals fluctuates with the changes of domestic demand and the leading role
of the international market. Under the background of sustained and stable economic growth of
China in 2007, the domestic minerals price rise will tend to slow down in the process of steady
growth, and the overall level can be controlled in a more moderate increase range. Its price
increase was slightly lower than in 2006. Based on the research for the factors affecting the market
supply changes, consulting to price trend in the past three years, and using the time series analysis
method to forecast, it was expected that the whole country’s minerals price would keep the
development trend of “steady growth” in 2007.
The forecast is mainly based on the following three points. First, sustained and rapid economic
growth will be conducive to maintaining the growth of demand for minerals. Despite the demand
growth rate for minerals will be slowed down, the demand remains high, which would support the
national mineral price goes up in 2007. Second, the in-depth reform of resource price will promote
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the development of future mineral price. The main target of reform is oil, natural gas, coal,
electricity, water and land resources closely related to the national and social development, the
long-term low price level of which has resulted in the serious waste of resources and the extensive
growth pattern. The government will accelerate the reform of resources product price in 2007. The
most direct effect of the reform is the rise in price, and the production cost and price of other
minerals will be promoted as well. Third, the excess capacity will become a prominent factor
restraining the price rise of mineral products. The high energy-consumption projects, such as steel,
cement, electrolytic aluminum, ferroalloy, coke, calcium carbide, automobile, copper smelting,
lead smelting and zinc smelting, which were large-scale constructed a few years ago, a
considerable portion of which have been put into operation in 2007. If the adjustment measures
were not adopted timely for these related 10 industries, surplus production capacity would be
likely to arise, which would give rise to price diving possibly.
As above-mentioned, the factors promoting and restraining the rise in domestic minerals price are
compossible in 2007, however, the promotion role are bigger than the restraining role. It was
expected that the price level of domestic market would remain upward trend as a whole. The
overall level will increase about 10%, and the price trend of each mineral type is different from
each other.
It is anticipated that the annual average CIF of imported iron ore will be less than 65 US dollars
per ton. The new international long-term iron ore contract price has been formed in fiscal year
2007. The standard powder ore price is 0.721 US dollars / ton, a 9.5% increase than in 2006. But
looking back at the past, even after the long-term contract price rose 71.5 percent in 2005, China's
CIF of imported iron ore still maintained a downward trend at the end of 2006, which showed that
China's iron ore supply and demand situation had changed. On the one hand, the continuous
operation of the macro-control policy made the monthly output of crude steel declined month by
month. The output of domestic iron ore increased greatly, which was conducive to reducing the
demand for imported iron ore. On the other hand, the international spot supply increased, which
also made the ore price went down. Therefore, the CIF of iron ore may still show a downward
trend in 2007.
The copper price will rise. The increase production of domestic copper is limited currently, while
the refining capacity is in excess seriously. The supply of smelting enterprises’ raw material is
difficult to be maintained continuously, which will make the domestic copper continue show big
supply gap, and the tight supply and demand situation has been in the high position, its uprising
space is not very great, and even the possibility of a high drop would appear under the influence of
market speculation.
89
The aluminum prices will fall back. First, the domestic alumina price went down from 6,000 yuan
/ ton to 2,400 yuan / ton in less than half a year from the second half year of 2006, and returned to
the normal price level. The production cost of electrolytic aluminum also returned to its normal
level. Second, the export tax of electrolytic aluminum is 15%, which further restrain the export of
domestic electrolytic aluminum, and increase the domestic sales pressure on the aluminum market
to a certain extent. The domestic electrolytic aluminum price is likely to be declined. Third, the
production capacity of electrolytic aluminum is overmuch seriously.
The Gold price will remain high level. The investment demand and jewelry demand for gold
stimulated the gold price rose to a new high in 26 years. Under the policy background of
controlling the scale of investment in fixed assets, the surplus part of the investment will be
diverted to the gold field. Therefore, it was estimated that the gold investment demand would rise
in 2007. With the improvement of people’s living standards, the consumption demand for gold is
expected to rise as well. Therefore, the price of gold in 2007 is expected to remain high.
3.2 Market tend of major industries
3.2.1 Analysis on iron ore market trend
In recent years, affected by the global growth in demand for iron ore, particularly the rapid growth
of China's demand for iron ore, the international iron ore market is facing tight supply situation,
and ore price went up for four consecutive years. The demand exceeding supply of ore market is
mainly due to the low price of the international ore in early days, and the global mining
enterprises’ investment for ore is weak, which cause the interim production capacity shortfall. In
fact, the current global iron ore resources are very rich and many of the resources have not been
fully developed. According to the relevant statistics, there are more than 140 billion tons of iron
ore economic reserves in the world currently, which are mainly distributed in Russia, Brazil,
China, Canada, Australia, India, the United States and other countries and regions. In recent years,
the world's three major ore suppliers have been actively invested in expanding production capacity,
while the companies in India, Chile, South Africa, Russia, and other countries are also carrying
out the expansion. CVRD of Brazil Brucutu new mines in October 2006 operational, the mine iron
ore production after the commencement of the annual output will reach all 30 million tons. Rio
Tinto Group is a subsidiary of Hamersley (Hamersley) companies and Norbu River (Robe)
company expansion, it is estimated that in 2007 its capacity to 170 million tons. BHP Billiton
(BHP) has invested 1.5 billion US dollars to upgrade its C-segment or after the mining area to 42
million tons, the second half of 2006 production. 2006 BHP's iron ore production will reach 118
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million tons by 2007 to reach an annual output of 129 million tons. Overall, in 2006 the three
major ore giants, as well as India and other ores of iron ore exporting countries to increase total
production capacity in about 75 million tons, which effectively guarantee the international iron ore
supply.
In terms of the output of iron ore, the global iron ore production has been around 1 billion tons a
few years before and after 200. The global ore output was 10.9 million tons in 2002. With the
substantial growth of global steel production in recent years, and the continuous growth of global
iron ore production, the global iron ore output is expected to exceed 1.4 billion tons in 2006.
China, Brazil, Australia, Russia, Ukraine, India, the United States, Canada, South Africa and
Sweden are the world's top ten iron ore producing countries, the total iron ore output of these 10
countries accountfor about 90 percent of the world's total, of which China is the world's largest
iron ore producer.
In terms of the iron ore trade, the global iron ore trade volume also has increased rapidly with the
growth of China's import demand in recent years. The global iron ore trade volume was nearly 500
million tons in 2001, while the global iron ore trade volume is expected to reach 700 million tons
in 2006, an increase of 200 million tons than in 2001, which is the mainly supplied to China. The
world's major iron ore exporters are Australia, Brazil, India, South Africa and other countries, and
the annual iron ore export volume of the above four countries accounts for 85% of the global
exports. These exporting countries have abundant iron ore reserves, and India’s iron ore export
growth over the past few years is very fast. The world’s major ore importing countries include
China, Japan, South Korea, as well as the United States and some EU countries, of which China is
the world's largest importer of iron ore imports with more than one-third of global export. China’s
adjacent countries---Japan and Korea are also major importer of iron ore. In terms of the world's
major iron ore imports, in addition to China and the United States, other major importing
countries’ production of pig iron almost depend on the iron ore imports.
In recent years, China's consumption of iron ore has increased rapidly with China's rapid growth
in pig iron production. China has become the world's largest consumer of iron ore currently.
China’s pig iron output was 171 million tons in 2002 and 330 million tons in 2005, and nearly
doubled that of 2002. China pig iron output is expected to reach more than 400 million tons in
2006, a year-on-year increase of 21 percent---70 million tons more than the previous year.
Calculated by production of one-ton pig iron consumes 1.55 tons of 66% finished grade ore, then
the annual domestic consumption of finished iron ore is about 620 million tons in 2006. In view of
domestic enterprises’ expansion of production capacity for iron ore, the iron ore reserves should be
increased; the annual actual need for finished iron ore is estimated to 635 million tons, an increase
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of 120 million tons than the precious year. It is expected that China's iron ore consumption will
account over 46% of the global total iron ore consumption.
Table 3-2 The demand of domestic finished iron ore
Unit: 0.1 billion
Year
Crude
iron
output
Increased
as
compared with the
Iron
volume
previous year
ore
demand
Increased
as
compared with the
previous year
2006
4
0.7
6.35
1.2
2005
3.3
0.72
5.15
1.15
2004
2.58
0.55
4
0.8
2003
2.03
0.32
3.2
0.5
2002
1.71
0.24
2.7
0.35
Judging from the domestic iron ore production situation, many private small mine areas are not
included in the range of national ore output. Therefore, the statistical data of national ore output is
not accurate. For example, according to national statistics, China’s crude ore output was 420
million tons in 2005, up 25 percent from the previous year. If the average grade of crude ore is at
30 percent, one-ton finished ore need to consume around 2.4 tons of crude ore, then the crude ore
output can be concerted into 175 million tons of finished ore in 2005. According to the domestic
demand for iron ore, it can be roughly estimated that the domestic finished iron ore output should
be about 240 million tons in 2005, 65 million tons more than the data of national statistics, which
is the finished ore output not included in the national statistics. Similarly, China’s crude ore output
was 580 million tons in 2006, up 38 percent from the previous year and 242 million tons of
finished iron ore by conversion rate. While it was expected that the domestic demand for finished
iron ore was about 630 million tons at that year, it can be leaned that the domestic finished iron
ore was about 310 million tons minus the imports, namely 68 million tons of finished ore output
are not included in the national statistics, accounting for more than 20 percent of the total
domestic finished ore output.
At present, China's retained iron ore reserves is about 46 billion tons, of which 97.5 percent is low
grade iron ore, the high-grade iron ore that the average iron grade content is above 55% and can
be directly fed into the furnace account for only 2.5% of the national reserves. While the
high-grade iron ore that forms a certain scale and can be mined separately is much less. At present,
China's iron ore reserves are concentrated in Anshan – East Hebei Province - Beijing, Panzhihua Xichang, Wutai - Lanxian, Ningwu- Luzong, and other mine areas. In terms of the geological
distribution, the Northeast, North China's iron ore reserves are more than 10 billion tons, followed
by the Southwest region of 8.3 billion tons; reserves in East China are 6.5 billion tons; and
reserves in South Central are 4.5 billion tons. Before 2002, the development for China's iron ore
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resources exploration is basically in the state of stagnation, which made the domestic ore output
increased very slow. After 2002, with the rapid increase of domestic output of pig iron, the
domestic ore production capacity was unable to meet the domestic demand, leading domestic ore
price soaring, and the highest price has amounted to 1,000 yuan / ton. Stimulated by the price
soaring in the ore market in recent years, the domestic mining enterprises have shown the large
expansion trends, including many civil mining areas increased rapidly and the domestic ore
production is significantly increased. According to the National Statistical data, China’s ore output
rose by 22 percent year-on-year in 2004, and in 2004 it was an increase of 25 percent. While in
Jan.-Sep. 2006, it reached 37 percent. Although the coverage of national statistics is limited and
the date for growth has difference with the actual data, it can be seen that from the beginning of
2004, China's ore output growth has accelerated noticeably from the change of the above growth
rate. Calculated according to our estimated production, China’s ore output year-on-year growth
rate was 21% in 2004, and was 23% in 2005. The year-on-year increase of domestic ore output
was as high as 29% in 2006. In terms of the domestic ore increment, the domestic finished ore was
15 million tons in 2003, increased of 37 million tons in 2004, and up to 45 million tons in 2005. It
is expected that the output will reach 70 million tons in 2006. It can be said that the current
domestic ore production has entered release period, which is favorable for easing the shortage of
domestic supply of iron ore.
In terms of the iron ore import, the insufficient domestic supply of ore has stimulated China's
rapid growth for imports of ore in recent years. China's annual growth rate of iron ore import has
been more than 20 percent since 2000. In 2003, China imported 148 million tons of iron ore, 208
million tons in 2004 and 275 million tons in 2005. It is expected that China will import 325
million tons of iron ore in 2006, 50 million tons more than 2005.
Table 3.-3 China iron ore import from 2000 to 2006
Unit：10,000 tons
Year
China’s
import
Proportion of the global iron
Proportion
of
the
volume
ore trade
domestic consumption
2000
7000
16%
36%
2001
9240
19%
39%
2002
11150
21%
41%
2003
14800
26%
46%
2004
20800
34%
52%
2005
27500
41%
53%
2006 (predict)
32500
46%
51%
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Since 2003, China has become the world largest iron ore importing country and its proportion of
global iron ore trade has increased year by year.
Chin’s iron ore resource per capita is only 42% of the world per capita. In recent years, the growth
rate of pig iron, steel and rolled steel output is faster than the growth rate of iron ore output.
China's iron ore production could not meet domestic demand, leading to its dependence on the
international market has increased daily. Along with the industrial upgrading, China's steel
industry started to become more dependent on the high-grade iron ore produced in Brazil,
Australia and India. The "grade" become a keyword for raw materials. The standard grade for
imported ore is 64.5%. Brazil’s high-grade iron ore reserves are 11 billion tons, and the average
grade of iron ore is 58.56%, and the highest grade can reach 70%. While the average grade of the
domestic iron ore is only 32.7%, equivalent to only half of the above imported ore. Some domestic
enterprises, such as Angang, Panzhihua Iron and Steel Corporation, although they have some
large-scale mines, still need to use imported iron ore. These iron and steel groups need to import
the iron ore that the grade is above 65 percent. In terms of the volume, China's imported iron ore
volume exceeded Europe and Japan in 2003 for the first time, and imported 275 million tons of
iron ore in 2005. The domestic large-scale iron and steel groups’ dependence on the imported ore
is 53.3 percent. In 2006, China's total imports of iron ore were 326 million tons, a 18.6 percent
growth as compared with 2005. In the first half of 2007, China's foreign trade imported iron ore is
190 million tons, still an increase of 8%. According to the statistics of China Iron and Steel
Association, China's dependence on imported iron ore is 54.84% the first quarter of this year, a
3.74 percent increase as compared to a increase of 51.1% last year. The insiders’ expectation for
reducing dependence on the imported ore is not fulfilled. Besides, its dependence on the imported
ore will “rise in stead of fall”. Under the background that the import also maintains a high rate of
growth, the effect of international iron ore for domestic steel production will be even bigger. This
is the reason why China's passive position of “competition between the pre and steel” is difficult
to be changed in the short term.
In 2004 and 2005, China's increment for ore import was almost equivalent to the global trade
growth, and China is expected to import volume of ore will account for 46 percent of the world
trade. The major iron ore importing countries for China are Australia, Brazil, India, South Africa
and other countries. Among which, Australia is one of China's largest iron ore exporting country,
followed by India and Brazil, and South Africa takes the fourth place. At the same time, driven by
China's strong demand growth for imported ore, a number of American States and neighboring
countries also increased their export of iron ore to China in recent years, such as Kazakhstan, Peru,
Canada, Russia, Venezuela, Chile, Indonesia, North Korea, and Ukraine, etc, whose iron ore
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exports to China exceeded more than 1 million tons.
In 2006, China's total import volume of ore was 326.3 million tons, up 18.6 percent from 2005.
The number of mine contract signed by China's leading steel groups increased in 2006, and the
majority of which were the renewal of the contracts. Ma Steel signed a contract with CVRD on
iron ore supply in 2007-2013 of 7.3 million tons / year (8.3 million tons / year from 2009); Beitai
Iron and Steel Group signed a contract with CVRD on iron ore supply in 2007-2031 of 4.2 million
tons / year. These steel plants’ contract with CVRD can be traced back to 2003. In Australia, FMG
continue to expand its market sharesin China, and signed contracts with nine steel groups of China,
including Jinan Steel, Laiwu Steel and Shagang Group, etc, the total output was about 9.4 million
tons / year. Wuhan Iron and Steel Company also decided to purchase 4.4% initial yield of FMG,
and would purchase up to 2 million tons / year of iron ore in 10 years. In addition, in order to
ensure long-term and stable supply of iron ore and reduce the purchase costs, China’s steel mills
will continue to extend the imported ore purchasing channels. Jinan Steel has reached a supply
agreement with India DEMPO in 2007-2010, and Fujian Sanming Steel has reached a supply
agreement with Ukraine Ferrexpo for pellet for three years.
Table 3-4 China’s imported ore from foreign countries in 2004-2005
Unit: 10,000 tons
Country
2004
2005
Increment in 2005
Australia
7800
11200
1500
Brazil
4600
5500
2200
India
5000
6900
400
South Africa
1100
1050
150
Other countries
2300
2850
750
Total
20800
27500
5000
The domestic ore market in 2006 kept the stable operation status and the ore price did not show
sharp rise and fall as previous years. It mainly due to the rapid growth of domestic ore output that
played an important role for balancing the domestic ore price.
The domestic ore price continued to rise in 2003. During this period, the domestic mining
enterprises’ preliminary input was inadequate and resulted in the output growth was restricted,
while the domestic steel output maintained a rapid growth in the same period, so the contradiction
between supply and demand was abvious, and the ore price rose from 300 yuan/ ton to 950 yuan /
ton. In 2004-2005, the domestic ore market by the domestic steel market showed big price
fluctuations as affected by the price fluctuations of steel market, and the fluctuations was in the
95
range of 500-900 yuan /ton. In 2006, the domestic ore price maintained the steady operation status,
price fluctuations were within 100 yuan / ton throughout the whole year. The stable operation of
ore price showed that the domestic ore market in 2006 has achieve a balance of supply and
demand, which was mainly due to the rapid production increase of ore output, and the tension
between the demand and supply of ore was greatly improved. Judging from the annual average
price, the average price of the domestic ore was 665 yuan / ton in 2006, the average price dropped
by 70 yuan / ton as compared with 735 yuan / ton in 2005, and a decrease of 115 yuan / ton as
compared with 780 yuan / ton in 2004 than the 780 yuan / ton, which showed drop tendency of
current ore price.
Judging from the imported ore price, the international price of ore has presented the rise condition
in recent years. The three big ore companies have increased the price of iron ore consecutively
from 2003 to 2006, and the price increased of 71% in 2005. On December 21, 2006, Baosteel
announced that it had reached an agreement with Brazil CVRD. CVRD's fine ore price will rise by
9.5% as compared with 2006 in 2007. This shows that China still seems to lack confidence in the
international negotiating table. In 2005, the iron ore price in the international market rose by 71.5
percent, and continued to rise by 19% in 2006. Although China's iron ore import volume was
about 3.25 million tons with a year-on-year increase of 18.2%, the growth rate was much lower
than the average growth rate of 30 percent since 2003. In recent years, reasons for the international
ore price rise include: the international ore demand continued to increase; the US dollar continued
to tend to fall; and three major ore companies controlled nearly 80% of the global ore trade
volume. At the same time, another important reason for the price rise of ore is that China's
enterprises signed less long-term supply contracts with foreign ore suppliers and are lacking in
long-term and stable supply, and many enterprises must import ore through spot market, which led
to the situation of bid up and ore price in the spot market price was much higher than the
long-term supply price. However, the growth rate of China’s imported ore amount was lower than
the growth rate of iron ore amount in 2006. The average price of China's imported iron ore in the
first nine months was 62.7 US dollars / ton, a year-on-year decrease of 7.2 percent. Of which, the
average price of India’s imported iron ore was 63.4 US dollars / ton, a year-on-year decrease of 20
percent, 7 US dollars/ton lower than the price of Brazil, and the price gap with Australia narrowed
down from 27 US dollars / ton to 8 US dollars / ton in March last year, which showed that the
international ore supply and demand relationship was easing. The ore price of 2007 is under
negotiation. With the Baosteel signed price agreement with the international giant ore group, the
ore price will rose by 9.5% again in 2007, but the main reason for rising was not due to the short
supply, but was caused by sustained depreciation of US dollar. Ar present, the global supply and
demand market of iron ore is undergoing important changes, ant the supply and demand of iron
ore has shifted from the tense stage into balance stage.
96
Table 3-0 Demand and degree of self-sufficiency of China’s iron ore
Year
Demand
Import volume
Domestic output
Degree
of
self-sufficiency
2006
6.3
3.2
3.1
49%
2005
5.15
2.75
2.4
47%
2004
4
2.08
1.92
48%
2003
3.2
1.48
1.72
54%
2002
2.7
1.12
1.58
59%
The annual consumption of China’s iron ore has been increased continuously and the annual
increment has been increased as well. The iron ore demand growth is strong. The strong growth of
iron ore makes the domestic iron ore cannot meet with the demand in the short term and the
demand growth for imported iron ore is faster. China’s self-sufficiency of iron ore has shown a
declining tendency in recent years. China’s iron ore self-sufficiency dropped from 64% in 2000 to
47% in 2005 (see the above table, unit: 0.1 billion ton). From 2006, along with the expansion of
domestic mining enterprises, the domestic iron ore production capacity also began to expand,
which was of great significance to level off China’s self-sufficiency of iron ore. Although China’s
import demand for iron ore is still in the increasing period in recent years, along with the slow
down of domestic pig iron output, the continuous sharp drop of China’s self-sufficiency of iron ore
will be changed obviously.
It is expected that the imported iron ore total amount is about 370 million tons in 2007, an increase
of about 44 million tons than in 2006 and an increase of 42 percent. The gross amount of domestic
iron ore is about 805 million tons in 2007, an increase of 15.5 percent over last year. The iron ore
resource shows tense situation relatively.
3.2.2 Analysis on copper market trend
China’s copper market in 2006 witnessed the process of a decline from summit, and dramatic
oscillation. After the Spring Festival, stimulated by the price rise in the international market, the
domestic forward and spot copper price rose sharply for a record of 70,000 yuan. After entering
the second half of 2006, the copper price showed downward trend affected by a variety of factors.
To the end of November, the electrolytic copper price in the main market was about 65,000 yuan
in general, a decline more than the first half year.
China’s copper price dropped sharply in 2006 and showed following four characteristics:
97
The domestic consumption was declined. In 2006, the domestic copper consumption was declined
due to the high price. In terms of the copper consumption indicator, the accumulative copper
output was 4.576 million tons in the first 10 months, a year-on-year increase of only 6.6 percent
over last year, and a fallback of 4 percent over the previous year. It is estimated that total annula
copper output is about 5.5 million tons, an increase of about 6% and is still in the lower level.
A sharp increase in copper export and a significant reduction in import. According to the statistics
by customs, from Jan. to Oct., the total accumulative copper (including copper alloy, the same
below) export volume was 23.9 million tons, and was 2.8 times of the same period last year.
Under the effect of the suppression measures issued by the State, it is expected that the export
volume of copper will fall back after two months, but the annual copper exports will reach
250,000 tons, an increase of nearly 50 percent from last year; and the imported copper was
779,000 tons, a year-on-year decrease of 37.7% from last year. It is expected that the annual
import volume is about 950,000 tons, about 34 percent decline. China's sharp increase in copper
export and the significant reduction in import gave rise to the "China factor" change to a positive
direction in the international copper market. The copper market has big influence on the global
supply-demand relationship, which also become one of the important factors that the international
fund withdrew from the copper market since the second half year.
Although China’s export speed of copper increased at an alarming rate in 2006, its rapid increase
of export volume is only temporary for the limited domestic resources, as well as under the
influence of suppression measures by relevant departments, and has strong staged characteristics.
In the long term, the fact that China’s copper supply heavily relies on imports of copper will be
difficult to change.
The newly increased resources show downward trend. In recent years, under the regulations of
strong demand and continuous rise in price, the investment in copper smelting processing has
increased rapidly, and led to the expansion of newly increased production capacity. In 2005, the
domestic copper output rose by 23 percent, and the domestic output hit another new high this year.
From Jan. to Oct., the copper output was 2.41 million tons, a year-on-year increase of 20%. It is
estimated that total annual copper output will be about 2.9 million tons, about 15 percent growth
over last year and another double-digit growth. However, the newly increased resources show
downward trend due to the sharp decline in imports. According to the data of Ministry of
Commerce of Distributing Monitoring Form Reporting System of Important Means of Production,
from Jan. to Oct., the newly increased resources of copper were 3.19 million tons, a-year-on-year
decrease of 2.1 percent. It is estimated that newly increased resource of copper will be no more
than 3.9 million tons, a slight decrease over the previous year. However, if adding the delivery
resources of the State Reserve Bureau, the annual supply of copper has increased over the
previous year. According to the above-mentioned two estimates, the overall relation between
supply and demand of copper was balanced in 2006.
98
China’s copper supply will continue to increase and the consumption will fall back in 2007. The
price rise lasts for several years will come to its end. The coexisting of market and other factors
will cause great fluctuations.
The newly increased production capacity continues to expand and the supply pressure is huge.
One of the pressures is the expansion of newly increased production capacity. Over the past three
years, China’s copper processing capacity has entered a large-scale growth period and expansion
period, with an average annual growth rate of above 20%, far outstripping the previous level of
growth. In 2007, China's annual copper output will reach or close to 3.2 million tons if calculating
according to the growth rate of 10%. Second, the export dropped significantly. China has
promulgated suppression measures such as raising export tariffs on copper products, which will
lead to a greater level of export fallback- the link relative ratio of copper export volume dropped
by more than 5% in this October. Third, the import volume will rise will rise in stead of drop. At
present, China's annual import of copper is less than 1 million tons, the decrease space has been
narrowed significantly. With the expansion of economic scale and the development of processing
industries, as well as the resupply needs of enterprises, it is expected that China’s copper import
volume will be over 1 million tons in 2007. Fourth, there was a large amount of carry-over stock
over the previous year. According to the market system of “buying commodities with rising prices
rather than those failing prices” and historical experience, the price rises to highest rate is also the
day when the stock is the most. Currently, the dominant stock of Shanghai Futures Exchange has
reached 30,000 tons, and this recessive and dominant stock may become a new year's supply
sources.
As mentioned above, it is expected that the copper supply available will reach or exceed 4.5
million tons in 2007, of which the newly increased resources will reach 4.4 million tons, 12%
more than last year. The downward trend is turned completely.
The growth in demand will not change, but the growth rate will be weakened. In terms of the
macro pattern of the New Year, despite the global economic growth will not have a fundamental
reversal in 2007, copper consumption continues to maintain the growth pattern, but the growth
rate will fall back correspondingly. First, the two engines driving the global economic growth
currently - economic growth of China and US will slow down in 2007. In someone’s opinion,
under the impact of real estate bubble burst in the United States and Europe, the global economy is
likely to fall into recession. Second, China's copper exports will have a greater reduction, and the
exports volume is expected to less than half of the previous year in 2007. The remaining resources
will be sold to the domestic market. Third, the “blowout like” growth in consumption of copper
99
products is difficult to reproduce. Under this influence, it is expected that China’s copper
consumption (including exports) will be more than 4 million tons, 5% more than last year. If there
is no accident, the relationship between supply and demand will be balanced.
Generally speaking, the continuous price rise of China's copper for many years will come to an
end in 2007. The copper price will show large fluctuation trend throughout the whole year. In
addition to the market supply-demand relationship changes from tension to balance, the ending of
the commodity bull market is also the main factor ending the price rise, and the copper market is
facing great risk of reversal. Up to now, the price of global oil, coal, copper, rubber, and other
primary products has entered the high-risk state generally. It is predicted by some institutions that
the oil price in the international market will fall to 50 US dollars / barrel below. If this forecast is
realized, minerals including copper products, will drop down substantially.
The pressure of RMB appreciation is enlarged. The trade surplus has continued to increase and the
foreign exchange reserve has increased quickly, which enlarged the appreciation pressure for
RMB. It is predicted that the RMB exchange rate will remain upward tendency in 2007 and the
import cost of the copper and furnace will be reduced accordingly.
3.2.3 Analysis on aluminum market trend
Since 2006, the international aluminum price has risen from about 2100 US dollars / ton in the
beginning of the year to 3,000 US dollars / ton in May, although a slight fall back afterwards, but
has maintained at 2,400 US dollars / ton. Entering the fourth quarter, the price gradually increased
to 2700 US dollars / ton, and the international aluminum average price was about 2,500 US dollars
/ ton, up 34 percent over the previous year, reaching the highest point in ten years. Affected by the
international aluminum price rise, the domestic market aluminum price also rose, but a relatively
small increase, rising from 19,500 yuan / ton in the beginning of the year to 21,000- 22,000 yuan /
ton currently, about 10% increase.
According to the preliminary analysis, main factors promoting the international aluminum price
rise are: first, the fund speculation promoted the overall price of non-ferrous metals to rise. The
international funds’ intervention in the non-ferrous metals futures market in 2006 made the price
of copper, nickel, zinc and others get the highest price in history, which led the price rise of
non-ferrous metals including the aluminum; Second, the global aluminum consumption remaining
growth and brisk market demand. Since 2006, with the steady growth of the world economy, the
global aluminium consumption is expected to increase 4.8 percent over the previous year, reaching
33.4 million tons, slightly higher than the annual output of aluminum; Third, China's export
100
reduction. In early 2006, China's electrolytic aluminum exports began to levy a 5 percent export
tariff, and further increased to 15% in November, therefore, the exports were inhibited. From Jan.
to Oct., the total domestic electrolytic aluminum export volume was 720,000 tons, a year-on-year
decrease of 26.9 percent, and the supply of electrolytic aluminum on international market was
decreased to a certain extent.
Contrary to the price rise of electrolytic aluminum, the price of alumina went down from about
6,000 yuan / ton quickly to the current 2,400 yuan / ton in less than half a year since the second
half year of 2006 and returned to normal price level. Compared with the first half of 2006, the cost
of alumina of current domestic electrolytic aluminum enterprises is reduced greatly, but the
electrolytic aluminum price remains high level, and the product profitability was significantly
increased.
From the situation of the past few years, the global aluminum supply and demand are basically in
balance due to global aluminum consumption and production growth. China is the largest
electrolytic aluminum production and consumption country, the domestic aluminum
supply-demand change has great impact on the stability of global market. In 2006, it is expected
that the domestic aluminum production will increased of 17.8 percent to 9.2 million tons. The
apparent consumption increased of 20 percent to 8.5 million tons. In 2007, the domestic aluminum
output growth is expected to about 14% to 10.5 million tons, and the apparent consumption
increased of 13 percent to 9.6 million tons. According to the initial judgment, just from the
supply-demand change in 2007, no major changes will take place, which provide stability for the
international aluminum price.
In order to restrict the excessive development of industries engaging in “high energy consumption,
high pollution and resource products”, the Chinese government has promulgated a series of
control policies and measures in recent years. The State Council issued Notice of Fast Promoting
the Structural Adjustment in Overproduction Industries; relevant departments issued the guidance
of structural adjustment on the electrolytic aluminum industry, and access threshold of the industry
in environmental protection, land, energy consumption and scale were improved; brought down
even cancelled the export rebate rate of most of the non-ferrous metal products; the National
Development and Reform Commission introduced the Access Criterion of Lead and Zinc Industry
in March this year. From November 1, 2006, the Customs Tariff Commission of the State Council
regulated the provisional export tax rates of primary products of copper, nickel, electrolytic
aluminum totaled 11 non-ferrous metals. The provisional tax rate is 15 percent. The export tax
rates of these products were 5% to 10%.
101
These targeted macro-control policies have achieved remarkable results. At present, the copper
smelting investment has reduced and the planned investment in new projects has dropped sharply,
but the investment in the nonferrous metals industry is still not optimistic generally but the with
strong growth momentum. In 2006, the investment in fixed assets of China’s nonferrous metal
industry was 118.08 billion yuan, up 36.44 percent, of which the investment in refining was 63.6
billion yuan, accounting for more than half of the whole non-ferrous industry. National Bureau of
Statistics has disclosed that the investment in fixed assets of nonferrous metal industry substantial
increased of 56.4% in the first two months of this year, far higher than China's fixed asset
investment growth of 23.4%. In particular, it is worth noting that the electrolytic aluminum
investment may rebound under the impact of high aluminum price. Many projects are being
implemented in secret; but the lead and zinc smelting industry investment remains high and the
production capacity will be further expanded.
At the same time, the export in large amount of high-energy consumption, high pollution and
resource products has not been inhibited fundamentally. Aluminum and zinc are China's largest
export variety of non-ferrous metal industry. Although the export tariffs were increased, China's
export of aluminum ingots was still as high as 1.212 million tons in 2006, a slight decrease of 8%
compared with 2005. However, because the export of a lot of aluminum products has tax rebates,
some part of electrolytic aluminum is exported in the form of aluminum products after rough cut,
resulting in 1.24 million tons of aluminum exports, a year-on-year increase of 74.3%.
3.2.4 Analysis on gold market trend
In 2006, China's gold output was 240.078 tons from January to December this year. Compared
with the same period last year, the gold output increased of 16.028 tons, up 7.15 percent. The gold
mining enterprises’ (finished gold and gold) mineral gold was 179.848 tons, up 0.72 percent from
the same period last year. The mineral gold output proportion of various provinces (regions) are:
Shandong---25.03%, Henan---13.74%, Fujian---7.99%, Liaoning---5.70%, Hunan---5.46%,
Shaanxi---5.24%, Hebei---4.82%, Xinjiang---3.56%, Gansu---3.51%, Guizhou---3.48%; the
mineral gold output of the above the key gold producing provinces (regions) account for about
78.53% of the national output, and other provinces account for about 21.47%.
From January to December 2006, the finished gold of the smelting enterprises (non-ferrous metal
smelting enterprises + gold smelting enterprises) was 111.867 tons, up 16.94 percent. The finished
gold of the nonferrous metal smelting enterprises was 38.856 tons, 23.87% more than the same
period last year. The gold output of the key non-ferrous metal smelting enterprises account for
nation's output was: Jiangxi Copper Company Ltd.---33.99%, Yunnan Copper Co., Ltd.---25.79%,
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Anhui Tongling Nonferrous Metal Group---11.95%, Daye Nonferrous Metal Company--- 11.33%,
Gansu Jinchuan Nonferrous Metal Company---4.28%; above key non-ferrous metal smelting
enterprises account for about 87.34% of the national output, and others account for about 12.66%.
The finished gold of the gold smelting enterprises was 73.011 tons, up 13.55 percent. The gold
output of the key gold smelting enterprises account for nation's output was: Shandong Zhaojin
Group---48.63 percent, Henan Lingbao Gold Company Ltd. ---14.09%, Henan Zhongyuan Gold
Smelter---8.61%,
Hengbang
Smelting
Corporation---6.38%,
Shandong
Laizhou
Gold
Smelter---6.18%; the gold output of the above the key gold smelting enterprises account for about
83.89% of the national output, and other gold smelting enterprises account for about 16.11%.
Gold prices soared in 2006, especially in first half year. Under the effect of price soaring of the
international crude oil and US dollar weakness as well as global inflation, gold price soared at
720S/oz in May from 502S/oz in January and increased by 38.46%. Subsequently, controlled by a
large number of undersell of the funds, the gold prices dropped down greatly, nearly closing to the
starting point before price rise. In the second half of the year, the gold market was featured with
wide-range surge. The gold price came back to 600 US dollars in the fourth quarter, but the
downturn in oil prices made the price of gold has been unable to break through the price at 660 US
dollars.
Although the annual average price of the gold rose by 35.69% compared to the previous year, the
supply of gold did not increase. In the aspect of mineral gold, several major gold producing
countries’ gold output dropped continuously due to the descending of grade, increased production
costs and the impact of natural disasters. The output of South Africa, Australia, the United States
and Indonesia dropped significantly. However, the output of China, Latin America and Africa and
other countries increased, partially offsetting the decline in output of these countries. Therefore,
the global mineral output was more than the expected output in 2006, amounting to 2,467 tons, a
year-on-year decrease of 2 percent.
In 2006, the domestic gold prices followed the trend of international prices. However, because the
domestic investment shareswas relatively small, the domestic gold price did not rise so greatly as
the international prices. But because of strong demand, the domestic gold prices are still relatively
high. The gold price in the Shanghai Gold Exchange soared from 138 yuan/g to 185 yuan /g in
mid May from the beginning of the year and increased by 34.06 percent. Thereafter, the domestic
gold prices also experienced a sharp fall and fell to 144 yuan /g to mid-June, slumped 28.47
percent. In the second half year, the gold market was featured with wide-range surge. The gold
price rose to 173 yuan / g in the beginning July, but the the price of gold has been unable to break
through the price at 162 yuan / g.
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China’s demand for gold is still strong. China’s rapid economic growth brought along the
consumption of gold greatly and the purchasing power of residents increased significantly in the
past few years. China's gold consumption continued to grow in recent years, especially in jewelry
consumption. According to the World Gold Council's latest data, the gold consumption in
Mainland China rose by 1.5% to 187.6 tons from the first quarter to the third quarter of 2006, of
which the gold jewelry demand was 179.2 tons, accounting for 95 percent of total demand. The
investment demand was 8.4 tons.
In the aspect of investment, China's gold demand has increased greatly in recent years. At present,
as more banks and gold merchants sell account gold and gold bullion, China's retail investment
market has become active. As predicted by the World Gold Council, the gold account transaction
volume reached 50 tons from the first quarter to the third quarter of 2006, but the net volume of
account gold investment products was only 8.4 tons. However, the amount of the increase is
significant for China as its gold investment demand is low.
In 2007, the US dollar weakness and high oil prices and investment in the gold market will
continue to support the price rise of gold. The gold bull market will continue to exist. However,
after many years’ price rising, the increasing space is narrowed and rate of return of the
commodity market is reduced. Therefore, the price of gold also has risks. On the wholel, we
believe that the price of gold will surge in the high price area in 2007 and even has new high
record. It is expected that the average price of the international gold will rise by about 7 percent,
close to 645 US dollars / oz.
3.2.5 Analysis on zinc market trend
The domestic zinc price closely followed changes of LME in 2006 and showed unilateral upturn
before May 12, the average price of 1# zinc pig per ton rose form 17,000 yuan from the beginning
of the year to maximum 36,500 yuan on May 12, the highest trade price of 1# zinc pig per ton
reached 40,000 yuan and lasted for three to five days. With zinc price adjustment made by the
LME, the domestic price of 1# zinc pig dropped from May 13 to June 20, and the lowest price was
back to 24,600 yuan / ton. After this, the price began to goes up gradually. The domestic price was
lower than LME prices in the second half year. The price of 1# zinc pig was between 30000 to X
33,000 yuan at most times. The price difference between 0 # and 1# zinc pig can reach 2,000 yuan
/ ton at maximum, and returned to between 100 to 150 yuan to the normal level at the end of the
year. The average price of 1# zinc pig per ton was 27,187 yuan in 2006, up 101.3% over last year;
the average price of 1# zinc pig per ton was 27,662 yuan / ton, up 102.4% over last year. The
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growth is less than the international market.
China’s annual export of refined zinc was 325,000 tons in 2006, up 164% than in 2005; and the
annual import of refined zinc was 318,000 tons, 18.8 percent decrease compared to 2005. The
annual net export of refined zinc was 7,228 tons. However, in terms of the total trade of zinc
products, the net import is still the dominant factor. The annual net import of zinc concentrate was
about 400,000 tons, the net import of zinc alloy was 198,000 tons, the net import of zinc dross was
70,000 tons, the net import of zinc material was 38,000 tons, and the net export of zinc oxide was
29,000 tons.
According to the statistics of various organizations, the global zinc supply shortage was above
300,000 tons from 2003 to 2006. It was reported by LME that the net reduction of inventory was
305,000 tons in 2006. However, the regional premium started to decline in November last year.
The inventory increased of 27,000 tons to 88,000 tons reported by LME, and further increased to
more than 90,000 tons in January 2007. The market supply shartage was eased.
It is expected that the consumption of zinc in the United States and Europe will maintain the level
of 2006 in 2007, showing zero growth. The global demand growth is mainly dependent on Asia,
particularly China and India. Antaike estimates that the global zinc consumption in 2007 will rise
3.7 percent to about 11.7 million tons. The global zinc supply shortage will be significantly
reduced.
The newly increased production capacity of galvanized sheet of large domestic steel companies
and joint ventures will arrive at full capacity in 2007. A relatively large number of new production
capacities will be put into production in 2007, and the entire galvanized zinc industry’s demand
for zinc will continue to grow rapidly. With prices down of copper and the commission of brass
sheet and strip in 2007, it is expected that the brass needs for zinc will be better than in 2006. The
zinc die casting alloys and battery industry’s demand for zinc still exist some uncertain factors,
which may offset part of consumption growth of galvanized zinc industry and brass industry. The
domestic zinc consumption is expected to reach about 3.74 million tons in 2007, a 10-percent
increase versus 2006 and the growth rate is basically equivalent to that of 2006.
The domestic 0 # zinc pig continued to maintain 5% export tax rebate currently, the major
enterprises have some hedgings in the LME. The increase in processing fees is favorable for
imports of raw materials and the processing supplied materials amount is likely to increase.
Therefore, China’s refined zinc exports will increase in 2007 conditionally. However, the total
amount of zinc is still in the state of net import.
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The global zinc supply growth rate is accelerated markedly in 2007, while the demand growth is
slowed down. The shortage of supply will be significantly reduced and the stock will be recovered.
The zinc price is showing downward trend as a whole. In view of the recent zinc price adjustment
is obviously larger than the expected adjustment, we lower the average price of 2007, but the
average price is expected to be higher than in 2006. The average spot price is about 3,430 US
dollars / ton and the annual average price domestic # 1 zinc pig is 28,490 yuan / ton.
3.2.6 Analysis on lead market trend
In 2006, under the circumstance of short supply in the Western countries and low lead inventory,
China’s cancellation of the export tax rebate stimulated the price rise of lead. LME’s futures price
hit 1,790 US dollars / ton in December eventually. Under the circumstance that the lead price has
been higher than the price of basic metals, we expect that the lead price will drop slightly in 2007,
but given the higher export price of China’s refined lead and low inventory, the range of price drop
will not be great. LME’s futures price should not be lower than 900 US dollars / ton in March, and
will maintain at 1150 to 1550 US dollars / ton of historical higher-level most of the time.
LME lead prices continue to hit historical new high in 2006. The futures hit a record high of 1,430
US dollars in February, and then went to the period of recovery or regrouping in a few months and
fell below 1,000 US dollars in June. The lead price hit the historical high of 1,790 US dollars on
December 12, which is the highest level since 1982. In 2006, the LME middle spot price was
1,289 US dollars / ton, up 32 percent year on year; the futures average price was 1,283 US dollars
/ ton in March, a year-on-year increase of 36.2%.
The domestic lead price was basically equivalent to the international price in 2006. Something
slightly different is the time when the domestic lead prices hit historical high is earlier. In early
November, the highest price of the domestic lead market reached 15,300 yuan / ton. The average
price of domestic refined lead reached about 12,111 yuan / ton in 2006, up 29.3 percent over the
same period of last year.
There are many factors that affect the lead price trend. However, as the fund attention fans for lead
is relatively low, what has a decisive effect on the lead price is the fundamental. In 2006, the
changes of spot premium of major consumption areas kept consistent with LME lead price trend.
The changes of premium reflect the short supply of the spot. What factors that affect the supply of
the spot? There are three aspects: First, the balance of Western lead market; second, inventory;
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third, burst factors, mainly refer to China’s cancellation of export tax rebate for refined lead.
The proportion of China’s refined lead output accounting for the world’s output is increasing.
According to statistical data of ILZSG and Antaike’s estimate, the global output of refined lead
was about 8 million tons in 2006, up 5.4 percent on a year-on-year basis, and the increase was
mainly from China. While the Western countries’ refined lead increased slightly. The output of
China’s refined lead is expected to be 2.68 million tons in 2006, a year-on-year increase of 14.5%,
and the proportion in the global sharesrose from 31 percent in 2005 to 34 percent in 2006. The
refined lead consumption cannot keep up with the refined lead production growth. The supply gap
of lead market is further narrowed. According to statistical data of ILZSG and Antaike’s estimate,
the global consumption of refined lead was 8.05 million tons in 2006, a year-on-year increase of
3.7%. The increase in the global consumption of refined lead was almost concentrated in China,
while Western world’s consumption almost had no change. Antaike predicts that China’s lead
consumption of refined lead will be 2.18 million tons or so in 2006, an increase of 14.1%. Under
the circumstance that the refined lead output growth is faster than the consumption growth, the
supply gap of global lead market will be further narrowed from 123,000 tons in 2005 to 26,000
tons in 2006.
China’s refined lead production is mainly in primary lead, the proportion of secondary lead is not
great, so it is particularly important to guarantee the supply of concentrate of smelting enterprises.
China's newly increased production capacity was great over the past two years, so the purchasing
of raw materials has become intense. The newly increased production capacity was nearly 500,000
tons in 2005 and 2006, but only 180,000 tons of which can guarantee the supply of concentrate.
The average price of China’s 60%-grade lead concentrate was 9,417 yuan / tons in 2006, a
year-on-year increase of 27.7%. According to the statistics of Customs Service, China’s imported
lead concentrate was 1.19 million tons in 2006, a increase 160,000 tons over the last year. Antaike
expect that China’s lead concentrate output will be about 1.25 million tons in 2006 and the
self-produced concentrate can meet the needs of 64.8 percent melting enterprises.
In 2006, among China's top 20 enterprises in the production of refined lead, Henan Yuguang Gold
& Lead Group Co., Ltd took the first place for its output of 288,000 tons. Yunnan Province
Zhaotong City Lead Zinc Ore did not produce lead concentrate before 2006, but it has a
production capacity of about 60,000 tons of crude lead and 100,000 tons of electrolytic lead after
holding Yunnan Lixin Non-ferrous metals Company. From the total output, the proportion of the
total output of top 20 enterprises fell from 57.7% in 2005 to 53.4% in 2006. Reduction of output
of large smelters and the rise in lead prices significantly stimulated the expansion of small
enterprises, which was the main reason for the decline of production concentration degree.
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China’s Lead consumption mainly concentrated on the areas of lead-acid batteries. In 2006,
China's lead-acid batteries consumption of lead accounted for about 72 percent of the lead
consumption, followed by lead monoxide, lead alloys and lead material, the proportions of which
were 15 percent and 7 percent respectively. The final consumption of the lead-acid batteries was
mainly in the following three fields: the automotive sector (excluding agricultural vehicles and
military vehicles, etc.), the field of electric vehicles and lead-acid battery exports. Antaike’s latest
statistics show that the proportion of three above fields’ consumption of lead-acid batteries
reached 25%, 24% and 16% respectively.
Since 1999, China’s export volume of lead concentrate has maintained about 400,000 tons
basically. In 2006, China’s net export volume of lead concentrate reached 500,000 tons, a
year-on-year increase of 19 percent. The export volume is benefit from the increase of overseas
demand, and the adjustment of export tax rebate had no great influence on the export.
China is the world's largest production and consumption country of refined lead. The supply
shortage of Western countries is made up mainly from China. Therefore, the global lead market
depends on the changes of China’s lead market. China's newly increased production capacity
reached 500,000 tons in 2007, and more than half of them was supplied enough raw materials,
which was favorable for increasing production of refined lead. Meanwhile, the problem that VAT
of gold-containing lead concentrate cannot be deducted may be solved in 2007. Chinese
enterprises’ overseas processing space will be enlarged and the lead concentrate imports will
increase. China's import of lead concentrate accounted one thirds of the total overseas import in
2006.
As the strengthening of China's environmental protection, China's refined lead production will be
affected. However, on the whole, China's production will remain refined lead output will keep a
substantial increase in 2007. In terms of consumption, with China's rapid economic development,
the major consumption areas of refined will maintain good development momentum, but because
of the cancellation of export tax rebate of lead-acid batteries, lead-acid battery exports will be
affected to some extent. Therefore, the refined lead consumption growth cannot keep up with the
increase in production. China will export more refined lead. Antaike predicted, China’s refined
lead output will be about 3.05 million tons in 2007, consumption will be about 2.45 million tons
and the net export volume will reach 550,000 tons. But because of higher costs and cancellation of
export tax rebate of lead-acid batteries, the export price will rise. With continuous expansion of
production capacity, the competition of concentrate will be even more intense. The production
costs of China’s refine lead will maintain at a relatively high level in 2007.
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Over the past two years, the price of lead rose sharply made the global inventory depleted, LME
Warehouse Stocks was in very low level. LME Warehouse Stocks was about 40,000 tons by the
end of 2006, the lowest level since 1990. Under the circumstance that the inventories of consumer
and producer were both very low, it still needs some time for global lead stocks to resume the
normal level. The lead inventory will not increase greatly in 2007.
Through the above analysis, we can reach the conclusion that China’s refined lead export will be
continued to increase, while Western countries’ supply gap is gradually narrowing. Therefore,
supply shortage intense degree of Western countries would be eased in 2007. The global refined
lead will have some amount of surplus this year. Antaike predicts that the global refine lead will
have a surplus of 117,000 tons in 2007. The current fundamentals do not support the continuous
price rise of lead. By the end of 2006, the lead price growth rate was faster than the other basic
metals. Hence, it is expected that LME lead prices will show a downward trend in 2007. However,
considering exported refined lead prices rise and a lower level of inventory, we believe that the
decline rates of lead prices will not be great. LME’s futures should not be lower than 900 US
dollars / ton in March and will maintain at 1150 to 1550 US dollars / ton most of the time. The
average spot price will be 1,320 US dollars / tons. The domestic lead prices will fluctuate follow
international prices, but with the depreciation of the US dollar and the RMB revaluation, the ratio
of domestic and foreign lead prices began to narrow down and dropped to about 9.4 percent in
2006. Therefore, we expect that the average price of domestic lead will be about 12,400 yuan /
tons.
3.2.7 Analysis on nickel market trend
China imported 352,000 tons of nickel ore in December 2006 and 3.777 million tons nickel ore the
whole year, a year-on-year increase of 681 percent. Annual use of imported nickel pig iron
produced by low-grade nickel ore was about 31,300 tons according to the most conservative
estimate. China imported 10,375 tons of unwrought nickel in December. From the quantities of
imports of each month, the quantities of imported unwrought nickel in November and December
are far higher than the quantities in the first 10 months of 2006, not excluding the production
inventory of part stainless steel enterprises in 2007.
Macquaire Bank expects that the global stainless steel market will once again turn to the cyclical
downturn in the second half of 2007. The tense situation of nickel supply will be eased for a short
time, but long-term tension trend in supply and demand will not beimproved significantly. The
Bank predicts that the global nickel consumption will be 1.45 million tons in 2007, an increase of
5.2%, significantly lower than the increase in 2006, nickel supply will be 1.46 million tons (under
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normal circumstances), and the market excess supply will be about 7,000 tons.
According to CRU statistics, China’s annual nickel demand is 200,000 tons currently and the
demand will rise to 400,000 tons in the forthcoming years. According to EU Statistics, China’s
nickel demand will rise to 450,000 tons/year in 2015. As the global stainless steel output increases
at a rate of 6% every year (China's growth rate is 22%), nickel supply gap will be further
expanded.
Under the circumstance of market tension and competition between fund and value maintaining,
LME’s nickel futures prices will remain 28,000 to 35,000 US dollars / ton in the fourth quarter of
2006; and will gradually decline at a high level in 2007 and fluctuate between 22000 to 30000 US
dollars /ton, and the fluctuation is 24000 to 28500 US dollars most of the time.
Jinchuan Group is China's largest nickel production enterprise. Its nickel output ranks No. 5 in the
world and No. 1 in Asia. The company achieved a turnover of 35.3 billion yuan in 2006,
completed production of 101,000 tons of nickel, 205,000 tons of copper products and 6,300 tons
of cobalt products. Group plans to increase nickel output from the 90,000 tons to 150,000 tons in
2008, hence, expanding the supply of raw materials become the urgent task at present of Jinchuan.
Jinchuan and China's Baosteel jointly invested 1 billion US dollars in the Philippines “NONOC
Nickel Mine Project”, acquired 9.996% shares of Canadian GobiMinInc for 306 million Canadian
dollars, reached an agreement with Australia AllegianceMining, Jinchuan Group acquired Avebury
nickel mine of AllegianceMining valuing at 1.3 billion US dollars. Jinchuan Group will provide
financial and technical support for this nickel mine with a view to maximize the project's
production capacity in the shortest time. In the next 8-10 years, the nickel output will reach 70,000
tons exploited by Avebury. Calculated by the current conversion price, the gross income will be
more than 1.3 billion US dollars on the premise that the smelting costs are excluded. According to
the regulations of the agreement, Jinchuan Group has the consultation with the company and the
purchase of priority. Jinchuan enjoys a right of priority for acquision of AllegianceMining.
Jinchuan will pour capital of 12 million Australian dollars into this project.
3.2.8 Analysis on tin market trend
In 2006, the tin prices showed upward trend on the whole. At the beginning of the year, the price
continued rebound at the end of 2005, rising from 6500 US dollars to 9,700 US dollars in early
May, creating a new high in ten years. One of the major reasons for this is due to the extended
rainy season in Indonesia, which affects the domestic production and even the global supply. At
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the same time, the basic metals price rose sharply as a whole, which also drove the rise in tin price.
But after mid-May, the fund selling affected the entire basic metals market, and tin prices also fell
rapidly to 8,000 US dollars.
From mid-late May to September, the tin price fluctuated from 7800 to 9,000 US dollars. From
October 11, tin prices rose rapidly from 9,000 US dollars to 11,000 US dollars in four days,
creating a new high of 11,800 US dollars in 18 years at the end of the year.
In 2006, the highest tin price was 11,800 US dollars / ton (December 29), the lowest price was
6,500 US dollars / ton (January 3), and the average price was 8,765.283 US dollars / ton, up 19.39
percent compared to 2005. The highest price of spot was 11,895 US dollars / ton (December 29),
the lowest price was 6,620 US dollars / ton (January 5), and the average price was 8,773.948 US
dollars / ton, up 18.95 percent compared to 2005.
In 2006, the domestic tin price fluctuated with the international prices fluctuations. At the
beginning of the year, the domestic tin price was approximately 68,000 yuan and reached 90,000
yuan in April and May. But the price dropped rapidly soon after. In the fourth quarter, the price
rose gradually and reached about 92,000 yuan at its highest level.
The average tin price in the market of production goods was 82098.39 yuan/ton in 2006, up 3.84
percent compared to 2005, lower than the international price on the whole. In terms of tin price
proportion at home and abroad, the price proportion showed downward trend over the year. The
normal proportion should be about 9, but it fell to 8 at the end of the year.
The global tin market changed from “oversupply” to “surplus” in 2005, which was mainly caused
by Indonesia’s great reduction in the yield. The global supply is expected to increase by only 0.92
percent to 350,700 tons, while the global tin consumption will continue to maintain a larger
increase. It is estimated that the global consumption rose by 9.51 percent to about 364,900 tons.
The global supply shortage of tin market reached 4,400 tons in 2006.
The wide application of lead-free solder in the electronics industry has made the tin consumption a
greater growth rate. It is estimated that the global tin consumption will by 9.51 percent to 364,900
tons in 2006. Asia enjoys the fastest growth rate in the world, especially China and Japan. It is
estimated that China’s tin consumption will rise by 18.45% to 121,300 tons in 2006. In addition,
according to CRU-ITRI estimates, Japan’s tin consumption will rise by 17.77 percent to 39,100
tons in 2006. The tin consumption in European region will rise by 7.42 percent to 70,900 tons, and
the United States will rise by 2.61 percent to 43,200 tons.
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Stimulated by high prices of tin, the domestic output is increased greatly in 2006. According to
statistics from China Nonferrous Metals Industry Association, China's tin output rose by 15.62
percent to 138,000 tons on a year-on-year basis in 2006. Yunnan increased by 26.93 percent to
81,634 tons on a year-on-year basis, Hunan increased by 22.70% to 19,709 tons, and Guangxi
decreased by 8.8% to 32,051 tons. Antaike thinks that the data may be a bit high. We estimate that
China's tin output will be 131,000 tons in 2006, up 10 percent compared to 2005. Yunnan Tin
Company’s increasing output is the most. The company's output in 2006 reached 52,399 tons, a
year-on-year increase of 22.66 percent. The output of Yunnan Chengfeng Non-Ferrous Metals Co.,
Ltd reached 21,765 tons, a year-on-year increase of 72.52 percent.
In 2006, Chinese government began to implement policies for protection of superior resources.
Through the improvement and rectification for mines by various regions, the output of tin
concentrate was reduced greatly. Hunan Linwu region rectified the mines from July, and most of
local mines were closed and gradually resumed production until November, making the region's
tin concentrate output decreased of more than 8,000 tons compared to 2005. In addition, Yunnan,
Guangxi, Jiangxi, and other places have also adopted some rectification measures. According to
statistics from China Nonferrous Metal Industry Association, China’s tin concentrate output
decreased by 33.53 percent to 51,832 tons on year-on-year basis in 2006, of which the three main
producing areas---the output of Hunan, Guangxi, and Yunnan was reduced significantly, that was
53.45%, 20.09% and 21.25% respectively.
In 2006, China's tin consumption continued to maintain high-speed growth. The great increase in
electronic products has promoted the consumption of electronic materials, and thus China's tin
lead solder consumption has increased as well. At the same time, in order to adapt to the EU's
lead-free directive, many domestic manufacturers producing solder turned to produce lead-free
solder, making domestic consumption of tin solder increase greatly. We estimate that China's tin
solder consumption will increase by 23 percent in 2006.
In 2006, China's tin plate output reached 2.1 million tons, its tin consumption in the tin plate
industry is estimated at about 10,000 tons calculated as per ton of tin plate consumes about 4.8
kilograms of tin. Float glass industry’s tin consumption was reduced in 2006 and was around
4,000 tons. Other industries’ tin consumption also has slightly increased. Antaike estimates that
the tin consumption in China will reach 121,300 tons, up 18.46 percent compared to 2005.
China's import and export volume for tin ingot reduced significantly. According to statistics from
the China Customs, exports of tin ingot decreased 12.85 percent to 19,982 tons on year-on-year
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basis. The reduction of exports is related to the decline and cancellation of export tax rebate.
Besides, the increase in domestic consumption also makes the diminution of tin ingot exports.
In 2006, China's imports of tin ingot also reduced a lot compared to 2005, a decrease of 16.3
percent to 15,913 tons. Indonesia’s decrease in crude tin output and exports affected China's
imports of tin ingot. According to statistics from the China Custom 三 s, China's imports of tin
ingot from Indonesia decreased by 18.93 percent to 10,459 tons on year-on-year basis in 2006.
13,158 tons imported tin ingot belongs to processing imported materials and processing materials
supplied by clients, accounting for 82.68 percent of the total imports.
In addition, the quantity of China’s imported tin concentrate decreased by 5.22 percent to 7,094
tons on year-on-year basis in 2006, nearly 90 percent of which were imported from Bolivia.
Although the imports of tin concentrate, crude tin and domestic tin concentrate output reduced, the
domestic refined tin output has increased. Therefore, we predict that the tin output through waste
recycling will increase greatly in 2006, and will gradually become a more important raw material
source for smelters.
According to CRU, Indonesia's refined tin output might drop to 123,500 tons in 2006, and tin
concentrate output will fall to 126,000 tons, a year-on-year decrease of 8.4% and 7.7%
respectively. Other countries’ tin output is not very optimistic either. China continues to control
mines, and published the Access Criterion of Tin Industry at the end of 2006. This policy has
restricted China's tin smelting capacity expansion to some extent. Therefore, China's tin output
growth will be limited. It is estimated that China’s consumption of tin in the solder will maintain
an increase of more than 20 percent in 2007. It is estimated that China's total consumption of tin
may reach 140,000 tons in 2007, and the global tin consumption may increase by about 7 percent
to 390,000 tons. The global tin shortage will be much more than in 2006, and may reach around
21,000 tons. The shortage will be relatively large in the first half of the year. Therefore, the tin
prices may hit a new multi-year high of 15,000 US dollars in the first half of year. In terms of the
situation throughout the year, the tin market will continue to remain strong in 2007 with the
average price may be around 9,500 US dollars.
3.2.9 Analysis on platinum and palladium market trend
The platinum price increased by 31 percent on a year-on-year basis from January to September in
2006. Similarly, the average price of palladium rose by 69% on a year-on-year basis from January
to September. Let’s make a comparison among the price index of platinum, palladium and gold,
the price change amplitude of platinum exceeded that of gold in 2006. There are two points need
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to be explained here. First, the platinum price fluctuation was greater than the gold in 2006.
Second, there is a close relationship between the price of platinum and gold. We can see that the
price change amplitude of platinum is much greater than palladium. The price proportion of
platinum and gold rose from 0.75 to 0.63 by comparison. The US Dollar price was very low this
year, only at 0.34.
The world’s palladium supply growth is mainly due to increase in the output of the mines of South
Africa. The platinum supply has increased rapidly as well as the palladium. The platinum was in
great demand in 2006. The catalyst accounts for 50% of the total demand of platinum and,
compared to other industries, in particular the electronics industry; its consumption of platinum is
larger. The jewellery industry’s use of palladium declined from 2002 to 2006.
The global jewelry industry’s demand for platinum decreased by 6% to 10% in 2006 despite rise
in raw material prices. Jewelry’s demand for platinum accounts for the majority demand of
platinum. We know that China and Japan are major consuming countries of platinum jewellery,
accounting for 44 percent and 29 percent of the market shares respectively. We predict that Japan
and China’s needs for platinum will decline in 2006. The platinum mine’s output and recovery of
platinum metals from spent purification catalyst is less than processing needs, but there are signs
of increasing need in 2006. The platinum market is expected to oversupply in 2006, the negative
growth has ended, and inventories will increase. The situation will affect the price of platinum if it
is continued.
Platinum mine’s output and recovery of platinum metals from spent purification catalyst is less
than processing needs, it is expected that the palladium supply shortage situation will be alleviated
in 2006 and the supply shortage of net inventory will be reduced. The demand has remained low
from 2000. With regard to the inventory of palladium, the net stock was low from 2004 to 2006,
accounting for 3% of the total supply. Therefore, the platinum market supply and demand was
close to balance. The stock of palladium was higher in 1999 and 2000. The palladium was mainly
sold to Russian government and water purification companies from 2004 to 2006. Most of the
palladium stocks in the Russia are government stocks. This will reduce the price pressure on
palladium.
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4 Development climate of China’s mining
industry
4.1
4.1.1
Policy climate
Transfer of mining rights
Recently, the mining right market grows fast. According to the 11th Five-Year Plan for Mining
Industry of Chinese Association of Mining Right Assessors and “on basis of the requirement of
relevant regulations, all mining rights acquired by payment or transferred in the secondary market
have been assessed currently.” The expansion of mining industry is shown by the figure as follows:
the number of the assessment projects on China’s mining right increased from 281 in 2001 to over
3000 in 2005.
According to the provisions of relevant laws issued by the state, the transfer of mining rights
currently is conducted by five modes including approval of application, agreement, invitation for
bid and auction as well as listing.
Transfer of mining right by approval of application
It is a mode for the authorities responsible for the management of mining rights to approve the
transfer of mining right. It is also a process in which the authorities collect the cost of mining right
and award the applicant with mining right through examination and approval of the applicant’s
applications and on basis of the result of assessment and decision. This mode applies to mining
rights, which is infirmity with other provisions of relevant regulations and laws or shall not be
transferred by means of agreement, invitation for bid, auction and listing due to the special
circumstance according to the authorities. The implementation of the approval of application is a
way of implementation of acquisition for value in mining right, marked by non-market-driven
transfer and the rule of application going first.
Transfer of mining right by means of agreement
It is a mode for the authorities responsible for the administration of mining rights to approve the
transfer of mining right. It is also a process in which the applicant discusses the mine price, tenure
of use, mining area, mode and time of payment, requirement on development and utilization and
other terms with the authorities after the approval of application and the transfer contract is
concluded and entered into on basis of mutual understanding. This mode applies to the mining
right, which is infirmity with other provisions of relevant regulations and laws or shall not be
transferred by means of invitation for bid, auction and listing because of special situation
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according to the authorities. Transfer by agreement is a special transfer mode. It needs the
necessary factors of administrative approval and the market transaction. It is a way of
implementation of acquisition for value in mining right, marked by non-market-driven transfer
and without competitor.
Transfer of mining right by means of invitation for bid
It is a mode for the authorities responsible for the administration of mining rights in market to
seek a developer in favor of the government’s development and utilization plan after the
government works out the clear intention on development and utilization and the planning
conditions. It is also a process in which the authorities prepare the bidding document and issue
bidding notice or invitation on basis of the bidding project of mining right, while the bidder
receives the bidding document and submit a bid, and then the authorities evaluate the bid and
choose the successful bidder on a selective basis. This mode applies to the large and complex
mining places and requires the developer not only possesses adequate capital to ensure the
minimum input of mine exploitation but also has more powerful qualification to meet the need of
mine exploitation. It belongs to market-oriented transfer with more than one bidder and chooses
the successful bidder on a selective basis.
Transfer of mining right by means of auction
It is a mode for the authorities responsible for the administration of mining rights to organize the
bidding among the bidders in accordance with the provisions of relevant regulations and decide
the transfer mode of mining right on basis of the bidding result after the government works out the
intention on the development and utilization of some mining field. It is also a process in which the
authorities at the appointed time in appointed place organize the qualified bidder to make the
public bid on mining right and choose the transferee in accordance with the principle of the
highest bid wins. This mode applies to the transfer of mining right active in mining product
market and with large number of bidders, marked by market-driven transfer, large number of
bidders and “the highest bid wins”.
Transfer of mining right by means of listing
It is a mode by which the authorities responsible for the administration of mining rights will draft
the transaction conditions of the transfer of mining right, accept the bidder’s tender within the
notice period and decide the transferee on basis of the result of offer within the deadline of listing.
It is also a process in which the authorities responsible for the administration of mining rights
issue the initial price for the transfer of mining right at the appointed trading place of mining
rights according to the designated date of the listing bulletin, and then wait for the offer of the
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bidder, accept and issue the latest quotation and choose the transferee on basis of the result of offer
until the deadline of listing. This mode applies to the transfer of mining rights with few bidders in
a not very lively market, characterized by market-driven transfer, free number of bidders and “the
highest bid wins”.
4.1.2
Integration of mineral resources
Many problems such as the number of mining enterprise increases quickly; the scale of mining
enterprise become more and more small and the location of mining enterprise becomes
increasingly dispersed; insufficient utilization of big mine and unrestrained exploitation of the
same mine, because China is rich in small deposit and short of large deposit and furthermore
encouraged the towns to develop the mining industry during the early days of reform and opening
up, adding the extensive operation of mining industry. These problems go against the sustainable
development of China’s national economy. It is important to integrate the mineral resources and
other production factors and regulate the layout of the mining exploitation. The State Council has
fully rectified and standardized the exploitation system of mineral resource since 2005. Sine then
each province has taken effective measures and fully rectified the exploitation system of mineral
system. The integration of mineral resources shows the new development. The trend that superior
resources have run into the powerful enterprise has become more and more apparent. In
accordance with the No. 18/2006 Document issued by the General Office of the State Council, the
clear orientation on the objective of the integration of the mineral resource is as follows: firstly, it
is urgent to settle the problem of insufficient utilization of big mine and unrestrained exploitation
of the same mine, make the exploitation layout of mine become more and more rational and set
one mining right in one mine area; secondly, it is to settle the problem of mining enterprises and
finish the allocation that the powerful enterprise gains the superior mineral resource; thirdly, it is
to obviously improve the exploitation and utilization rate of mineral resources within the whole
area; fourthly, it is to carry out the Laws and Regulations System of Safety Production carefully,
strengthen the safety inspection and supervision and eliminate the hidden danger in safety, which
generated by irrational layout of mine exploitation; fifthly, it is to reserve and treat the wastes in a
concentrative way, treat the contamination to meet the State’s discharge standard in order to
apparently improve the ecological environment of mine.
Henan province enhances the control power for key resource to push mineral resources’
concentration towards powerful and leading enterprise. In term of the integration of state-owned
coalmine, the seven key leading coal enterprises are guided and encouraged to integrate the local
state-owned coalmine where they located. In term of the integration of bauxite mine, the
concentration steps of bauxite resources towards the key alumina enterprise at provincial level
have been quickened. The secondary integration work of the bauxite resources had been finished
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by end of 2007. In term of the resource integration of other key minerals such as gold,
molybdenum and iron, the integration is conducted under the law on the basis of government
promotion, enterprise equal negotiation, and reasonable allocation of interests. In order to improve
the guidance on the mineral resource integration, Hehan provincial government determined to
change the name of Leading Team for Consolidation of Coal and Aluminum Mines of Henan
Province into Leading Team for Consolidation of Mineral Resource of Henan Province.
Furthermore, the government adjusted and enriched the member unit of leading team and
published the suggestion for mineral resource integration.
Hunan province encourages the nonferrous metal industry to grow bigger and stronger by taking
use of the advantage in resources and by the push of the key leading enterprise. The government
also clearly express that it will make great efforts to support the development of Hunan
Nonferrous Metals Holding Group Co Ltd (herein after referred to as “Hunan Nonferrous
Metals”).
In accordance with the Notice of the General Office of the State Council on Suggestion of
Ministry of Land and Resources and other Ministries about the Exploitation and Integration of
Mineral Resources, the government at provincial level shall take the overall responsibility for the
exploitation and integration of mineral resource. The leading team at provincial-level shall take
charge of the rectification and standardization of the exploitation system of mineral resources.
During the exploitation and integration of mineral resources, the provincial (autonomous region,
municipality directly under the Central Government) government shall organize the departments
of Ministry of Land and Resources and the people’s government of a municipal district or a city or
a county to make the mine integration plan and confirm the mine area belonging to the integration
on basis of the general integration plan. Furthermore, it is not only responsible for the formulation
of relevant policies and the standard conditions the mine must meet after the integration, but also
gives the guidance and finish the exploitation and integration works of mineral resources
macroscopically. In accordance with the notice, the people’s government at every level shall make
the local integration plan. On basis of the general requirement of the work on national mineral
exploitation and integration, each province (autonomous region, municipality directly under the
Central Government) shall finish the mineral exploitation and integration of over three important
type of minerals and over five important mine areas by the end of 2007; and basically complete
the work on the exploitation and integration of mineral resources.
By means of “government’s guidance, operation on basis of market and integration according to
law”, Yannan provincial government made over half of the important mineral resources including
tin, copper, lead, zinc and other minerals concentrated into the large leading enterprise. 74% of the
tin resources with proven reserves in Yunnan have been concentrated into with proven reserves.
60% of copper resources have been integrated into Yunnan Coppper Group. 64% of lead and zinc
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resources have been integrated into Yunnan Metallurgical General Enterprise, Yunnan Jinding
Zinc Industry Limited Enterprise and Xiangyun Enterprise. 71% of the iron ore resources have
been integrated into Kunming Iron & Steel (Group) Co Ltd and Lufeng Degang Enterprise. In
term of the mode of resource integration, the superior resources have been primarily concentrated
into the powerful enterprise by means of “walking on two legs” to the effect that the integration of
industries at provincial level and the integration of key mine areas at district and city level. Firstly,
taking use of the opportunity generated by industry integration, it can realize the concentration of
the six important resources towards the powerful enterprise. The promotion on the mode of
industry integration represented by “old mode” within the province and the mode combing the
industry and resource integration has gotten sound result. Secondly, it cuts the mining rights by
means of mine area integration. By making great efforts to rectify and integrate the key mine areas
within each city and county, the number of the key mine areas integrated within the province
currently is 67, while the number of mining rights have been reduced 772. It puts an end to the
unauthorized mining plant. 2126 mining plants without irrational setup and not only wasting
resources but also damaging the environment, have been shut down.
Greater efforts have been exerted to control and allocate the important resources and promote the
concentration of the mineral resource to powerful and leading enterprise by Henan provincial
government. In term of the integration of state-owned coalmine, the government guides and
encourages the top seven leading coal enterprises in Henan to integrate the nearest local
state-owned coalmine. In term of the integration of bauxite mine, the government speeds up the
concentration step of bauxite mine resources to the key enterprise in alumina industry at provincial
level. The secondary integration work had been finished ahead of time by the end of 2007. The
integration of important mineral resources such as gold, molybdenum and iron is conducted under
the law on the basis of government promotion, enterprise equal negotiation, and reasonable
allocation of interests. In order to enhance the leadership on the integration of mineral resources,
Henan provincial government decides to change the name of Leading Team for Consolidation of
Coal and Aluminum Mines of Henan Province into Leading Team for Consolidation of Mineral
Resources of Henan Province, adjust and enrich the member units of leading team and publish the
guiding principles for the integration of mineral resources.
Hunan Province puts forward the slogan of making full use of resource advantageous and
expanding and enhancing the capability of nonferrous metals industry by the push of the leading
enterprise and will give all-out support to the development of Hunan Nonferrous Metals. Big step
has been taken in resource integration by Hunan Nonferrous Metals Holding Group Co Ltd. Last
year, Hunan Nonferrous Metals had successfully held 80% of shares of Zigong Cemented Carbide
Corporation Co Ltd by increase of capital and investment. After holding 45.9% of the shares of
China Tungsten and Hightech Materials Co Ltd directly and indirectly, Hunan Nonferrous Metals
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has become the top manufacturer of cemented carbide in the world and plays half of the domestic
cemented carbide market. Later, Hunan Nonferrous Metals actively discussed the integration issue
of Tungsten resources with the relevant enterprises and made great efforts to control the Tungsten
market form the source. Hunan Nonferrous Metals signed the framework agreement on
cooperation with the City of Chenzhou to invest 2 billion yuan within five years to develop the
nonferrous metals resources jointly and establish Baiyin Nonferrous Metals (Group) Co Ltd in
order to push the growth of the nonferrous metals development, smelting processing and deep
processing of Chenzhou. A proposed largest market of nonferrous metals and mineral product and
logistic center of mineral product in China will be built in Chenzhou. Hunan Nonferrous Metals
has signed a joint venture agreement with Chaling Xiangdong Tungsten Enterprise and purchased
90% of shares of Chaling Xiangdong Tungsten Enterprise by 67 million yuan. Hunan Nonferrous
Metals has signed a framework agreement on cooperation with Hengyang Municipal Government
to integrate, develop and use the nonferrous metals resources of Hengyang. Hunan Nonferrous
Metals has purchased over 90% of shares of Tungsten by 360 million yuan. Hunan Nonferrous
Metals will also finish the reorganization of some bankrupt enterprises including Baoshan
Lead-Zinc Mine and Xianghualing Tin Industry at the opportune time this year. Hunan Nonferrous
Metals has begun to harmonize the integration work of Xintianling mining area in Hunan recently.
Hunan Nonferrous Metals had become largest comprehensive manufacturer of nonferrous metals
(excluding aluminum) by output by the end of last year. Its output of lead and zinc has ranks the
first place in China and the third in the world. Its output of stibium product and cemented carbide
has
ranks
number
one
in
the
world,
while
the
reserve
of
important
strategic
resource——Tungsten——ranks the first place in the world.
Jiangxi Provincial Government published the general plan on the integration and development of
mineral resources to carry out the work step by step from important to common, from easy to
difficult and from point to area. According to the development of Jiangxi’s mining industry,
Jiangxi Provincial Government points eleven mining areas including Dexing Fujiawu
Copper-molybdenum Ming Area as the key mining area at provincial level on the work of
integration and development of mineral resources. After the integration, five mines in Dexing
Fujiawu Copper-molybdenum Ming Area will become a back-up mining area of Dexing Copper
Mine, planed and developed by Jiangxi Copper Corporation in a unified way.
4.1.3
Conservation and comprehensive utilization of mineral resources
Higher requirements for the conservation and comprehensive utilization of mineral resources have
been put forth in accordance with the documentations including Notice of the State Council about
recent key work of building economical construction society and Several suggestion of State
Council about speeding up development of circulation economy as well as Decision About
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Strengthening Energy Saving Tasks. The first twenty years in this century is the important strategic
period of China’s economic and social development. Doing a good job in mineral resources
exploitation and utilization and safeguarding the supply of mineral resources have a direct relation
with the realization of the target of building a well-off society in an all-round way. Chinese mining
enterprises set a new concept of development in mining to improve the utilization efficiency of
mineral resources and establish a new mechanism in the rational exploitation and utilization of
mineral resources. Chinese mining enterprises not only improve the utilization efficiency of
mineral resources on basis of the progress of science and technology and actively boost the
circular economy but also give priority to the conservation and comprehensive utilization of
mineral resources as well as the environmental protection in mining area.
In exploitation of iron ore, Shougang Mining Enterprise works out the scavenging processing flow
for disk-type magnetic separator and magnetic rougher and the new processing of ore tailing
compound cleaning for the coarse ore after magnetic cleaning to decrease the grade of ore tailing
to 2.44％ and improve the metal recovery rate to 7.79％, which reach the international advanced
level. In exploitation of copper ore, North Copper first applies the spontaneous caving method for
its copper mine in China. Its underground leaching test for low-grade hard-to-mining and
refractory copper ores has played a spectacular success. Its “three rates” (mining recycling rate,
ore diluting rate and mine-dressing recycling rate) has reached the domestic advanced level in
mining industry. In exploitation in gold ore, Jiapigou Mining Enterprise works out the new method
of “boring and supporting” which settles the mining difficulties of old stope and remnant ore. At
time of expanding the concentration plant and applying the underground grade separation
technology to increase the recovery rate to over 90%, Jiapigou Mining Enterprise also attach great
important to the ore outside the mine to maintain the gold reserve around 4 tons.
During the mining development, advanced mining enterprise insists to take the new road of
industrialization and transform the economic growth pattern to improve the quality and profits of
the economic growth. Such delightful step has been taken in the process of building a
conservation-minded and environmental-friendly society. Shandong Jincheng Gold Mine makes
the continuous efforts to preserve the ecological environment, improves the management system
of environmental protection and increases the investment in capital, technology and personnel.
Shandong Jincheng Gold Mine has built the environmental monitoring station to monitor the
atmosphere, noise, dust, industrial wastewater and smoke in accordance with the provisions of
relevant regulations. The wastewater, waste rock and waste residue have been recovered
effectively. Due to the continuous efforts of the landscape engineering, its green coverage area had
hit 150,000 sq m by 2004. In 2005, Shandong Jincheng Gold Mine won the honor of “National
Environment-friendly Enterprise” —— the highest honor available in environmental protection.
China will make every effort to push the sustainable development of mining. The main contents
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include: greatly improving the comprehensive utilization level of mineral resources, sufficiently
exploiting the effective resources, making continuous efforts to increase the recovery rate of
mineral resources and do a good job in the exploitation and utilization of low grade and
hard-to-mining and refractory mineral resource, encouraging the powerful large and medium-sized
mining enterprise to tackle hard-nut problems in science and technology, cultivating the circular
economy in mining, strengthening the secondary exploitation rate of the ore tailing and the
comprehensive utilization rate of the waste rock and waste residue; enhancing the scientific and
technical supporting in mineral resource survey, tackling the technical problems on the
prospective study about mineral resources and the prospecting work for deep-seated deposit,
concealed deposit and indiscernible ore, attaching great importance to the capacity of tackling
hard-nut problems in key technology applied for the exploitation and utilization of mineral
resources, giving priority to develop the exploitation and utilization technology used for low grade,
hard-to-mining and complex ore, ore tailing and waste rock, improving the level of the mining
equipment to build a widely-used and effective mechanism of advanced technology, method,
processing and equipment; rectifying and standardizing the exploitation order of mineral resources;
maintaining the management and supervision to enhance the supervision on the exploitation order
and the varieties of key mines and consolidate the result of rectification to prevent the activities
violating the law and regulations; paying profound attention to environment protection and closing
the mine polluting environment and possessing hidden dangers; actively and appropriately
completing the mineral resources integration work and settling the problems on irrational layouts
of key mine and key varieties to make an important progress in the resource integration;
completing the work and tasks on fully rectifying and standardizing the exploitation order of
mineral resources in accordance with the general arrangement by the end of 2007; doing a good
job in safety in production; establishing the foundation to support the conversion to the production
of the enterprise short of resources and the re-employment project, vocational-technical training
and social security; do a good job in compensation for local people suffering the losses in living
due to the exploitation of mineral resources; improving the legal system of mineral resources to
tighten up the preparation work on the modification of Mineral Resources Law and perfect the
supporting law system; formulating and enacting the laws and regulations on the administration of
specified minerals for which protective mining policy is prescribed by the State, mine under
national planning and mineral resources to standardize the exploitation and utilization and
administration of the mineral resources under the law.
Ministry of Land and Resources launched a campaign to award the advanced enterprises for their
rational exploitation and utilization of mineral resources in February 2006. The mining enterprise
with brilliant achievement in rational exploitation and utilization of mineral resources for years
has been fully recognized. In accordance with the conditions and procedures of application, the
recommended materials shall be strictly examined. 186 mining enterprises won the honor of
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“National Advanced Mining Enterprise” after the procedures of experts review, on-site inspection
and approval and notice of the organizing committee. In term of the pattern of ownership, there
are 118 state-owned enterprises, 10 private enterprises, 6 joint ventures and 52 joint-stock
enterprises among the 186 mining enterprises. This pattern has fully displayed the characteristics
of the enterprise layout of keeping state-owned enterprise as the mainstay and allowing diverse
forms of ownership to develop side by side. This pattern has also given an exhibition of the
brilliant achievement made by the mining system reform for the past few years. In term of the
scale of the mine, there are 157 large and medium-sized enterprises and 29 small-sized enterprises
among the 186 mining enterprises. It has demonstrated the dominant advantages of the large and
medium-sized enterprise in capital, professionals, technologies, equipment and productivity as
well as the irreplaceable leading position in rationally exploiting and utilizing mineral resources
and improving the efficiency of the utilization. The small-sized enterprise has also become an
important part in mining exploitation as the continuous growth of the enterprise’s capacities and
productivity.
Profiles of the metal mines winning the honor are as follows:
¾
Pangang (group) Mining Enterprise
Main mineral varieties: iron ore
Address: Guaziping, Dongqu, Panzhihua, Sichuan
Ownership: State-owned enterprise
Resources exploitation and utilization situation: the enterprise pays profound attention to the
rational utilization of the mineral resource and makes great efforts to push the innovation in
science and technology. The Enterprise also continuously increases the mining recycling rate and
decreases ore diluting rate by scientific stripping and mining and ore blending. By vigorous
expansion of circular economy and ferrotitanium recovery from ore tailing, the comprehensive
utilization rate of ore tailing has hit 41％, while the recycle utilization rate of wastewater has hit
96％. The waste rocks of mine have been widely used in road, railway and construction. Brilliant
achievement has been gained in green work, of which the green coverage area in barren hills
covers 2336 mu.
¾
Sichuan Nanjiang Tieshan Metallurgy & Mining Enterprise
Main mineral varieties: Iiron ore
Address: Hongshan Village, Shaba Town, Jiangnan County, Sichuan
Ownership: Collectively-owned enterprise
123
Resources exploitation and utilization situation: at the time of do a good job in mining and
ore dressing of the leading mine product, the enterprise strengthens the recovery of associated
copper, cobalt and sulfur and the comprehensive utilization of the ore tailing. The recovery rates
of copper and cobalt have hit 36％ and 27％ respectively after the improvement work of
processing flow. The low-grade sulfurous iron ore after recovery will be roasted to remove the
sulfur. The acid liquor produced during the sulfur removal shall be recovered and applied for
floatation. The ore recovery rate, ore dressing recovery rate and ore diluting rate reach 88％, 93％
and 8％ respectively.
¾
Jianshan Iron Mine of Shanxi Xintai Iron Manufacturing Co Ltd
Address: Zhongbu Town, Zhangdian District, Zibo City, Shandong
Ownership: state-owned enterprise
Resources exploitation and utilization situation: The enterprise has made a significant success
in mineral resources recovery and utilization. The ore recovery rate, ore diluting rate and metal
recovery rate in three years has hit 92－95％, 7－9％ and 83－85％ respectively. All indices
lead the advanced level in domestic market.
¾
Shandong Jinling Iron Mine
Address: Zhongbu Town, Zhangdian District, Zibo City, Shandong
Resources exploitation and utilization situation: its ore recovery rate, ore diluting rate and ore
recovery rate hit 69.48％, 11.57% and 94.34％ respectively. Its products lead the advance level in
domestic market.
¾
Laiwu Mining Co Ltd of Laiwu Steel Group
Address: No 71, Luzhozng Xidajie, Laiwu City, Shandong
Ownership: joint-stock enterprise
Resources exploitation and utilization situation: the enterprise replaces the dewatering
method of drainage with boring and grouting technology of underground ore body upper
limestone for Dashui Mine in Yezhuang to eliminate the geologic hazard caused by huge drainage
and protect the groundwater resource. The technology is certainly valuable in practice. The ore
124
recovery rate, ore diluting rate and ore recovery rate lead the advanced level in domestic market.
¾
Baiyun Ebo Iron Mine of Baotou Iron & Steel (Group) Co Ltd
Address: Production Department of Baotou Iron & Steel (Group) Co Ltd, Baotou City, Inner
Mongolia
Resources exploitation and utilization situation: Baiyun Ebo Iron Mine belongs to refractory
complex paragenetic deposit. In view of its characteristics each variety of ore shall be exploited,
transported and stored respectively to rationally use and protect of all kinds of valent elements.
The ore recovery rate and ore diluting rate are 98％ and around 1％ respectively and are among
the top in domestic glory-holes.
¾
Nanfen Openpit Iron Mine of Benxi Iron & Steel (Group) Mining Co Ltd
Address: Tieshan Steet, Nanfen District, Benxi City, Liaoning
Resources exploitation and utilization situation: the mine rationally uses the mineral
resources, actively recover the hanging wall ore, ore in waste rock and the low-grade ore and
reprocesses the ore tailing. The mining recycling rate and the ore recovery rate hit 97％ and 81％
respectively.
¾
Anshan Iron & Steel Group Co Ltd
Address: No 39，219 Road, Tiedong District, Anshan City, Liaoning
Resources exploitation and utilization situation: by tackling hard-nut problems in science and
technology, the enterprise applies the new separation technology, new reagent and new facilities
for lean hematite ore with proprietary intellectual property rights, which makes the iron
concentrate grade and metal recovery rate hit 67％ and 87％ respectively. Its ore dressing
processing reach the international advanced level.
¾
Qidashan Iron Mine of Anshan Iron & Steel Group Co Ltd
125
Address: Qidashan Town, Qianshan District, Anshan City, Liaoning
Resources exploitation and utilization situation: by strengthening the construction of a
sustainable, environment-friendly and conservation-minded mine, the ore recovery rate and the
green coverage rate hit 98 ％ and 91 ％ respectively, while the number of scientific
achievement reaches 223, of which the mineral processing technology for Qidashan lean
hematite ore has won the National Sci-Tech Progress Award(II).
¾
Zhenjiang Weigang Iron Mine Co Ltd
Address: Weigang Village, Jiangqiao Town, Runzhou District, Zhenjiang City, Jiangsu
Resources exploitation and utilization situation: the enterprise makes a significant success in the
comprehensive utilization of mineral resource. After filtration, the ore tailing can be used as
building materials and cement stone, which results in near zero emission. The enterprise
abstracts electrolytic copper, cobalt oxalate and nickel sulfate from the acid sludge, so the
recovery rate of which is over 95％. The enterprise also builds a hot spring by making use of
the underground hot water.
¾
Tonghua Iron & Steel Group Slate Mining Co Ltd
Address: Banshi Town, Badaojiang District, Baishan City, Jinlin
Resources exploitation and utilization situation: By applying the advanced equipment and
technology, the enterprise has successfully improved the tailing bin and increased the capacity of
the bin. The service life of the bin has increased 24 years and over 2 thousand mu land has been
saved. The enterprise produces building brick by using of the tailing and recovers 340,000 tons of
ores from waste rock. After dressing by magnetic separation，the waste rock shall be used as
building materials.
¾
Chengchao Iron Mine of Wuhan Iron and Steel (Group) Corporation
Address: Qingshan District, Wuhan City, Hubei
126
Resources exploitation and utilization situation: Attaching great importance to tackling
hard-nut problems in science and technology, Chengchao Iron mine has successively conducted
the studies on iron mine block caving, high-intensity comprehensive mining of flat-dipping,
deep-laying and crushed iron ore deposit and study on Displacement Mechanism and engineering
strategy of country rock in west district in Chengchao Iron Mine as well as study on
comprehensive utilization of low-grade associated copper and sulfur in iron mine. All
abovementioned studies yield good economic returns.
¾
Daxilin Iron Mine of Xilin Iron & Steel Group
Address: Meixi District, Yichun City, Heilongjiang
Resources exploitation and utilization situation: by improving mining process, Daxilin Iron Mine
has recovered the limited resources and prospected ore in periphery of mining areas as well as
exploited ore resources potential in deep side zone. At time of establishing the stone crushing
production line to produce building stone, the mine has also recovered the ore.
¾
Shougang Mining Enterprise
Address: Qianan City, Hebei
Resources exploitation and utilization situation: by applying scientific management and
continuous innovation, Shougang Mining Enterprise has receiver notable returns in the
comprehensive utilization of resources. The enterprise has also explored the feasible technical
methods in governing the mine environment by comprehensive control measures such as using
waste rock and tailings and processing building materials and reforesting waste-dump landslide
and tailing bin. The level of comprehensive utilization has reached the advance domestic level.
¾
Hainan Iron & Steel Enterprise
Address: Shilu Town, Changjiang County, Hainan
127
Resources exploitation and utilization situation: according to the market demands and by scientific
proportioning of open-hearth raw ore, blast furnace raw ore, blast furnace raw ore with high sulfur,
lean ore and other ores, Hainan Iron & Steel Enterprise upgrades the utilization ratio of resources.
By applying the appropriate magnetic separator to recover overflow power and reelecting the
tailing left in the past, the enterprise greatly improved the utilization of resources.
¾
Yunfu Pyrite Enterprise Group Corporation
Address: Gaofeng Street, Yuncheng District, Yunfu City, Guangdong
Resources exploitation and utilization situation: the mining recycling rate and the ore diluting rate
of the enterprise has reached over 90％ and 2.5% respectively in recent three years. The
enterprise establishes the production lines for iron red, presintering material and magnetic
materials to process pyrite cinder. The cutting slope & unloading, closing slope surface, slope
protection with paved rock blocks, building retaining wall and anti-slide piles, side slope
reforestation and other measures adopted by the enterprise have yields notable effect.
¾
Nanshan Mining Co Ltd of Ma Steel Group
Address: Xiangshan Town, Yushan District, Maanshan City, Anhui
Resources exploitation and utilization situation: by rational exploitation and utilization of the
resources, the “three-rates” of the enterprise reaches the advanced domestic level among other
mines of the kind. The enterprise recovers and utilizes the lean ore, associated and paragentic ore
and tailing and attaches great importance to the environmental protection.
¾
Guangxi Branch of Chinalco
Address: Pingguo County, Baise City, Guangxi
Resources exploitation and utilization situation: Guangxi Branch of Chinalco is dedicated to
exploiting the bauxite. By technical innovation, the enterprise has won many prizes successively
in the process of mining, processing, proportioning and tailing process. The enterprise has
successfully improved the ore washing efficiency and the hourly output and decreased the new
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water consumption for ore washing. The enterprise has tackled hard-nut problems in science and
technology on the goaf reclamation. By applying the goaf reclamation, the enterprise has used the
tailing thickening for reclamation soil and shortened the reclamation period to two years. The crop
yield is equivalent to that of the land of the kind. So far, the reclamation areas hit over 2500 mu
and the reclamation rate is 90.9%.
¾
Huaziyu Magnesite Mine of Liaoning Jinding Magnesite Group
Main mineral varieties: Magnesite
Address: Huaziyu Street, Bali Town, Haicheng City, Liaoning
Resources exploitation and utilization situation: Huaziyu Magnesite Mine has conducted a series
of reforms including the mining method which is transferred from mechanized mining to artificial
mining, the processing from large digging height to small steps, drilling hole from large-diameter
submerged drilling to small-diameter bore hammer drilling, the mining method from longitudinal
section and transverse mining method to non-section fan-type longitudinal and transverse
combination mining and the loading method from mechanized shoveling to hand shoveling by
gradation.
¾
CITIC Dameng Mining Industries Limited
Main mineral varieties: manganese ore
Address: Jianye Building, 90 Minzu Avenue, Nanning, Guangxi
Resources exploitation and utilization situation: By enlarging-slope design and increasing the
number of open cut mining, the enterprise successfully upgrades the mining recycling rate and
achieves good economic effect by artificial mining corner ore. The enterprise also reduces the
gradation of ore tailing by adjusting dressing process flow and increasing manganous carbonate
dressing system. At time of cooperating with local mining industry, the enterprise recovers the
remaining ore and re-dresses the remaining ore tailings jointly. The total metal recovery rate has
hit over 80%. The emission of “three waste” (waste water, waster gas and solid wastes) shall be
conduct after the scientific treatment.
¾
Jinduicheng Molybdenum Mine of Jinduicheng Molybdenum Group Co Ltd
Main mineral varieties: Molybdenum ore
Address: Jindui Town, Hua County, Weihua City, Shaanxi
129
Resources exploitation and utilization situation: “Three rates” of the mine reaches the domestic
advanced level. By mining both high and low grade ore and rational proportioning as well as
comprehensive recovery of sulfur, copper and iron resource, the enterprise has brilliant
achievement in processing of wastewater and waste gas.
¾
Sandaozhuang Mine of Luoyang Luanchuan Molybdenum Group Co Ltd
Address: Junshan West Road, Luanchuan County, Luoyang, Henan
Resources exploitation and utilization situation: the enterprise is dedicated to the promotion of the
recycling economy and the comprehensive utilization. By making technological breakthrough, the
enterprise successfully manages the scheelite recovery technology and changes the past waste
condition of annual 8000 tons of scheelite concentration being sent to tailing bin. The test of
molybdenum tailing sintered brick project has succeeded and the recovery and utilization of
wastewater, waste gas and solid wastes has yielded good economic returns.
¾
Jilin Jien Nickel Industry Co Ltd
Address: Hongqiling Town, Panshi City, Jilin Province
Resources exploitation and utilization situation: By transferring the mining method, the mining
recycling rate of the enterprise has hit 95%. Using remaining ore and tailing as the stowage
material of mined out space, the enterprise successfully reduces the emission and meanwhile
re-dresses the tailing, processes and utilizes the wastewater and recovers the associated metal.
¾
Xitieshan Lead-Zinc Mine of Western mining Co Ltd
Main mineral varieties: Lead-Zinc ore
Address: No 52 Wusi Avenue, Xining City, Qinghai
Ownership: Joint-stock enterprise
Resources exploitation and utilization situation: By continuous reform of mining method, ore
diluting rate and loss rate of the mine have hit 8.68% and 10.87% respectively, which reaches the
domestic advanced level among the mines of the same kind. By attaching profound importance to
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the environmental protection and the comprehensive control of the “three waste”, the mine has
successfully reached the zero-emission of wastewater. The dam body of tailing bin is firm and the
operation of the mine is stable.
¾
Nanjing Qixiashan Xinyang Mining Co Ltd
Address: No 89 Qixia Street, Nanjing, Jiangshu
Resources exploitation and utilization situation: By pushing technological progress and adopting
potential controlled flotation technology, the enterprise increases the mine-dressing recycling rates
of lead, zinc and sulfur, which respectively have hit 90%, 91% and 78% and reached the advanced
level. By applying the wastewater purification technology, the enterprise achieves the recycling
utilization and zero-emission of beneficiation wastewater. By conducting whole tailings
cementation filling, the enterprise has also achieved zero-emission of tailings and passed the
environmental management system certification in 2004.
¾
Fankou Lead-Zinc Mine of Shenzhen Zhongjin Lingnan Non-ferrous Co Ltd
Address: Renhua County, Shaoguan City, Guangdong
Resources exploitation and utilization situation: The mining recycling rate and ore diluting rate of
this mine have hit 98% and 10.7% respectively. The mine-dressing recycling rates of lead, zinc,
sulfur and silver are respectively 85.9％, 95％, 53.7％ and 82.6％. The mining methods, which
have been upgraded continuously, have yield sound economic returns. The remaining ores are
used for stowage materials. The stowing ratio of tailing has hit over 60%. The comprehensive
utilization rate of return water has reached over 75%. The emissions of the “three rates” are over
99% respectively.
¾
Longnan Luoba Lead-Zinc Mine of Gansu Luoba Non-ferrous Metal Group Co Ltd
Address: Liulin Town, Hui County, Gansu
Resources exploitation and utilization situation: The “three rates” of this mine are among the
domestic advanced level. The waste residue filling has yield good effect. The mine has also
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attached profound importance to safety in production and land rehabilitation and greening.
¾
Changba Lead-Zinc Mine of Gansu Chengzhou Mining and Metallurgic Group Co Ltd
Address: No 3 Nanqiao Road, Chengguan Town, Cheng County, Gansu
Resources exploitation and utilization situation: The mining recycling rate, ore diluting rate and
mine-dressing recycling rates of this mine have hit 88%, 9.8% and 93% respectively. The mine
produces 415 00 tons of waste rock, which are totally used for filling of old mined out space.
Therefore, the waste rock emission is zero. The mine invested 12 million yuan in the Phase I and
II of environmental pollution improvement project, which made the mine among the
environmental-friendly mines.
¾
Anhui Chizhou Huangshanling Lead-zinc Mine
Address: Huangshanling, Tangxi, Guichi District, Chizhou, Anhui
Resources exploitation and utilization situation: The utilization of low gradation resources in this
mine has yielded good economic returns. The mining recycling rates of complex multi-metal
low-gradation copper, lead, zinc ores have reached 77％, 91％ and 81％ respectively, which are
among the advanced level. The mine has attached great importance to wastewater treatment and
environmental protection.
¾
Fujian Nanping Mining Tantalum-Niobium Mining Co Ltd
Main mineral varieties: Tantalum-Niobium ore
Address: No 88 Xixi Road, Nanping City, Fujian
Resources exploitation and utilization situation: The “three rates” of the mine have reached the
domestic advance level among the mines of the same kind. The utilization of tailing has yielded
brilliant effect. The combination technology of recycling muscovite from the tailings and the
high-gradient magnetic separation technology are worthy of promotion.
¾
Hsikwangshan Twinkling Star Co Ltd
Main mineral varieties: Antimony ore
Address: Feishuiyan, Lengshuijiang City, Hunan
132
Resources exploitation and utilization situation: On basis of the different deposit conditions and
by applying different filling mining method accordingly, the mining recycling rate, ore diluting
rate and mine-dressing recycling rates of this enterprise have hit over 90%, below 5.8% and 88%
respectively. By attaching profound importance to obstructive ridge, the recycling of remaining
ore hits 570,000 tons. The antimony recycled from tailing has reached over 500 tons. By
conducting technology improvement and the great-leap-forward development of antimony
smelting, the enterprise has increases the technical content and the added value of the antimony
product. The enterprise has also improved the mine environment by making great efforts to control
the “three waste”.
¾
Shaoxing Pingtong Group Co Ltd
Main mineral varieties: Copper ore
Address: Pingshui Town, Shaoxing City, Zhejiang
Resources exploitation and utilization situation: By continuous innovation in mining and dressing
technologies, except the mechanized loading method, the enterprise applies the method of filling
two ends and closing the middle, which takes use of the underground waste rock to fill the
underground mined out space. By applying the concentration method of partial copper priority
separation-mixing concentration and regrinding-cooper-zinc separation technology, the enterprise
successfully increases the comprehensive recycling rate, which has hit over 80%.
¾
Hangzhou Jiande Copper Group Co Ltd
Address: Xinanjiang Street, Jiangde City, Zhejiang
Resources exploitation and utilization situation: By applying scientific mining system and
complete mining method——the first step of recycling applying upward lamination
stoping-cemented filling method; the second step of recycling applying one-time filling method
after low section caving. In three years, mining recycling rate reached 92-93% and the ore-diluting
rate reached 6.9-7.3%.
¾
Caihuagou Copper-bearing Pyritic Mine of Toksun County Xueyin Sulphur Copper
Development General Factory
133
Address: New Silk Road Economy Development Zone, Toksun County, Xinjiang
Ownership: Private enterprise
Resources exploitation and utilization situation: Ore contents of this mine contain 1.8％ of copper,
2.5％ of zinc, 30％ of sulfur and 35% of iron. By optimized mineral dressing process, the
recovery rates of copper concentrate and zinc concentrate have reached 90% and 89% respectively.
By using sulfur as the raw material of sulphuric acid, the mine successfully improved the
utilization of the resources. All the by-products are put into comprehensive utilization, therefore
there is zero emission of tailing and waste residue.
¾
Kelatongke Copper-Nickel Mine of Xinjiang Xinxin Mining Industry Co Ltd
Address: Fuyun County, Xinjiang
Resources exploitation and utilization situation: Kelatongke Copper-Nickel Mine is a mineral
processing enterprise integrating mineral mining, dressing and smelting and applying the
underground mining method and upward lamination stoping-cemented filling method. After
several times of technological improvement, the mine can utilize the high and low gradation ore at
the same time other than only the high gradation ore. By making large investment in exploration,
the mine has the additional explored reserve. The mine attaches profound attention to
environmental protection and the recycling utilization of wastewater after treatment.
¾
Xiekeng Copper-Gold Mine in Xunhua County, Qinghai
Address: Xiatan, Xunhua County, Qinghai
Ownership: Private enterprise
Resources exploitation and utilization situation: By long-term ordered development and
comprehensive recovery and utilization, the mine has successfully upgraded it mining recycling
rate to 90%, mine-dressing recycling rate of copper and gold to 95% and 90% respectively, ore
diluting rate under 10%. The mine attaches great importance to environmental protection and
realizes the zero-emission by investing 1.3 million yuan in tailing transformation.
¾
Fushun Hongtoushan Copper Mine
134
Address: Hongtoushan Town, Qingyuan County, Liaoning
Resources exploitation and utilization situation: By making the management system on depletion
loss and strict control, the mine ensures that the ore diluting rate is under 14%, loss rate is under
2%, mine-dressing recycling rates of copper and zinc are 92% and 72% respectively and the
comprehensive recovery rate of sulfur from the tailings is above 71%.
¾
Dexing Copper Mine of Jiangxi Copper Corporation
Address: Sizhou Town, Dexing City, Jiangxi
Resources exploitation and utilization situation: In China, the enterprise is the first one applying
MITEC international mining design and planning software to optimize the concept of opencast
working and expand the mining scope of mine on basis of progress of science and technology. The
enterprise successfully upgrades the efficiency of mining working by bringing in truck dispatching
system, utilizing computer technologies, modern communications technologies and GPS
technologies.
¾
Xiaoxinancha Gold-Copper Mine of Hunchun Zijin Mining Co Ltd,
Address: Xiaoxinancha, Hunchun City, Jilin Province
Resources exploitation and utilization situation: By attaching great importance to reform, at time
of utilization of old plant, the enterprise has built a new concentration plant with daily processing
capacity of 4000 tons and achieved the large-scale production effect. On basis of strict control of
recycling, the loss rate, diluting rate, gold and copper recycling rates are 3%, 3%, 70% and 83%
respectively. The annual output of gold and copper are one ton and 3588 tons respectively. The
output value hits 200 million yuan. The profit and tax hit 84.8 million yuan. The enterprise only
uses three years to develop itself from a enterprise running in the red for years into a sustainable
development enterprise.
¾
Tonglushan Copper-iron Mine of Daye Nonferrous Metals Enterprise
Address: Huangshi City, Hubei
135
Resources exploitation and utilization situation: On basis of progress of science and technology
and by transferring mining method and bringing in advanced technologies, the enterprise
succeeded in the test on “Upward Lamination Stoping-cemented Filling Method” and “Panel
Mechanized Mining Technique”. The underground ore blocks hard to exploit have been
successfully recycled. For transformation of flotation process and mining equipment, the
utilization of tailing yields good economic returns.
¾
Zijinshan Copper Mine of Zijin Mining Group Enterprise Limited
Address: Zijinshan, Shanghang County, Fujian
Resources exploitation and utilization situation: The “three rates” of this mine reached the
domestic advanced level among other mines of the same kind. The utilization level of mineral
materials is ranked the top of other domestic enterprises of the kind. Gold content of the waste
rock under comprehensive utilization exceeds 45%. The cutoff gradation is from one gram/ton to 2
gram/ton, which reached the international advanced level. The reserves increases from 5.45 tons in
detailed mineral ore survey to 278 tons recently. The comprehensive utilization and treatment of
waste rock, waste residue, wastewater and waste gas have yield good economic returns.
¾
Anqing Copper Mine of Anhui Tongdu Copper Stock Co Ltd
Address: Suburban district, Tongling City, Anhui
Resources exploitation and utilization situation: This mine achieves good effect in resources
recycling and tailing utilization. By carrying out technical measures to recycle resources, the mine
successfully realized the target of the “three rates”. On basis of technological breakthrough and
producing qualified copper concentrate by applying flotation and regrinding process and getting
iron concentrate from fine tailings by applying coarse and fine magnetic separation process, the
mine achieves notable economic effect.
¾
Anhui Tongling Chemical Group Xinqiao Mining Co Ltd
Address: Tongling City, Anhui
136
Resources exploitation and utilization situation: The enterprise gives the top priority to the
comprehensive utilization of resource and the development of recycling economy. On basis of
different properties of the mineral resources, the enterprise utilizes and recycles the mineral
resources such as copper, iron, gold and silver accordingly. The comprehensive utilization of
wastewater, waste rock and waste residue has also yielded noted economic returns.
¾
Tongkuangyu Copper Mine of Northern Copper Industry Co Ltd
Address: Yuanqu County, Shanxi
Resources exploitation and utilization situation: The “three rates” of this mine reaches the
domestic advanced level. The mine is the first one applying the spontaneous caving and a mine
with the lowest production cost. The underground leaching test for low-grade hard-to-mining and
refractory copper ores has succeeded. The utilization rate of return water hits 80%. The
comprehensive utilization ranks the top among the domestic advance level.
¾
Inner Mongolia Dongshengmiao Mining Industry Co Ltd
Main mineral varieties: Tungsten ore
Address: Bayin Baolige Town, Bayannao'er, Inner Mongolia
Resources exploitation and utilization situation: By cooperating with research units and
institutions, the enterprise successfully extract and takes full use of the valent elements in the
metal mines and produces the single concentrate product. The mining recycling rate and the
ore-diluting rate hit 92% and 8% respectively. The technical target reaches the domestic advanced
level.
¾
Jiangxi Xiushui Xianglushan Tungsten Co Ltd
Address: Industrial Park, Wudu, Xiushui County, Jiangxi
Resources exploitation and utilization situation: After integration, the enterprise reorganizes its
general planning, controls the total exploitation volume, shuts down the small concentration and
137
pit mouth, attaches profound importance to technology measures and carries out the tests on
mining recycling rate of Tungsten ore. The mining recycling rate of enterprise increases notably
and the comprehensive utilization reaches the domestic advanced level.
¾
Chongyi Zhangyuan Tungsten Co Ltd
Address: Chongyi County, Jiangxi
Resources exploitation and utilization situation: By giving top priority to the “three rates” control
and resources reserves expansion, the enterprise applies and brings in the domestic advanced
mining and dressing process and equipment. The mine-dressing recycling rate reaches the notable
domestic level.
¾
Xianghualing Tin Industry Co Ltd
Main mineral varieties: Tin ore
Address: Xianghua Town, Linwu County, Hunan
Ownership: Limited liability enterprise
Resources exploitation and utilization situation: By paying great attention to comprehensive
management, the enterprise has successfully improved its mining recycling rate, ore-diluting rate
and mine-dressing recycling rate to 93.6 ％ , 6.8 ％ and 65.8 ％ respectively. On basis of
comprehensive utilization and recycling of associated lead and zinc, the recycling rate of lead and
zinc have reached 95.2% and 89% respectively. By recycling the tin metal from tailing and the
scheelite below the economic gradation in the past, the enterprise gets 158 tons of tin for three
years. Meanwhile, the enterprise has also recycled the useful constituent from the tailings along
with the relevant university.
¾
Huize Mine of Yunnan Chihong Zinc & Germanium Co Ltd
Main mineral varieties: Zinc & Germanium
Address: Economy and Technology development Zone, Qujing City, Yunnan
Resources exploitation and utilization situation: By giving top priority to science and technology
as well as self-innovation, this mine applies advanced Lamination Sloping-cemented Filling
Method and mine-dressing technology to cement the control of mineral resources. The
ore-diluting rate and the loss rate are below 5% and the design value respectively. The
underground waste rocks remain in pit. The tailings are used for filling slope. The mine-dressing
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sewage can by recycled after treatment.
¾
Zhejiang Province Suichang Gold Mine Co Ltd
Main mineral varieties: Gold
Address: Huanyuanling, Lianzhu County, Suichang, Zhejiang
Resources exploitation and utilization situation: By continuous improvement of mine-dressing
process and “All Slime Cyanidation Production Process”, the enterprise increases the
mine-dressing recycling rate. The total dressing and smelting recycling rate in 2005 hit 95%. The
enterprise also attaches profound attention to the environmental protection and the comprehensive
utilization of waste materials.
¾
Beiya Gold Mine of Yunnan Mineral Resources Co Ltd
Address: Xiyi Town, Heqing County, Yunnan
Resources exploitation and utilization situation: By cooperating with research institutions and
advanced mining method and mine-dressing process and technologies, the mine has paid overall
attention to mineral resources control to increase the utilization rate. The ore-diluting rate and
mining recycling rate have hit 8% and 85% respectively in production, while the dressing and
smelting recycling rate has hit 85%-88%.
¾
Xinjiang Axi Gold Mine
Address: No 43 Lane two, Airport Road, Yining City, Xinjiang
Resources exploitation and utilization situation: By “All Slime Chlorinated Resin Gold Extraction
Technique”, the mining recycling rate, loss rate and ore- diluting rate have hit 97%, 5% and 8%
respectively. The mine has also paid profound attention to the environmental protection and
recycled the wastewater after treatment.
¾
Sifang Gold Mine Co Ltd in Feng County, Shaanxi
Address: Pingba Town, Feng County, Shaanxi
139
Resources exploitation and utilization situation: By continuous improvement of the enterprise’s
technical level for years and utmost utilization of mineral resources, the enterprise has
successfully controlled all the production targets within the rational scopes. The mining loss rate,
ore-diluting rate and total mining and smelting recycling rate have hit 12%, 12%, and 84.3%
respectively. The mining process applies the method of closed-circuit water circulation, which
effectively prevents the environmental pollution.
¾
Xiadian Gold Mine of Zhaoyuan Gold Mining Co Ltd
Address: North of Xizhixia Village, Xiadian Town, Zhaoyuan City, Shandong
Resources exploitation and utilization situation: This mine is the first one
applying the Caving
Method of Inclined Large and thick ore body and won the First Class Prize of Industrial Advanced
Science and Technology. By realizing the automatic production and establishing the wireless local
area networks, the mine has completed the informatization management firstly in China. By
building garden-like bio-mine and developing recycling economy, the mine is ranked the top
among other mines in Shandong.
¾
Yinan Gold Mine of Shandong Gold Group Co Ltd
Address: Tongjing Town, Yinan County, Shandong
Resources exploitation and utilization situation: By using the tailings as cement additives,
recycling waste rocks, wastewater, waste residue and waste gas, expanding the reserves of mine
with little resources and actively recycling the iron and remaining ore, this mine has achieved
sound economic effect.
¾
Xincheng Gold Mine of Shandong Gold Mining Co Ltd
Address: Laiwu City, Shandong
Resources exploitation and utilization situation: This mine has paid great attention to science and
technology and won the second class of national advanced technology prize by its
140
“Comprehensive Study on Deposit Mining Method under Complex Conditions”. The mine has
also been awarded the “National Environment-friendly Enterprise”, the highest honor of its kind,
for its notable achievement in processing and recycling of mine waste materials.
¾
Liaoning Wulong Gold Mine
Address: Dandong City, Liaoning
Resources exploitation and utilization situation: On basis of geological scientific research and by
attaching profound importance to exploring works, this mine has increased 6.6 tons of geological
reserves, improved the backwards mine-dressing process and upgraded the mine-dressing
recycling rate, which has hit 85%. The mine has successfully recycled 160,000 tons of ore from
corner ore and remaining ore and 367 kilograms of gold from tailings. The recycling process has
yielded notable economic returns.
¾
Jiangxi Jinshan Gold Mine
Address: Huaqiao Town, Dexing City, Jiangxi
Resources exploitation and utilization situation: By making full use of submarginal ore resources,
expanding the service life of mine, this mine has improved the mining method and strengthened
the management. Mining-recycling rate and mine-dressing recycling rate, which reach the
advanced level, have hit 88％ and 91％ respectively.
¾
China National Gold Group Corporation Jiapigou Co Ltd
Address: Jiapigou Town, Huadian City, Jilin Province
Resources exploitation and utilization situation: This enterprise is a mine with long history and
facing the problem of resources exhaustion. By displaying its potential and carrying out technical
innovation, the enterprise has successfully settled the recycling problem of the old slop and
remaining mine. At time of carrying out expansion of concentration, applying underground
separation techniques for low-grade ore, the enterprise has attached profound importance to
exploring. The mine-recycling rate has hit 95%. The gold reserve has been maintained around 4
141
tons annually.
¾
Shuiyindong Gold Mine of Guizhou Zijin Mining Co Ltd
Address: Mingu Town, Zhenfeng County, Guizhou
Resources exploitation and utilization situation: The enterprise self-developed a mine-dressing
process used for treat the hard-to-dressing and smelting primary gold ore. This process is called
chemistry pre-oxidation technology under common pressure and increasing temperature, which
can be directly used for the processing of raw ore. Therefore, the mine-dressing recycling rate has
hit over 90%. The mining loss rate and the ore-diluting rate are both below 5%. By adding CaO
and other materials, the enterprise has effectively controlled the quality of return water which can
be recycled by the production system and prevent the environmental pollution and the loss of
metal contents. The ore-smelting recycling rate has reached 98.5%.
¾
Guangdong Gaoyao Hetai Gold Mine
Address: Hetai Town, Gaoyao City, Guangdong
Resources exploitation and utilization situation: By technical improvement, this mine has
successfully reduced the ore-diluting rate and loss rate. By multi-mining methods, the mine has
upgraded the dressing and smelting techniques and strengthened the production and exploring.
The operation steps into positive cycle. The mining recycling rate has hit 94.5%. The ore-dressing
recycling rate has reached 91.4%. The cyanide-leaching rate has reached 98.5%. The cooper
recycled from tailings has reached 500 tons. The wastewater has also been recycling rationally.
¾
Bainiucheng Silver Mine of Mengzi Mining & Metallurgy Co Ltd
Main mineral varieties: Silver
Address: No 63 Tianma Road, Mengzi County, Yunnan
Resources exploitation and utilization situation: By carrying out large-scale exploitation and
scientific planning in production, this mine exploits both high and low grades ore strictly on basis
of mining plan. The ore-diluting rate, mining recycling rate and lead and zinc dressing recycling
rate have reached below 7%, over 80%, over 88% and over 98% respectively.
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4.2
4.2.1
Overseas investment of mining
Promotion of overseas investment for Chinese mining enterprises
Although the output of Chinese mining products increasing rapidly for recent years, the situation
between demand and supply is still tight. The supply of some predominant mineral products such
as oil, steel, copper, aluminum and sylvite becomes increasingly tight. In Chine, which is the
largest development country in the world, the supply of mineral resources has become the biggest
bottleneck holding back the sustainable development of national economy. “Going out” to explore
the foreign mineral resources has become one of the most important ways of relieving the existing
tight situation of mineral resources in China and also a critical and urgent task before us. China’s
oil industry, non-ferrous metal industry and metallurgical industry have taken the step of overseas
exploitation and development, which has come into fruition and prepared the ground for further
steps of “going out” strategy to develop oversees resources. The exploitation and development of
oversees mineral resources not only hinges on the mining enterprises themselves but also depends
on the powerful support from the government. Without the support, coordination and supportive
policies of the government, the mining enterprises are hardly able to lift each foot.
The next two decades witness the rapid development of China’s national economy and the swift
growth of the consumption of China’s mineral resources. Till 2020, the demand for some major
predominant minerals such as coal, steel and sylvite is expected to be twice of that of 2000, while
the demand for oil, copper and aluminum will maybe three to four times of that of 2000. Degree of
oversees dependence of other minerals except coal will be above 50%. The economic
globalization upgrades the mining globalization, which offers unprecedented opportunities and
challenges for development. On one hand, the mining globalization promotes the exploitation and
development of China’s mineral resources, creates advantages for making using of foreign
resources and pushes the improvement of the production process and the management of China’s
mining enterprises. On the other hand, because of some problems lie in China’s mining industry
itself, in today’s China, mining globalization has experienced the large impact and fierce
competition from foreign countries. Nowadays, China’s domestic mineral resources become
increasingly scarce, while the mining globalization develops more and more obviously. Under
such circumstance, encouraging Chinese enterprises go out to make overseas investment in mining
industry is not only a beneficial practice for Chinese enterprises going out of China and attending
international competition, but also an important way of settling the problem of scarce mineral
resources and ensuring its stable supply.
Since the reform and opening up, especially since 1990, China’s comprehensive national strength
and international competitive ability has increased a lot, furthermore, relevant laws and
regulations on oversees investment have successive came and the international investment climate
143
has been improved a lot. The step of oversees investment and foreign resources exploitation by
China’s mining enterprises has been quickened notably. According to incomplete statistics,
China’s mining enterprises and other enterprises in oil, metallurgical and geology and mineral
resources departments has conducted talks and cooperation on the exploitation and development
of mineral resource in Latin America, Africa, Middle East and surrounding areas of China, totally
over 40 countries (mainly the developing countries). Moreover, these enterprises have also carried
out minerals exploitation in some of the abovementioned countries. In accordance with the current
oversees investment made by China’s mining enterprises, for early starting, China’s oil department
has began to take shape and possess the basic ability to develop oil in foreign countries. In
addition, because of enough preparation and general planning, China’s oil department has not only
huge potential to make oversees investment in oil and gas resources but also certain persistence
ability and international competitive ability. Compared with west powers, oversees oil and gas
market share of China is still smaller. Although the oversees investment in non-oil and gas mineral
resources has stepped on the right path, for lack of general strategy, the ability to develop oversees
resources is still weak. However, the investments in ferrous metal and chromite have made great
success. Till now, the output of oversees iron mine of China is 25% of total import volume of
China’s iron ore. The target of oversees investment in precious metal minerals mainly focuses on
gold, while targets of oversees investment in non-ferrous metal minerals mainly focus on copper
and aluminum. China has successively made some mineral risk exploration targeted on copper and
gold in Australia, Southeast Asia, South America and other countries and found some good
exploitation target and prospect areas. In brief, the oversees mineral resources exploitation and
development work of China’s mining industry is still in the initial stage featured by small scale,
slow progress and imbalance development.
Presently, China has cooperated with countries from Africa and Latin America and other countries
from Asian in mineral resources and achieved “win-win” situation. China has still encouraged the
powerful enterprises to conduct cooperation in mineral resources and the utilization and
exploitation of the mineral resources as well as the geology inspection in accordance with the
international common practice and the law of the country of cooperation.
The areas selection of oversees mineral resources for China’s “going out” strategy shall learn from
the international experience in accordance with standards to choose investment country and
project for multinational mining enterprise. China has quickened its exploitation and development
steps in some countries rich in resources in Africa. Africa, rich in mineral resources, has a friendly
relationship with China. In addition, foreign mining enterprise is scarce in African countries.
China shall attaches great importance to such countries. The exploitation and development of
mineral resources in Africa shall gradually develop into an important mineral resources supply
base for China. South Africa, rich in the mineral resources such as iron, manganese, copper,
144
chromite, cobalt and diamond, which are short in China, has strong complementarity in economic
development with China. In addition, the large volume of mineral products can be imported. The
relevant enterprises in China have paid profound attention to chromium ore in Africa. In view of
the sound beginning of cooperation in mining exploitation between African countries and China
and with the further progress of the strategic cooperation between them, more and more Chinese
enterprises will invest in the mining industry of Africa.
Caucasus region and the Caspian Sea areas at present is a blank in the framework of global
mineral resources. West multilateral mining enterprise has not occupied the hinterland of Europe
and Asia. Such hinterland will give relatively stable and long-term supply of oil, copper, sylvite,
chromite, manganese and nickel and other important strategic resources by building mineral
resources development circle on basis of resources cooperation. Meanwhile, the new “Silk Road”
will provide China’s resources diplomacy and policy with broad geostrategy basis and display
certain role in building surrounding security mechanism by exploitation and cooperation of
resources.
China takes the developing countries as her major cooperative partners of oversees investment in
mineral exploitation. It is very important to get the support and help of the local government in
such countries during the mineral exploitation. However, this work will yield better effect by
diplomatic solution of Chinese governments. The Chinese governments shall support the
enterprises in system of government, capital, technology and talent education. In Sep. 2006, Zijin
Mining Group Co Ltd signed a financial cooperation agreement along with China Development
Bank in Xiamen. In accordance with such agreement, China Development Bank authorized Zijin
Mining Group Co Ltd a line of credit amounting to 9.6 billion yuan to meet the need of expansion
of oversees business of Zijin Mining Group. China Development Bank actively gave support to
China’s “going out” strategy and to a large extent resolved the capital problem of Zijin Mining
Group Co Ltd during the recent exploitation of oversees project.
4.2.2
Notable achievements of “going out” strategy in mineral resources exploitation
The relevant departments of China has cooperated with around 40 countries in Latin America,
Australia, Africa, Middle East and Middle Asia in exploitation and development of mineral
resources including iron ore, oil, copper ore, gold ore, cobalt ore and chromic iron ore, which is
short in China. Such cooperation has made certain success. New achievements in investment in
exploitation and development of oversees mineral resources has been made by Chinese enterprises
in 2006. Three oil enterprises of China signed a series of oversees cooperation agreements. China
Minmetals Corporation, along with Codel•CO, jointly develops cooper resources of Chile. CNMC
has gotten the metal reserves including copper, zinc, nickel and cobalt in Zambia, Mongolia and
Myanmar. Fujian Jijin Mining Group and Jiangsu Huaxi Group have invested in mineral resource
145
exploitation in foreign countries. It is a trend to integrate oversees mine resources. The successful
development of abovementioned projects has yielded better economic returns and promoted the
growth of local economy.
Presently, oversees Chinese mining enterprises shall be divided into following three categories by
nature of enterprise: large state-owned enterprise, joint-stock enterprise and private enterprise. The
large state-owned enterprise, under supervision of the Central Government, is the representative of
the Chinese government in oversees mining market. The Chinese government realizes the intent of
the national strategic resources reserves by large state-owned enterprise controlling resource
projects. The Chinese government provides the large state-owned enterprise with enough capital
and powerful competitive ability by national financial institutions’ loan fund. Sometimes, in view
of foreign policies, the Chinese government often supports the developing countries in Asia,
Africa and Latin America by means of program aid, which is often made by large state-owned
enterprise’s contracts. Joint-stock enterprise is a typical module under modern enterprise system
and the product of market-driven economy. Usually, the joint-stock enterprise, even wonderfully
excellent, hardly achieves full supports (neither financial loan nor government support) from the
government due to domestic policies and various reasons. Numbers of joint-stock enterprises have
to ensure the security of oversees investment and appropriate return rate by their own stable
operation. Seldom leaders or management team have no powerful sense of potential problems in
operation. Such strong sense of responsibility pushes them to explore oversees mine resources and
realize the strategic intent of enterprises. The private enterprise is composed of individual natural
person or numbers of individual natural persons. The registered capital of common private
enterprise is very low. The business scope of private enterprise usually refers to trading of mineral
product. The operation mode of private enterprise is very flexible and free of interruption of
enterprise system. The scale of private enterprise is often very small.
In accordance with the enterprise nature of oversees Chinese mining enterprises, their business
scopes usually are divided into four categories:
The first category refers to oversees M & Q. Such business is usually conducted by large
state-owned enterprise, for example China Minmetals Corporation, which reached an investment
and supply agreement and established the strategic cooperation by a US$ 2 billion investment
with Codel•CO on May 31, 2005.
The second category refers to mine investment moved by the demand of national foreign policies.
Such business is usually conducted by large state-owned enterprise, for example Zambia’s
Chambishi Copper Mine. As one of China’s economic aid projects for Zambia, this project is
operated by NFCA and co-contracted by CNMC, Tongling Nonferrous Metal Mining Group and
Zhongtiaoshan Nonferrous Metal Mining Group. Chambishi Copper Mine, an old mine, was
146
purchased by China by US$ 20 million in 1998. Till 2000, Chambishi Copper Mine was
constructed and rebuilt. It was put into operation in July 2003. In 2004, Chambishi Copper Mine
produced five tons of copper concentrate and created sales of US$ 51.21 million. NFCA has the
land-use right of 41km of ground surface in Chambishi Copper Mine area, which is equipped with
complete water, electricity, transport, communication, living and service facilities. For several
years, the enterprise has invested US$ 150 million in improving the construction of auxiliary basic
project including dynamite plant, smelting works and hospitals.
The third category refers to self-development mine project drawn directly investment. Such
business can be conducted either by large state-owned enterprise or joint-stock enterprise and
private enterprise. CHIMAN, a Zambian company, draws investment from a private enterprise in
Liaoning of China. This private enterprise operated a manganese mine with 4 million tons of
explored reserves in Zambia in 2004. Presently, the registration documents of the enterprise have
been completed and relevant equipment have also successively been in place. The manganese
mine is planned to put into operation in 2006. The ores produced by manganese mine will be
carried back to China by Tanzam Railway and by sea. Kelan Coal Mine, a Chinese private
enterprise, is located in the south of Zambia. Presently, the total investment in Kelan Coal Mine
has hit US$ 1.5 million. The mine was put into operation in 2003. The output was around 20,000
tons in 2004. The output of this mine is expected to be 10,000 tons in 2006. Kelan Coal Mine is
going to make an expansion in annual output to 200,000 tons and become the largest coalmine in
Zambia.
The forth category refers to minerals trade. Such business can be conducted either by large
state-owned enterprise or joint-stock enterprise and private enterprise. For example the iron ore
trade made by the giant suppliers such as Shanhai Baosteel Group, BHP Billiton and Companhia
Vale do Rio Doce. China Minmetals Corporation has also ore purchase station in Bolivia and other
countries in South America. The trading volume of private enterprise is skyrocketing with the
increasingly huge demand of China’s mining market. Main business scopes of private enterprise
include iron ore, cobalt ore, aluminium oxide, marble and ect. But the scale of business is very
small.
China Nonferrous Metal Mining Group Co Ltd (hereinafter referred as to “CNMC”) has
established offices and operation institutions in many countries and regions. The business scopes
cover the entire process of exploitation, design, construction, mining, dressing and smelting. After
twenty-year development, CNMC has gradually become a major leading enterprise in oversees
nonferrous resources exploitation, general engineering contractor at home and abroad and the
relevant trading and service industries. CNMC has become a “going out” pioneer in China’s
nonferrous metal industry. The nonferrous metal resources projects developed or under operation
by CNMC include Chambishi Copper Mine, Tumurttin-Ovoo Zinc Mine of Mongolia, Tagaung
147
Taung Nickel project of Myanmar and Thai-China lead-Antimony Alloy Plant. CNMC
successfully access into Australian mining capital market by purchasing ORD’s stock. CNMC
cooperated with Iran Mining Industries Development to explore lead and zinc resources in Iran;
invested in transformation of nonferrous mine in Korea; accessed to risk exploration areas in
Cambodia, Laos and other countries; signed a cooperation agreement on establishing Chambishi
China Nonferrous Industrial Park with Ministry of Industry and Trade of Zambia and strengthened
the work on exploitation of oversees metal resource such as copper, aluminum, lead, zinc and
nickel by various means. CNMC has successfully built Iran Hatongabade Copper Smelting Plant,
Fayabu Iron Alloy Plant, Iran Gagamu Alumina Plant, Arak Aluminum Smelter, Saindak Smelter
of Pakistan and a copper plant of Vietnam. CNMC has got a stable market share in Asian countries,
especially in Iran. China Nonferrous Metal Industry's Foreign Engineering Construction Co Ltd
has successfully entered Australian market, contracted the largest electrolytic aluminium project in
Kazakhstan and has been nominated to be one of the Top 225 Biggest International Contractors by
the Engineering News Document of the United States. In March 2005, China Nonferrous Metals
Int’l Mining Co Ltd, founded by CNMC, (hereinafter referred to as“CNMIM”) purchased
Australia ORD (O R D R I V E RRESOURCES LTD) and successfully listed on Australian Stock
Exchange on March 8, 2005. CNMIM is the first state-owned resource-based enterprise listed at
broad by means of risk exploitation enterprise. ORD have seven risk exploitation projects, of
which three are gold mines and four are copper mines, on nonferrous metal resources in the north
of Australia. In accordance with the cooperation agreement signed on November 2004, CNMIM
shall gain the exclusive selling rights of mineral product produced by all exploitation projects on
nonferrous metal resources. CNMIM shall also have the priority for exploitation, design,
engineering contract and equipment supply.
The total volume of mineral resources owned by China Minmetals Corporation (hereinafter
referred to as “CMC”) has experiences a rapid increase for recent years. Till the end of 2006,
CMC had gotten 60 million tons of iron reserves, 0.385 million tons of tungsten reserves, 280
million tons of coke reserves and 2.51 million tons of annual supply of aluminum oxide. CMC’s
annual turnover in 2006 hit US$ 18.9 billion, which exceeded US$ 15 billion in three successive
years, and its scale and economic return have also hit another new high. CMC is the largest
multinational operating group engaging in mining, smelting, manufacturing and circulation of
basic metals and the predominant raw materials. CMC has transformed the profit mode of trade
used for several decades and developed into a multinational resource-based enterprise. The
investment in copper mine in Chile has yielded 0.85 million tons of electrolytic copper in 15 years.
The investment in Jamaica has yielded the stable supply of bauxite. CMC has established 44 joint
ventures or sole proprietorship enterprises in the major countries throughout each continent. To
match the grand transformation from free-trade-based enterprise to resource-based enterprise,
CMC invested 616 million yuan in establishing China Minmetals Non-ferrous Metals Co Ltd in
148
December 2001. Presently, China Minmetals Non-ferrous Metals Co Ltd has possessed 13
shareholding enterprises and offices and 6 equity participation enterprises. Its investment covers
copper, aluminum, tungsten, antimony, tin, tombar thite, tantalum, peloponium and other metals.
On February 22, 2006, a joint venture agreement was signed with Codelco, Chile, and China
Development Bank on exploitation of copper resources in Chile. In accordance with the agreement,
the stage I investment in the joint venture will be US$ 550 million and the total volume of
investment will hit US$ 2 billion. CMC says it is the first cooperation project on exploitation of
oversees resources jointly between the enterprise in the world largest copper-consumption nation
and the enterprise in the world largest copper-production nation.
Since 2005, China’s steel enterprise’s steps towards oversees exploitation have been quickened.
Baosteel has successfully established Baohuarui Mining Company and Baoruiji Mining Company.
On basis of this, Baosteel achieved the iron ore supply of 6 million and 10 million tons annually.
Ansteel Group hold parts of equity of iron mine project in Western Australia. Shougang purchased
Peru’s Marcona Iron Mine Poject with a annual output of 7 million tons. Kunming Iron & Steel
Group Co Ltd established mines in Vietnam. Four giant steel enterprises, Wuan Iron and Steel
Group, Baosteel, Ansteel and Shousteel, have jointly invested in the establishment of Beijing Steel
Enterprise Union Mineral Resources Investment Co Ltd (hereinafter referred as to Beijing Steel
Enterprise Union) in Beijing. The four giant steel enterprises have also hold the first session of the
first shareholder meeting, board meeting and supervisor meeting. After the establishment, the first
oversees resources project undertaken is the iron mine project in Preah Vihéar of Cambodia. Top
leaders of Cambodia and China have always given the top priority to the exploitation of iron
resources in Cambodia. It is said that this project complied with the state’s requirements of
oversees investment and resources exploitation for the enterprise. Some experts said the
establishment of Beijing Steel Enterprise Union was marked the beginning of oversees investment
and mineral resources exploitation by China’s steel enterprises jointly. The Cooperation made by
four giant steel enterprises can avoid internal competitions effectively. On one hand, China has
numbers of steel enterprises, which have their own development strategies. It is likely for them to
flood into certain countries and regions rich in iron resources during the road of oversees
exploitation. This highly concentration would raise the standard of the establishment of mines and
finally cause the increase of the exploitation cost for the enterprises themselves. On the other hand,
this kind of situation is possible to arouse strong feelings among the foreign society and local
people. Therefore, it is an ideal choice to go out jointly. Luo Bingsheng, secretary-general of
China Iron & Steel Association, expressed that China’s steel enterprises shall further expansion its
operation to realize the common profits for each party such as mine, shipment, steel plant and
trader, while achieving the “win-win” situation between steel enterprise and mine in iron ore trade
on basis of taking iron ore as the predominant commodities. The shorter the industrial chain is, the
stronger the fluctuation is. Vertical integration strategy has been applied by many China’s steel
149
enterprises pursuing stable profit.
Chinalco has actively followed the Aurukun Project since the end of 2003 and officially attend the
global invitation for bid on September 15, 2005. For two years, Chinalco has finally had this
project. Aurukun bauxite mine in Cape York, north of Queensland, is near Weipa mine. The
estimated reserves are around 420 million tons. This mine’s mining right is awarded to a French
aluminum company in 1975. But this mine hasn’t been exploited for some reasons. Queensland
Government recalled the mining right in accordance with legislative procedure in May 2004, and
officially conducted the global invitation for bid on Aurukun bauxite exploitation on September 14,
2005. This invitation had aroused the lively interest of the famous company in resource
exploitation and aluminium industry. There are totally ten companies taking part in this bid.
Chinalco is going to invest AUD 3 billion totally to establish an oxide enterprise with annual
output of 2.1 million tons and a bauxite mine with annual output of 10 million tons as well as
relevant facilities.
Zijin Mining Group Co Ltd is a famous gold and non-ferrous mining enterprise. For 13 years since
its establishment, the average annual increase speeds of capital, sales and profit exceed 80%
respectively. By actively developing oversees business, Zijin Mining Group Co Ltd has
established numbers of subsidiaries and offices in Canada, Mongolia, Myanmar, Peru and Bolivia
in recent years. By giving top priority to South America rich in mineral resources and ideal for
investment environment, Zijin Mining Group Co Ltd has played an actively role in the process of
China’s “going out” strategy. Because of the large number of opencast mine, its production cost
per ton takes the lowest places in global gold mining industry. Last year, the production cost of
Zijin Mining Group Co Ltd is only US$ 203 per ounce, which is lower than the global average
level, which is US$ 296. Till the end of 2005, the gold reserve was 375 tons, which was listed the
top at home. Except gold business, Zijin Mining Group Co Ltd has also developed its business in
copper and zinc mine in order to avoid the risk brought by gold market fluctuation. Presently,
De’erni Copper Mine with an annual output of 22,000 tons under supervision of Zijin Mining
Group Co Ltd has been put into operation in October 2006. The copper reserves havehit over 3
million tons presently. And there are also plenty of zinc, cobalt, iron, molybdenum, nickel and coal.
At the beginning of this year, Zijin Mining Group Co Ltd, along with another domestic mining
enterprise, finds a large nickel mine with reserves of around million tons and gradation of above
1.3% in Myanmar. This nickel mine will be put operation after three years.
Jiangsu Huaxi Group invested in oversees project on mining industry in Mexico in February 2007,
after investing US$ 3 million and US$ 0.64 million in the establishment of two enterprises
respectively in Australia and Hong Kong. The total investment in the project was US$ 27, which
was solely funded by Huaxi Group. The Mexican cooperative partner provided Huaxi Group with
supports in policy and laws. The investment was mainly used for the exploitation of the copper
150
industry in Mexico. After operation, the mine will produce over 10,000 tons of fine copper powder,
which will yield sales of 500 million yuan annually. In August 2008, Huaxi Group invested US$
25 in the mining right of copper mine in Sinaloa of Mexico. The copper ore invested by Huaxi
Group is rich in gradation, of which the copper content is 1.2% to 5.5%. The service life of the
deposit explored presently is around 10 years calculated by annual output of 20,000 tons of copper
metal.
In 2007, National Development and Reform Commission approved Jinchuan Group’s purchase
project of AllegianceMiningNL. AllegianceMiningNL, a small mining enterprise in Sydney,
established in 1993 and listed on Australian Stock Exchange and hold 100% equity of Avebury
nickel sulfide project. Avebury nickel sulfide mine is located at industrial park zone, Midwest of
Tasmania, and its resources reserves are 11.6 million tons.
5 Statistic data
5.1 Economic indexes of ferrous metal ore mining and dressing
industry during 2004-2006
5.1.1 Economic indexes of ferrous metal ore mining and dressing
Table 5-1 Economic indexes of ferrous metal ore mining and dressing industry during 2004-2006
Year
2004
2005
2006
Number of enterprises
1664
2087
2495
Number of loss-making enterprises
210
341
423
Paid-in capital
29082476
33028117
37427099
State-owned capital
11485920
11407672
18726739
Collective-owned capital
1270677
958584
1079297
Capital from artificial persons
10981960
13479247
8301024
Private capital
5192825
7015538
9172081
Capital from Hong Kong, Macao and Taiwan
119847
128581
112609
Capital from foreign investors
31247
38495
35349
Total floating assets
37582058
51006440
64473681
Net accounts receivable
8063424
11126745
13249652
Inventory
7506177
9869537
11513740
Finished products
3447653
5262813
6232180
151
Average balance of floating assets
32925438
45850694
59408125
Long-term investment
11882055
13991506
15864674
Fixed assets
28281065
38291460
50645972
Average balance of net fixed assets
24837696
31641300
40645085
Intangible assets
3813678
10027345
7042009
Total assets
84029782
11671965
7
145606234
Total current liabilities
34730041
48875273
60450302
Total long-term liabilities
5331396
7049377
10324460
Total liabilities
40521537
56306887
71835820
Total equity
43491294
60397290
73770414
Product sales income
73006039
98958007
137652292
Product sales costs
50704310
69441722
102093372
Product sales expenses
2130361
3259028
3609283
Product sales taxes and extra charges
1448847
1733314
2806091
Profits from other businesses
562183
485548
590489
Overhead
6980808
7616498
8079129
Taxes
223079
348352
550307
Financial expenses
883341
1044732
1388946
Interest expense
808397
940341
1253801
Operating profits
11230107
15739012
18921106
Subsidy incomes
174098
134656
161957
Total profits
11796331
13730522
17246200
Losses
-361921
-478607
-678828
Total pre-tax profits
18142930
21990892
28094874
Income tax payable
2745311
3351483
3951138
Payable payroll of the year
5359977
6434817
8194797
Payable payroll of main businesses
4527011
5632026
7253711
Total payable welfare fund of the year
723700
736383
1003417
Total payable welfare fund of main businesses
582890
633059
902301
Payable value-added taxes of the year
4897752
6527056
8042583
Total intermediate input
44701233
62838358
88064660
Gross industrial output value (current price, new
regulations)
72535751
98958703
138828056
Output value of new products
0
959724
1207435
Sales value of industrial products(current price,
new regulations)
70832556
96008403
135340967
Delivery value of export
494869
520700
724407
Total number of employees (average number of
employees of the industry)
388055
405931
452677
Industrial added value
32741486
42649783
58810495
152
5.1.2 Economic indexes of iron ore mining and dressing industry during
2004-2006
Table 5-2 Economic indexes of iron ore mining and dressing industry
Year
2004
2005
2006
1511
1918
2335
188
303
381
Paid-in capital
28000612
31889120
35999158
State-owned capital
11004528
11046044
18118038
1238922
928657
972739
10716127
13207134
8026689
Private capital
4896141
6562399
8734984
116447
125181
112609
28447
19705
34099
34645537
48001155
61781610
7198391
10295905
12539996
Inventory
6678329
8972904
10931149
Finished products
3043974
4687332
5851063
30284657
43061741
56830095
11807411
13786663
15711333
Fixed assets
25913779
35716153
48299140
22750004
29229180
38672046
Intangible assets
3585989
9509261
6656758
Total assets
77740975
11026421
2
139804596
31485586
44305368
57763781
3958023
6270744
9792187
Total liabilities
35880750
50911837
68293491
Total equity
41860225
59336895
71511105
68724410
94552907
132836399
Product sales costs
47700947
66143417
98547371
1928024
3085759
3453926
1388078
1689694
2736377
538228
464400
568130
Overhead
6508449
7231285
7746822
Taxes
210749
321052
541020
Financial expenses
809606
1002791
1332058
Interest expenses
740526
899909
1202636
Operating profits
10712232
15297380
18563076
Subsidy income
164897
119307
145916
Total profits
11319823
13379815
16920455
153
Losses
-259511
-342943
-603756
17319920
21326574
27403555
Income tax payable
2626341
3273609
3894859
4976109
6026171
7825091
Total payable payroll of main businesses
4157818
5299145
6915904
677275
696860
953767
Payable welfare fund of main businesses
539261
601582
855849
4612019
6257065
7746723
42153509
60146298
85232677
Gross industrial output value (current price,
new regulations)
68481937
94514432
133813184
0
918696
1124973
Sales value of industrial products (current
price, new regulations)
66938100
91902714
130513725
216992
186942
443125
354494
367864
424161
30949663
40627581
56331191
5.1.3 Economic indexes of other ferrous metal ore mining and dressing
industry during
Table 5-3 Economic indexes of other ferrous metal ore mining and dressing industry
Year
2004
2005
2006
153
169
160
22
38
42
Paid-in capital
1081864
1138997
1427941
State-owned capital
481392
361628
608701
31755
29927
106558
265833
272113
274335
Private capital
296684
453139
437097
3400
3400
0
2800
18790
1250
2936521
3005285
2692071
865033
830840
709656
Inventory
827848
896633
582591
Finished products
403679
575481
381117
2640781
2788953
2578030
74644
204843
153341
Fixed assets
2367286
2575307
2346832
154
2087692
2412120
1973039
Intangible assets
227689
518084
385251
Total assets
6288807
6455445
5801638
3244455
4569905
2686521
1373373
778633
532273
Total liabilities
4640787
5395050
3542329
Total equity
1631069
1060395
2259309
4281629
4405100
4815893
Product sales costs
3003363
3298305
3546001
202337
173269
155357
60769
43620
69714
23955
21148
22359
Overhead
472359
385213
332307
Taxes
12330
27300
9287
Financial expenses
73735
41941
56888
Interest expenses
67871
40432
51165
Operating profits
517875
441632
358030
Subsidy income
9201
15349
16041
Total profits
476508
350707
325745
Losses
-102410
-135664
-75072
823010
664318
691319
Income tax payable
118970
77874
56279
383868
408646
369706
369193
332881
337807
46425
39523
49650
43629
31477
46452
285733
269991
295860
2547724
2692060
2831983
new regulations)
4053814
4444271
5014872
0
41028
82462
3894456
4105689
4827242
277877
333758
281282
33561
38067
28516
1791823
2022202
2479304
155
5.2 Economic indexes of non-ferrous metal ore mining and
dressing industry during 2004-2006
5.2.1 Economic indexes of non-ferrous metal ore mining and dressing
Table 5-4 Economic indexes of non-ferrous metal ore mining and dressing industry during 2004-2006
Year
2004
2005
2006
1465
813
1862
171
105
203
Paid-in capital
19649390
10361111
31479470
State-owned capital
8913337
3127395
6337014
2201482
378740
2937028
4914093
4342355
15074589
Private capital
3118940
2316911
6322083
103857
46911
145226
397681
148799
663530
30263582
20170020
70974078
4353229
3333227
9986002
Inventory
6403440
4377621
13657305
Finished products
2655328
1940051
6117110
26492399
18222799
60268159
8014879
2117072
12993299
Fixed assets
32607966
17647365
48911687
27931195
13611104
38768466
Intangible assets
3570561
2925852
7898100
Total assets
76378846
44453028
145904752
31642035
19409979
55569259
10060267
4937184
12971726
Total liabilities
41990159
24905223
69689607
Total equity
34388687
19547805
76215145
79523543
42252331
171485785
Product sales costs
59014421
29522498
117165870
1389621
1131717
3019320
634493
408807
1654444
431430
268919
778757
Overhead
6625983
3779428
10906046
Taxes
249364
295404
406241
Financial expenses
1116618
562477
1440896
156
Interest expense
862320
534505
1172016
Operating profits
10967020
6730312
36510864
Subsidy incomes
396951
69049
611713
Total profits
11570458
6510506
35555957
Losses
-339503
-166456
-321905
14932440
9464672
45587323
Income tax payable
2050041
1084782
6644627
5212950
3309696
8118682
4873015
3083928
7466045
644380
404762
1259079
578085
355439
957944
2727489
2545359
8376922
55418641
27224702
107793484
new regulations)
80161138
41223644
167173112
0
259610
5775453
new regulations)
78933526
40472716
163820491
3107238
757070
7072451
391732
196070
453092
27470169
16546104
67756550
5.2.2 Economic indexes of common non-ferrous metal ore mining and
Table 5-5 Economic indexes of common non-ferrous metal ore mining and dressing industry during
2004-2006
Year
2004
2005
2006
752
813
1087
94
105
125
Paid-in capital
10739542
10361111
15490729
State-owned capital
5100254
3127395
2859409
583830
378740
450615
2849600
4342355
8180731
Private capital
1954071
2316911
3569436
81460
46911
119240
170327
148799
311298
13656007
20170020
40639215
2210570
3333227
6188435
157
Inventory
3201224
4377621
7902147
Finished products
1533523
1940051
4137126
12377766
18222799
33735251
5710559
2117072
3856052
Fixed assets
14067928
17647365
25292997
11471841
13611104
19605815
Intangible assets
1351243
2925852
4179012
Total assets
35694447
44453028
77175989
16439288
19409979
32615271
3547028
4937184
5619144
Total liabilities
20104132
24905223
38727723
Total equity
15590315
19547805
38448266
26934491
42252331
83183068
Product sales costs
19407632
29522498
52946060
757949
1131717
1662589
306166
408807
836291
237272
268919
550742
Overhead
2867374
3779428
6182955
Taxes
122935
295404
279877
Financial expenses
532634
562477
648548
Interest expense
376248
534505
658723
Operating profits
3129986
6730312
20479506
Subsidy incomes
72799
69049
285629
Total profits
3565429
6510506
19394073
Losses
-150479
-166456
-124713
5561094
9464672
25997498
Income tax payable
558302
1084782
3244427
2540657
3309696
4613295
2345581
3083928
4391934
304056
404762
562173
266833
355439
536972
1689499
2545359
5767134
17611634
27224702
48134332
new regulations)
26169882
41223644
78849747
0
259610
633091
new regulations)
25745585
40472716
76225538
472557
757070
1118947
174783
196070
235423
10247780
16546104
36482549
158
5.2.3 Economic indexes of copper ore mining and dressing industry
during 2004-2006
Table 5-6 Economic indexes of copper ore mining and dressing industry
Year
2004
2005
2006
136
147
191
18
18
18
Paid-in capital
5206933
2659387
4041968
State-owned capital
4054010
1045002
356786
120626
126840
78739
748157
1100286
2960242
Private capital
269802
371671
603971
0
0
980
14338
15588
41250
4172844
4501750
9339492
660384
703043
1204321
Inventory
904621
1047615
1799847
Finished products
487262
626608
1065349
4212728
4096095
7331445
4467445
526204
1067260
Fixed assets
4603932
4215373
5382794
4247639
3468547
4554335
Intangible assets
601182
720613
1158036
Total assets
14080341
10450881
17409670
6329352
4270908
7163508
1461630
1102960
1147447
Total liabilities
7812676
5694480
8439145
Total equity
6267665
4756401
8970525
8334214
9752938
18045319
Product sales costs
6181316
6628899
10776485
155309
198860
312443
67834
77377
157306
80881
67237
210327
Overhead
1028616
1131336
1677390
Taxes
22663
25937
69852
Financial expenses
160318
101350
114192
Interest expense
92615
97710
110315
Operating profits
679832
1643909
5186398
Subsidy incomes
32941
27313
72757
Total profits
1121421
1549724
4866648
Losses
-21909
-22152
-15073
159
1664639
2283483
6384370
Income tax payable
161393
234369
736693
824989
967224
1196049
775620
918135
1147102
105429
118750
154342
96271
112583
146575
475384
656382
1360416
5315513
5980513
10391143
new regulations)
7767848
9727738
18260886
0
5350
42744
new regulations)
7806375
9569470
17603503
0
20512
400
51260
49947
58479
2927719
4404070
9230159
5.2.4 Economic indexes of plumbum and zinc ore mining and dressing
Table 5-7 Economic indexes of plumbum and zinc mining and dressing industry
Year
2004
2005
2006
390
433
605
44
48
61
Paid-in capital
4105238
5700282
8663973
State-owned capital
860138
1567829
1996964
275971
203097
253666
1806628
2667374
4629916
Private capital
1045653
1142504
1535616
24590
35397
80724
92258
84081
167087
6967213
12380405
26095377
879935
1976576
3965923
Inventory
1474920
2110968
4496386
Finished products
648659
921971
2422917
5961523
11128169
21589821
1086828
1459290
2540883
Fixed assets
7501802
11099605
15835845
5442896
8054245
11493098
160
Intangible assets
609749
1989151
2760440
Total assets
16600813
27649589
49160370
7654432
12298745
20629000
1654336
3423308
3524582
Total liabilities
9350503
15871214
24445277
Total equity
7250310
11778375
24715093
13042984
23561352
50289902
Product sales costs
8900501
15893641
30792896
321475
573022
844887
178570
242409
515303
79781
186923
283690
Overhead
1484713
2157336
3750015
Taxes
67011
226915
174225
Financial expenses
269015
365265
425679
Interest expense
190667
352869
452659
Operating profits
2035834
4261288
13633232
Subsidy incomes
26515
31293
200572
Total profits
2037566
4187763
12988289
Losses
-74391
-89796
-60281
3135946
5857684
17025905
Income tax payable
328719
720116
2279998
1342184
1847455
2682488
1242014
1687297
2533508
151782
230885
308548
136977
189637
294732
919810
1427512
3522313
8037546
14668817
27334039
new regulations)
12716300
22521711
44996337
0
93790
287341
new regulations)
12424586
22165408
43433082
66885
107001
93131
94547
110361
131927
5598597
9280607
21184611
5.2.5 Economic indexes of nickel and cobalt ore mining and dressing
Table 5-8 Economic indexes of nickel and cobalt mining and dressing industry
161
Year
2004
2005
20
19
3
3
Paid-in capital
115026
127268
State-owned capital
21580
15775
9859
355
37257
38794
Private capital
256156
393295
62610
64781
63582
63388
281772
335065
252198
396399
Inventory
562952
834708
Finished products
332391
445863
30939
25744
6617
5678
Fixed assets
914
720
124976
229652
Intangible assets
-6936
-2417
Total assets
5506
6372
5420
6180
47464
71212
Total liabilities
561608
838019
Total equity
0
0
3660
2867
Product sales costs
290929
445254
20
19
3
3
115026
127268
Overhead
21580
15775
Taxes
9859
355
Financial expenses
37257
38794
Interest expenses
256156
393295
Operating profits
62610
64781
Subsidy income
63582
63388
Total profits
281772
335065
Losses
252198
396399
562952
834708
Income tax payable
332391
445863
30939
25744
6617
5678
914
720
124976
229652
162
-6936
-2417
5506
6372
Gross industrial output value (current price, new regulations)
5420
6180
47464
71212
Sales value of industrial products (current price, new
regulations)
561608
838019
0
0
Total number of employees (average number of employees of
the industry)
3660
2867
290929
445254
5.2.6 Economic indexes of tin ore mining and dressing industry during
2004-2006
Table 5-9 Economic indexes of tin ore mining and dressing industry
Year
2004
2005
2006
53
53
54
3
7
5
Paid-in capital
421847
663839
869060
State-owned capital
78060
33727
36736
13343
28741
201
108103
338725
110206
Private capital
490920
609544
720772
90458
66416
83045
145004
131646
123185
622346
663134
852636
644305
1005215
1182335
Inventory
1473494
2178012
2233622
Finished products
1050857
1613427
1444468
41554
92145
132375
19576
25042
41224
Fixed assets
1048
0
2000
159428
232794
364204
Intangible assets
-2039
-15048
-16063
Total assets
14091
18684
25693
13207
18128
25308
93035
135682
142238
Total liabilities
1474513
2183456
2255370
Total equity
22240
37680
266850
8973
10060
10084
Product sales costs
498353
889955
958871
163
53
53
54
3
7
5
421847
663839
869060
Overhead
78060
33727
36736
Taxes
13343
28741
201
Financial expenses
108103
338725
110206
Interest expenses
490920
609544
720772
Operating profits
90458
66416
83045
Subsidy income
145004
131646
123185
Total profits
622346
663134
852636
Losses
644305
1005215
1182335
1473494
2178012
2233622
Income tax payable
1050857
1613427
1444468
41554
92145
132375
19576
25042
41224
1048
0
2000
159428
232794
364204
-2039
-15048
-16063
14091
18684
25693
new regulations)
13207
18128
25308
93035
135682
142238
1474513
2183456
2255370
22240
37680
266850
8973
10060
10084
498353
889955
958871
5.2.7 Economic indexes of antimony ore mining and dressing industry
during 2004-2005
Table 5-10 Economic indexes of antimony ore mining and dressing industry
Year
2004
2005
17
21
4
5
Paid-in capital
61811
75827
State-owned capital
26234
44986
5950
8000
20576
18531
Private capital
166985
219667
164
25987
59599
42704
49962
293995
348992
81736
115032
Inventory
284992
466337
Finished products
199769
380836
2484
11933
3591
5330
Fixed assets
2448
1875
23988
30149
Intangible assets
-12942
-6892
Total assets
3086
5708
2653
5602
18515
26426
Total liabilities
267372
485006
Total equity
8932
53049
2422
4279
Product sales costs
96537
210312
17
21
4
5
61811
75827
Overhead
26234
44986
Taxes
5950
8000
Financial expenses
20576
18531
Interest expenses
166985
219667
Operating profits
25987
59599
Subsidy income
42704
49962
Total profits
293995
348992
Losses
81736
115032
284992
466337
Income tax payable
199769
380836
2484
11933
3591
5330
2448
1875
23988
30149
-12942
-6892
3086
5708
new regulations)
2653
5602
18515
26426
267372
485006
8932
53049
165
2422
4279
96537
210312
5.2.8 Economic indexes of aluminium ore mining and dressing industry
during 2004-2006
Table 5-11 Economic indexes of aluminium ore mining and dressing industry
Year
2004
2005
2006
16
20
24
3
3
3
Paid-in capital
183513
442984
538556
State-owned capital
13130
379125
385969
81063
1270
370
72140
31646
108117
Private capital
214359
700535
1080123
23699
20905
32113
82218
574250
740059
191656
621576
1967784
256129
525384
608396
Inventory
384153
1797959
4182406
Finished products
325213
1529405
3436235
15704
25742
42688
12019
28168
49167
Fixed assets
0
0
0
6763
72514
235737
Intangible assets
-15477
-18786
-1615
Total assets
932
8027
19772
889
8027
19772
7617
106283
233349
Total liabilities
341523
1523688
4225793
Total equity
0
42807
90510
1946
6622
7803
Product sales costs
116678
196705
1381271
16
20
24
3
3
3
183513
442984
538556
Overhead
13130
379125
385969
Taxes
81063
1270
370
Financial expenses
72140
31646
108117
Interest expenses
214359
700535
1080123
166
Operating profits
23699
20905
32113
Subsidy income
82218
574250
740059
Total profits
191656
621576
1967784
Losses
256129
525384
608396
384153
1797959
4182406
Income tax payable
325213
1529405
3436235
15704
25742
42688
12019
28168
49167
0
0
0
6763
72514
235737
-15477
-18786
-1615
932
8027
19772
new regulations)
889
8027
19772
7617
106283
233349
341523
1523688
4225793
0
42807
90510
1946
6622
7803
116678
196705
1381271
5.2.9 Economic indexes of magnesium ore mining and dressing industry
during 2004-2005
Table 5-12 Economic indexes of magnesium ore mining and dressing industry
Year
2004
2005
68
64
10
6
Paid-in capital
467175
525598
State-owned capital
3759
5446
62318
4683
17205
74268
Private capital
936283
973737
332641
329325
358105
296391
1013464
938809
651440
790661
Inventory
1653174
2152032
Finished products
1367103
1765531
130769
131440
167
10439
17719
Fixed assets
7381
6465
58576
140530
Intangible assets
-11097
-2669
Total assets
19615
13014
8524
12664
66398
72811
Total liabilities
1692242
2186292
Total equity
367657
493859
7773
8395
Product sales costs
490473
675743
68
64
10
6
467175
525598
Overhead
3759
5446
Taxes
62318
4683
Financial expenses
17205
74268
Interest expenses
936283
973737
Operating profits
332641
329325
Subsidy income
358105
296391
Total profits
1013464
938809
Losses
651440
790661
1653174
2152032
Income tax payable
1367103
1765531
130769
131440
10439
17719
7381
6465
58576
140530
-11097
-2669
19615
13014
regulations)
8524
12664
66398
72811
regulations)
1692242
2186292
367657
493859
7773
8395
490473
675743
168
5.2.10 Economic indexes of other non-ferrous metal ore mining and
Table 5-13 Economic indexes of other common non-ferrous metal ore mining and dressing industry
Year
2004
2005
52
56
9
15
Paid-in capital
177999
165926
State-owned capital
43343
35505
14700
5754
39534
72731
Private capital
451247
391087
134856
112582
130070
103401
537720
431953
186532
180338
Inventory
1198528
1508993
Finished products
1050482
1264896
59715
72831
7520
7084
Fixed assets
1552
1383
32711
67380
Intangible assets
-5688
-8696
Total assets
3615
3322
2892
2618
61276
49051
Total liabilities
1177366
1521377
Total equity
6843
2162
4202
3539
Product sales costs
228494
443458
52
56
9
15
177999
165926
Overhead
43343
35505
Taxes
14700
5754
Financial expenses
39534
72731
Interest expenses
451247
391087
Operating profits
134856
112582
Subsidy income
130070
103401
Total profits
537720
431953
Losses
186532
180338
169
1198528
1508993
Income tax payable
1050482
1264896
59715
72831
7520
7084
1552
1383
32711
67380
-5688
-8696
3615
3322
regulations)
2892
2618
61276
49051
regulations)
1177366
1521377
6843
2162
4202
3539
228494
443458
5.3 Statistic data of iron ore import and export in 2006
5.3.1 Statistic data of import and export of iron ore, iron and steel
products and steel billet in 2006
Table 5-14 Statistic data of import and export of iron ore, iron and steel products and steel billet in
2006
Import
Quantity (ton)
Year-on-year changes
(%)
326，303，326
18.5
Australia
126，758，482
13.0
Brazil
75，847，821
38.6
India
74，775，085
9.1
South Africa
12，556，119
18.9
Peru
4，680，206
39.2
Kazakhstan
4，411，397
95.8
Canada
3，872，871
39.0
Iran
3，545，224
67.1
Russia
3，325，285
-22.3
Venezuela
2，621，285
3.8
Iron and steel products
18，510，000
-28.3
Iron ore
Origin:
170
Export
Steel billet
370，000
-71.8
Iron and steel products
43，010，000
109.6
Steel billet
9，040，000
27.8
Data source: China Customs
5.3.2 Statistics of iron ore and ore concentrate (including roasting pyrite)
export in 2006
Table 5-15 Statistics of iron ore sand and ore concentrate (including roasting pyrite) export in 2006(by
destination)
Country and region
production and sale
of
Trade volume (kg)
Trade sum (US$)
US
470
421.00
Australia
6065
2，959.00
Denmark
314
43.00
Germany
3330
209.00
Greece
802
1，442.00
Kazakhstan
24000
4，800.00
ROK
520900
93，043.00
Malaysia
9000
2，941.00
Myanmar
1676000
176，808.00
Japan
1540570
87，778.00
Saudi Arabia
30000
3，732.00
Taiwan, China
21000
6，737.00
Thailand
637400
204，142.00
Indonesia
20000
1，835.00
Vietnam
51450
9，042.00
Total
4541301
595，932.00
Table 5-16 Statistics of iron ore sand and ore concentrate (including roasting pyrite) export in 2006 (by
customs)
Customs
Trade volume (kg)
Trade sum (US$)
Beijing Customs District
1280
1，133.00
Chengdu Customs District
225
399.00
Dalian Customs District
480000
87，380.00
Guangzhou
District
35000
4，006.00
Haikou Customs District
1000
40.00
Hefei Customs District
20000
2，020.00
Huangpu Customs District
22490
5，881.00
Customs
171
Nanjing Customs District
20000
1，835.00
Nanning Customs District
20
10.00
Ningbo Customs District
540
974.00
Qingdao Customs District
2138
1，252.00
Shantou Customs District
568200
193，925.00
Shanghai Customs District
84145
16，359.00
Shenzhen Customs District
42470
3，434.00
Tianjin Customs District
2824893
168，294.00
Urumchi Customs District
24000
4，800.00
Xiamen Customs District
14900
6，484.00
Chongqing
District
400000
97，706.00
4541301
595，932.00
Customs
Total
5.3.3 Statistics of iron ore sand and ore concentrate (including roasting
pyrite) import in 2006
Table 5-17 Statistics of iron ore sand and ore concentrate (including roasting pyrite) import in 2006(by
origin)
Total of the year
Total of the year
Trade volume (kg)
Trade sum (US$)
Canada
3872870663
368，366，087.00
US
292185360
25，173，122.00
Australia
126758000000
7，322，317，263.00
New Caledonia
19000
2，247.00
New Zealand
411366139
13，456，943.00
Libya
32571844
2，281，202.00
Mauritania
75674455
5，465，097.00
Mozambique
176233303
12，807，766.00
South Africa
12556118945
817，165，343.00
Nigeria
42
339.00
Tanzania
25
884.00
Uganda
10
26.00
Argentina
57692170
3，490，401.00
Brazil
75847820558
5，527，328，122.00
Peru
4680206056
300，235，116.00
Mexico
667431236
49，261，171.00
Venezuela
2621284631
194，849，176.00
Chile
2351057448
173，950，829.00
Country and region
production and sale
of
172
Germany
654
1，819.00
Russia
3325285468
212，391，250.00
Finland
380
1，976.00
Ukraine
1897721835
154，050，993.00
Hungary
50
337.00
DPRK
1599080334
76，593，592.00
Philippines
1178399983
69，445，609.00
Kazakhstan
4411396800
319，031，634.00
Malaysia
332094409
19，134，924.00
Mongolia
317766485
16，797，986.00
Myanmar
701020850
8，800，263.00
Japan
6650150
101，830.00
Saudi Arabia
99251450
7，288，521.00
Taiwan, China
20640
828.00
Thailand
170827829
11，249，592.00
Iran
3545223731
215，589，931.00
India
74775084531
4，825，888，795.00
Indonesia
1985968940
105，418，642.00
Jordan
1093
370.00
Vietnam
1556516196
65，844，981.00
Total
326303200000
20，923，785，007.00
Table 5-18 Statistics of iron ore sand and ore concentrate (including roasting pyrite) (by customs
district)
Customs
Trade volume (kg)
Trade sum (US$)
Beijing Customs District
9137
26，464.00
Changchun
District
833661790
37，150，037.00
Changsha Customs District
3410891898
203，961，935.00
Dalian Customs District
16169783443
1，059，475，531.00
Fuzhou Customs District
1765809538
126，255，236.00
Guangzhou
District
1141944506
90，853，310.00
Harbin Customs District
24380
610.00
Hangzhou
District
13201118143
745，221，106.00
Hefei Customs District
4417044637
272，546，500.00
Hohhot Customs District
317766285
16，797，973.00
Huangpu Customs District
314688098
21，155，497.00
Jiangmen Customs District
310429091
23，257，396.00
Kunming Customs District
1167922788
24，321，447.00
Manzhouli
47284814
2，485，974.00
Customs
Customs
Customs
Customs
173
District
Nanchang Customs District
878093973
74，282，685.00
Nanjing Customs District
25358956378
1，692，054，262.00
Nanning Customs District
9319656598
596，420，938.00
Ningbo Customs District
27115827701
1，750，788，316.00
Qingdao Customs District
100803000000
6，495，961，092.00
Shanghai Customs District
23277877587
1，457，161，943.00
Shenzhen Customs District
5458549736
397，352，566.00
Shenyang Customs District
277060000
19，590，259.00
Shijiazhuang
District
25928915687
1，646，577，755.00
Taiyuan Customs District
1763170817
129，829，106.00
Tianjin Customs District
35571157596
2，265，008，174.00
Urumchi Customs District
4434895800
321，005，550.00
Wuhan Customs District
3817906492
227，526，960.00
Xi'an Customs District
717469795
47，336，883.00
Xiamen Customs District
3927252095
225，605，710.00
Zhanjiang Customs District
13264409832
867，297，097.00
Zhengzhou
District
1290626482
86，476，695.00
326303200000
20，923，785，007.00
Customs
Customs
Total
Dada source: China Customs
6 Brief introduction to enterprises
6.1 Aluminum Corporation of China (CHALCO)
The Aluminum Corporation of China (CHINALCO) was established on the basis of some
aluminum institutions and enterprises owned by the central government in 2001 as a trial of the
authorized investment institution and the state-holding company to operate, manage and supervise
the state-owned assets of the affiliated wholly-owned subsidiaries, holding companies and
enterprises with state-owned equity, maintain and increase their value and exercise the rights of
investor. The total assets of the CHINALCO reached 152.6 billion yuan in 2006. It reported profits
of 22.5 billion yuan on sales revenue of 105.5 billion yuan in the year.
CHINALCO has formed a development structure consisting of the light metal sector
(aluminum), heavy metal sector (copper) and rare metal (molybdenum, titanium) by means of
174
establishing new projects, expansion, technical reform and assets restructuring in accordance with
the state industrial policies. It owns the largest molybdenum and titanium material production and
R&D base of China and is the second largest supplier of alumina and the third largest electrolytic
aluminum manufacturer of the world. CHINALCO developed a number of technologies with
independent intellectual property rights best represented by "Ore Dressing Bayer Alumina
Production Processing" and realized a historic transfer of aluminum production equipment and
technologies from introduction to export, featuring relative strong international competitiveness.
Aluminum Corporation of China Limited (CHALCO), controlled by CHINALCO, has listed
in Hong Kong, New York and Shanghai. China Aluminum Group has developed 150 members
with CHINALCO playing a leading role, covering different sectors of non-ferrous metal and
enjoying great influence. CHINALCO signed strategic cooperation agreement with a number of
provinces (municipalities, autonomous regions) with more than 50 member enterprises, branches
and subsidiaries distributed in 20 provinces (municipalities, autonomous regions).
The strategic plan of CHINALCO is to build four business sectors, namely the light metal
sector (aluminum), heavy metal sector (copper), rare metal (dominant ores) and non-ferrous metal
project building with general contracting as the core business. With the plan, CHINALCO aims to
transfer from a professional aluminum mineral company to an international multi-metal mining
company and grow into a world leading multi-metal mining company. While growing the
aluminum mining sector with CHALCO, the parent company focuses on developing the copper
sector and the rare earth sector and relevant construction and technical services. The copper sector
and the rare earth sector has grown stably and cathode copper and copper processing materials,
molybdenum extract ore and titanium processing products grew from nothing and the output of
these products reached 220,000 tons, 140,000 tons, 28,000 tons and 5,000 tons respectively in
2006, taking a leading position of the same field in China. CHINALCO increased investment of
more than 10 billion yuan in Yunnan Copper Group by means of buying shares of the copper
group and the actually paid-in investment reached nearly 10 billion yuan in cash. The company
also invested 2 billion yuan in Yunnan for advanced copper processing projects. CHINALCO held
49% shares of new Yunnan Copper Group after the share increasing. It was the largest industrial
merger of the non-ferrous industry of China for CHINALCO to increase investment and shares in
Yunnan Cooper Group. With advantage complementary between CHINALCO and Yunnan Copper
Group, CHINALCO rapidly completed its layout in geological prospecting, mining and dressing,
smelting and advanced processing of copper and made breakthroughs in the long-term strategic
intention of growing and strengthening the copper sector. Since then CHINALCO had controlled
copper ore mining and smelting enterprises such as Daye Non-ferrous Metals Company, Yunnan
Copper Group and Peru Copper Inc., controlled nearly 20 million tons of copper resources and
owned advanced copper processing enterprises such as CHINALCO Luoyang Copper Co. Ltd.
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and CHINALCO Shanghai Copper Co. Ltd.
6.2 China Minmetals Corporation
Established in 1950, China Minmetals Corporation is a large-scale multinational group
specializing in producing and trading metals, minerals and electromechanical products.
Meanwhile it also engages in finance, real estate, shipping, bidding and tendering, construction
contracting and investment. In 1992, China Minmetals was named by the State Council one of the
first 55 group enterprise trials and one of the 7 groups authorized to operate the state-owned assets.
China Minmetals was listed among Top 44 Major Backbones directly managed by the central
government in 1999. China Minmetals' total revenue reached US$18.9 billion in 2006. It ranked
the 13th of Top 500 Enterprise of China and 435th of Fortune 500 companies in 2007.
China Minmetals maintained a rapid growth in terms of the size and profits in 2006 and
realized total sales of US$18.9 billion, sales revenue of 125.5 billion yuan, increased by 9.13
percent and 6.96 percent respectively on a year-on-year basis. The total profits growth reported
record 11.65 percent on a year-on-year basis.
China Minmetals has worked as a major import and export channel of metal mineral products
of China and enjoyed high reputation home and abroad. The group company owns a globalized
marketing network and 168 solely or jointly funded ventures in 20 provinces and special zones in
China. It holds majority or minority shares in 14 domestic listed companies and two red chip
companies -- Minmetals Resources and Minmetals Land Ltd. listed in the Hong Kong stock
market. China Minmetals has established 44 overseas companies in the major countries and
regions across the world.
China Minmetals has kept tight cooperation ties with commercial banks home and abroad. It
has successfully issued US$600 million commercial paper in the US in several years in a row
since 1996 and won high reputation from the authoritative international rating institutions. China
Minmetals got US$100 million of three-year International Syndicated Loans for the first time in
2001. It has more than 8,000 clients in China and other countries, of which most are long-term
trade partners.
In order to enhance its core competitiveness, China Minmetals implements a progressive
development strategy. It set up six sectors and two units, namely the iron and steel sector, raw
material sector, non-ferrous metal sector, comprehensive trade sector, finance sector, real estate
sector and the service sector, the transport unit and the bidding unit, and ferrous metal ore mining
and dressing industry for professional operation, driving different business development soundly
in a sustainable way and realized the target of increasing value of the state-owned assets. China
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Minmetals has vigorously engaged in overseas resource development and acquired a number of
rare resources by cooperation with mineral giants home and abroad and entering into the mining
ownership market. It has acquired nearly 600 million tons of iron ore reserves, 385,000 tons of
tungsten, 2.51 million tons of alumina, more than 1.5 million tons of copper reserves and 280
million tons of coking coal, in addition to the exclusive prospecting right of a aluminum mine in
Jamaica(牙买加得福德铝土矿). The risk prospecting of the silver-plumbum-zinc multi-metal
mine in Gansu province and the tungsten-molybdenum multi-metal mine in Guangxi and
prospecting of the non-ferrous metal in Bolivia are under processing. These measures of joining in
the upstream operation of the resources effectively secure the leading position of China Minmetals
in the resource field.
As the largest iron and steel trader of China, China Minmetals distributed more than 19
million tons of steel products in 2006. While enhancing the company transform, China Minmetals
further tapped its advantages in the steel circulation field and vigorously developed the
distribution and value added services of steel products to ensure its leading position in the iron and
steel distribution field. It has formulated a nationwide distribution network of iron and steel and
set up iron and steel processing centers in Tianjin, Qinhuangdao and Taicang, Jiangsu province
respectively to offer value-added services to customers.
China Minmetals combined the strategic transform with the regional economic development
of China and carried out comprehensive economic and technical cooperation with Qinghai, Hunan,
Liaoning, Tianjin and Anhui by grasping the opportunity of a new turn of economic growth, taking
a favorable foothold for acquiring resources. In July 2006, it successfully acquired Hunan
Ershisanye Construction Group Co. Ltd. to enter into the mine and metallurgy construction field.
The movement supplemented China Minmetals' efforts to access to the upstream of the resource
industrial chain. In February 2007, China Minmetals signed the Agreement on Developing and
Building Liaoning (Yingkou) Coastal Industry Base Minmatals Industry Park with Yingkou
municipal government and acquired 20km2 of land in the coastal industry base for the first level
development and building the Minmetals Industry Park centering on raw material supply, iron and
steel product processing and distribution, logistics and real estate development.
6.3 Yunnan Chihong Zn&Ge Co. Ltd.
Yunnan Chihong Zn&Ge Co. Ltd. (Chihong Zn&Ge for short) was established on July 18,
2000 and listed in the A Share market on April 20, 2004. It ranks Top 100 non-ferrous smelting
company of China and the first enterprise in Yunnan province named as one of the first circular
economy trial unit by the central government. It has a staff of more than 9,000 persons. It has the
capacity to mine and dress 600,000-800,000 tons of ore, 160,000 tons of electrolytic zinc, 100,000
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tons of electrolytic plumbum, 60,000 tons of zinc alloy, 80,000 tons of refined plumbum, 200,000
tons of germanium, 320,000 tons of sulfur acid, 10,000 tons of ammonium sulfate, 150 tons of
silver and 120kg gold, recover more than 400 tons of cadmium, copper and bismuth a year and
generate 52 million kilowatt-hour of power with the waste heat. The company has stuck to the
new industrialization path of "high technological content, outstanding economic benefits, lower
resource consumption, less environment pollution and full exertion of the advantages of human
resource", resulting in rapid growth of output and obvious improvement of operation quality.
Especially in 2006, the products, output and benefits of the company were significantly increased
with completion and putting into production of Huize Mine and Qujing Non-ferrous Metal project
for "deepening comprehensive development and utilization of resources and environmental
protection and energy conservation technology reform" and continuous price rising of the
non-ferrous metals in the international market. It produced 224,374.66 tons of plumbum and zinc,
germanium products containing 10,188.56kg of germanium, 59,380.68kg of silver ingot and
223,891.66tons of sulfur acid and reported net profits of 1,036,468,700 yuan on the sales revenue
of 4,457,442,400 yuan. The total industrial output value (current value) was 4,295,450,000 yuan
and the paid-in taxes (taxes payable) were 538,280,000 yuan. Chihong Zn&Ge's stock created
record three No.1 in the history of Shenzhen Stock Exchange and Shanghai Stock Exchange in
2006, i.e. the highest earnings per share, the highest share price and the best dividend scheme.
Chihong Zn&Ge was brought into the CSI 300 Index after being chosen by the SSE Constituent
Index.
The predecessor of Chihong Zn&Ge, Yunnan Huize Plumbum&Zn Mine, was initiated in
1951 and one of the 156 major construction projects in the first Five-Year Plan. It is the first
enterprise adopting the enrichment technology of low-grade mineral intergrowth with fuming
process and the only one that can process plumbum-zinc oxide ore and plumbum-zinc sulfuration
ores. With more than 50 years of development, Chihong Zn&Ge has diversified from a single
product to more than 20 products from four lines, namely plumbum, Zinc, Germanium and sulfur
acid. It is the first enterprise abstracting germanium from plumbum-zinc ore for the state-of-the-art
national defense projects and made great contribution for development of the non-ferrous industry.
Chihong Zn&Ge is a large-scale state-controlled modern enterprise integrating mine
prospecting, ore mining, dressing, smelting, chemical industry and scientific research functions. It
has owned a number of mines and smelting bases in Qujing, Zhaotong, Huize of Yunnan and
Ningnan, Sichuan, and holding companies in Hulunbeier, Inner Mongolia and Jianshui, Yunnan.
The mines of Yunnan Huize Qilin Plant have a large reserve, high grade and are rich of valuable
metals. The plumbum and zinc reserves for industrial mining exceed 3.14 million tons and the
prospective reserves are expected to exceed 8 million tons. The company carried out the
"advanced development and utilization of resources and environmental protection and energy
178
conservation technology reform" project in 2003 relying on the resource advantages. It adopted
world leading large-scale ore mining, dressing and lifting transport equipment and technologies
and DCS control operation, formulated an intellectual information network integrating
underground and ground voice, image and data collecting and processing functions and realized
ore dressing automation. The "mine paste cementation-stuffing mining technology" and the
"phasal ore grinding and phasal dressing technology" independently developed by the company
have significantly improved the underground mining safety, effectively avoided geological
disasters, and sharply reduced the total power consumption of mining and dressing. The
technologies represent the advanced technical level of the ore mining industry. The crude
plumbum ore smelting project of Qujing adopted the top blowing-sinking oxygen enrichment
technology and the exhaust sulfur dioxide concentration is lower than the state emission standards
(GB16297-1996, Integrated Emission Standard of Air Pollutant, 330ppm), achieving good benefits
in both environmental protection and energy conservation. Chihong Zn&Ge adopted the oversize
fluosolid furnace and world leading automatic zinc peeling technology for the zinc production.
The successful application of automatic zinc peeling technology is unique in China. The company
set up large plate, coordinated anode automatic vertical mould casting, cathode plate continuous
casting and automatic cathode plate production lines for plumbum electrolyzing and refining and
took a lead in the general energy conservation and production efficiency of plumbum electrolyzing
in China. The production systems all adopted DCS automatic control technologies which are the
most advanced technology and equipment in the plumbum and zinc smelting enterprises home and
abroad.
Yunnan Chihong Zn&Ge Co. Ltd. will inherit the market-oriented and rational prosperity
concept, the resource management concept of making scientific arrangement and refined operation,
the environmental protection concept of being environment friendly to realize harmonious
development. The company will grasp the opportunity of being one of the first trials of circular
economy and grow the company into a modern enterprise with international competitiveness and
world leading technologies, management and benefits to contribute to Yuannan's economic
development and the non-ferrous industry development of China. Aiming at high efficient
utilization and resource recycling, the company will stick to the conservation development, clean
development and security development mode with the emission and energy consumption
reduction, resource reuse and recycling as core and "lower consumption, lower emission and high
efficiency" as the main tasks.
6.4 China Nonferrous Metal Mining (Group) Co., Ltd.
China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC for short) is a large-scale central
179
enterprise under direct supervision of the State-owned Assets Supervision and Administration
Commission of the State Council (SASAC) and specializes in nonferrous metal mine development,
construction projects and relevant trade and services. CNMC took a lead in "going global" in the
1990s to develop nonferrous metal resources that were short of supply in China. In the process the
company has made important achievements, formed its own characteristics and enjoyed high
reputation and influence in the market.
CNMC started overseas project contracting in 1983. In 1995, it started to invest in overseas
resource development and established Thailand-China Plumbum-stibium Alloy Plant. With
support from the central government, CNMC directly invested in Zambia Chambishi copper mine
in 1996. It invested in Tumuerting-Aobao Zinc Mine in Mongolia in 1998. Currently CNMC is
busy with the smelting factory of Chambishi copper mine, Dagung Mountain Nickel Mine in
Burma and Zambia-China Economic and Trade Cooperation Area. It peeled off the high quality
assets to set up China Non-ferrous Metal Industry’s Foreign Engineering and Construction Co.,
Ltd. (NFC for short) in April 1997 and listed the company in the stock market. So far CNMC has
held controlling shares of (or holding shares of) 29 enterprises, of which 21 are located in China
and eight abroad. The overseas nonferrous metal resources it owned contain 6 million tons of
copper, 120,000 tons of cobalt, 700,000 tons of nickel, 1.23 million tons of zinc and 100 tons of
gold. It has invested more than US$300 million in total in the overseas market and became one of
the companies boasting the largest nonferrous metal resources in the overseas market.
Currently CNMC has controlled (or held shares of) 30 enterprises. Its businesses cover
nonferrous metal project consulting service, construction, ore mining, ore dressing, smelting,
personnel training, metal processing and trade. It has set up offices and operation agencies in more
than 20 countries and regions and NFC has listed in Shenzhen Stock Exchange.
CNMC owns a batch of high quality resources and projects that are short of supply in China
and formed an overseas nonferrous mineral resource development structure with the Central and
South Africa, neighboring countries of China, and the developed countries with rich mineral
resources such as Australia and Canada as core. Currently CNMC has successfully acquired a
batch of large-scale nonferrous metal resource development projects such as Zambia Chambishi
Copper, Tumuerting-Aobao Zinc Mine in Mongolia and Dagung Mountain Nickel and received
high attention and vigorous support from the CPC and the central government. Most of the
projects became intergovernmental projects and enjoyed a good development momentum. The
major projects include Zambia Chambishi Copper Mine which was acquired by CNMC in 1998 in
the international bidding. Together with the copper mine, CNMC also acquired the land usage
right of 41 km2 on the surface of the copper mine and the duration is 99 years. The copper mine
contains 5 million tons of copper and 120,000 tons of cobalt and is the first and also the largest
nonferrous metal mine approved by the Chinese government outside of the territory of China. The
180
total investment of the project hit US$160 million and is crowned a landmark project of
Sino-Africa cooperation.
Chambishi Copper Mine was started construction in July 2000 and put into production in July
2003. By September 2006, the mine has produced 150,000 tons of copper concentrate in total. The
company has gained valuable experiences of international operation and achieved good
achievements with constantly improvement of the enterprise management system.
Tumuerting-Aobao Zinc Mine is the largest investment project of China in Mongolia and an
important project of inter-government cooperation between the two governments. The mine
contains 1.23 million tons of zinc and the total investment hit US$44.59 million. In 2000, the
Mongolia President was present at the foundation laying ceremony of the project. President Hu
Jintao noted during his visit to Mongolia in June 2003, "Tumuerting-Aobao Zinc Mine shall be
developed into a model project of Sino-Mongolian cooperation". On August 28, 2005, the project
was formally put into production and the Mongolia President was present at the opening cerement
and cut the ribbon for the project. Since it was put into production, the mine has run smoothly. It
not only realized full capacity production and making profits in the same year when it was put into
production, but successfully drove the gross domestic production of Mongolia to increase by over
2 percent. The accumulated paid-in taxes and money returning to the society hit more than US$5.3
million, creating outstanding economic benefits and social benefits.
Burma Dagung Mountain Nickel Mine is an important resource project developed in the
neighborhood countries of China. The mine is located less than 200km to the border of China and
contains 700,000 tons of nickels. The CNMC and Burma No.3 Mineral Company signed an
agreement for prospecting and feasibility study of the mine in July 2004. Premier Wen Jiabao and
Burma Premier Khin Nyunt were present at the agreement signing ceremony. Currently geological
prospecting and feasibility study have been completed and a joint venture will be established to
start construction of the mine. The total investment is expected to reach US$600 million.
Chambishi Crude Copper Smelting Factory, jointly invested by the CNMC and Yunnan
Copper (Group) Co. Ltd., is another important resource project of the Chinese enterprises made in
the overseas market. The designed capacity is to produce 150,000 tons of crude copper a year and
the total investment is about US$200 million. During Beijing Summit of the Forum on
China-Africa Cooperation the Chinese party and Zambian party signed the memorandum of
understanding on cooperation between both parties. Vice Premier Zeng Peiyan was present at the
signing ceremony. After completed, the project will offer nearly 1,000 job opportunities for the
local and further improve the industrial chain of Chambishi Copper Mine, increase the
comprehensive benefits and realize the purpose of shipping all the crude copper products back to
China.
181
Chambishi Wet-type Copper Extraction Plant is a US$25 million project invested by the
CNMC for utilizing the legacy resource and infrastructure of Chambishi copper mine and
extending the industrial chain. The designed capacity is to produce 8,000 tons of cathode copper
and 40,000 tons of sulfur acid a year. After putting into production, the plant has generated good
economic benefits, offered more than 300 job opportunities for the local and increased the local
tax revenue by more than US$2million each year.
In 2003 the CNMC started preparation for building Zambia China Nonferrous Industry Park
relying on the basic conditions of Chambishi Copper Mine. Vice President Zeng Qinghong and
Vice President Lupando Augustine Festus Mwape were present at the signing ceremony of the
letter of intent on building China Nonferrous Industry Park. We will work hard to build the park
into a new model project of economic and trade cooperation between the two countries.
Thailand-China Plumbum-Stibium Alloy Plant is an important project that the CNMC has
invested in underpinning its efforts on recycle and utilization of nonferrous metal resources. The
plant was completed in Thailand at the end of 1995 with designed capacity reaching 20,000 tons
of recycled plumbum. Currently it has taken more than 30% of the plumbum market of Thailand
and is the largest plumbum manufacturer of Thailand. Pure plumbum, plumbum-calcium and
plumbum-tin alloy are exclusive products of the plant. It has come up to a new step in terms of
product, capacity, output, and technology and environment protection and is considered a
successful example of the Chinese capital and technology in the local.
Including these projects mentioned above, the CNMC has set up offices and development
projects in 23 countries and regions and signed contracts with its counterparts in Congo, Burma,
Vietnam, Indonesia, Malaysia, Mongolia, DPRK and Laos on mineral resource development and
showed concern for, followed up and mined a batch of high quality resource projects.
The CNMC has set up a reputed brand in the international project contracting market, and
enjoyed a stable market share especially in the Asian market. The Kazakhstan electrolyte
aluminum plant project and Iran electrolytic aluminum facility in Sabzevar signed by the CNMC
in 2005 and 2006 reached US$300 million and US$1 billion respectively, showing a promising
development prospect of the CNMC on the international project contracting.
6.5 China National Gold Group Corporation
China National Gold Group Corporation (CNGC for short) is the largest gold manufacturer
of China with a total asset reaching 10.2 billion yuan and subsidiaries located in all the major gold
manufacturing places of China. Its annual output of gold accounts for 20 percent of the total and
182
the gold reserves account for more than 30% of the total gold reserves of China. As of June 30,
2006, the CNGC was possession of the mining right over 341.89km2. Of which, the mining area
was 21.20km2 and the prospecting area 320.69km2. The gold reserve was 60 tons and copper
reserves 280,000 tons.
The Zhongjin Gold is active at developing new gold resources. In November 2006, the
company's controlling subsidiary Hubei Sanxin Gold-Copper Limited Liability Company acquired
Pingwu County Taifu Gold Mine from Guangxi Taifu Gold & Minerals Development Ltd. Co. The
gold mine contains 6.3 tons of gold with grade reaching 4.2g/ton. The Kuoerzhenkuolas mine
acquired by Zhongjin Gold Xinjiang branch contains 5 tons of gold. At the same time, Zhongjin
Gold is engaging in acquiring Henan Jinyuan, Inner Mongolia Xinda and Jilin Haigou mines
which are under control of the CNGC. Heilongjiang Wulaga Gold Mine located in Jiayin County,
Heilongjiang province, one of the largest strip gold mines of China, is also in possession of
Zhongjin Gold.
6.6 Shougang Mining Corp.
Shougang Mining Corp., affiliated to Shougang (Group) Corp., was established in 1959.
Located in Qianxi county, Qian'an city, Hebei province, it is the main raw material base of
Shougang Group. With 47 years of development, it has grown into a state-owned large scale
smelting and mineral enterprise engaging in mining, ore dressing, pellet, agglomeration,
mechanical manufacturing, electric power repair facility and building and construction and
installation. It has fixed assets of 5.3 billion yuan and a staff of 15,000 persons.
Shougang Mining has stuck to the working guideline of deepening reform, enforcing
management, making scientific and technological progress and exploring the market. Aiming at
"high quality" products and services, the company actively adjusts the industrial structure and
enforces the core competitiveness and sustainable development capability targeting at meeting the
market demand with innovation as the drive force. By doing so, it has gained excellent product
development capability and quality guarantee, and after-sales service system with mineral
products and non-mineral products distributed home and abroad.
Shougang Mining has constantly increased the production capacity and enjoyed obvious
increase of economic benefits. Its annual capacity of iron ore powder reaches 6 million tons,
agglomeration mineral 7.5 million tons and pellet mineral 5 million tons. Its annual sales revenue
reached more than 7 billion yuan. Shougang Mining has secured a leading position in the industry
in terms of the main economic and technical indexes. Of the 60 comparable economic and
technical indexes, Shougang Mining ranks the first position on 24 indexes, and ranks Top 3 on 39
indexes. The labor productivity hit 470,000 yuan/person/year and the employees' income has
183
increased steadily.
The general development thinking and objectives of Shougang Mining during the 11th Five
Year Plan period are: carry through the scientific outlook to development, consolidate Qian'an
mineral raw material base, vigorously develop the mineral resource industry, improve relevant
industries and serve the iron and steel industry development. It plans to produce more than 12
million tons of finished mineral products, 12 million tons of agglomeration and pellet minerals,
and realize sales revenue of 10 billion yuan and profits of 2 billion yuan in 2010. By doing so,
Shougang Mining expects to take a leading role in the smelting system, rank the first position on
the comprehensive technical and economic indexes such as the productivity and realize the
objective of growing the mining company into a trans-industries, inter-regions, multinational and
trans-ownership oversize mine company and a leading mine and open mine.
6.7 Zijin Mining Group Company Limited
As a famous gold mining enterprise and one of the Top 500 Enterprises in China, Zijin
Mining Group Company Limited is an H-share company listed at the Hong Kong Stock Exchange
(Stock name: Zijin Mining; stock code: 2899). Zijin Mining was included in the FTSE Mining
sector Indexes on December 20, 2004; it was added to the Dow Jones China Offshore 50 Index on
March 20, 2006. According to Forbes, Zijin Mining Group ranked the 17th of China's Top
Enterprises and the 16th of China's Overseas Listed Companies with the Most Investment Value
(1st of all mining enterprises) in 2006. It ranked the 2nd position of China's Top Enterprises in 2007,
according to Forbes.
Table 6-1 Main production and operation index data of Zijin Mining
Sales revenue
Gross profits
Net profits
Gold output
Total assets
10,000yuan
10,000 yuan
10,000 yuan
10,000 yuan
10,000 yuan
1993
592
63
55.4
33.15
914
1994
1152
287
192
96.43
1323
1995
2452
521
347
142.227
3159
1996
3274
1137
803
263.17
6177
1997
11878
2066
1377
710.2
11656
1998
12867
2563
1654
1417.68
19345
1999
21998
5005
3255
2968
27701
2000
29801
7702
4795
4119
43954
2001
37251
9877
6500
5262
57920
2002
59730
20484
13706
7812
103424
2003
105755
42069
31523
10754
272404
2004
151865
63523
41530
13046
329285
2005
306877
112944
70147
20961
548762
184
2006
1077783
294897
172519
49280
1124322
Data source: web of Zijin Mining
Centering upon non-ferrous metals such as gold and copper, Zijinshan Gold Mine, the core
enterprise of Zijin Group, has been developed into a gold mine that boasts the largest utilizable
and ensured reserves of monomer mines, the largest scale of ore mining & mineral processing, the
highest amount of gold production, the lowest beneficiation feed grade of ores, the lowest unit
cost of ore processing and the best economic performance in China. It is the only world-class gold
mine of China. Its overall cost for the gold produced from mining is 58.53 Yuan/g and its cost
control is at the leading place in the country. The Gold Smelting Plant of Zijin Mining Group has
been added to the directory of gold suppliers by the London Bullion Metal Association (LBMA).
Standard gold produced by Zijin is marketable all over the world. And its gold products are
authorized to use the marks of ISO Standards of Product.
According to China Gold Association, the total gold production of China was 122.2 tons in
the first half of 2007, of which 98 tons were produced from the gold mine. The gold industry
realized gross industrial output value of 31.857 billion yuan and profits of 3.468 billion yuan. Zijin
Group accounted for 10.4 percent of the total of the gold generating from the gold ores and 29.25
percent of the profits.
The Company has established nearly 100 subsidiaries in more than 20 provinces across China
such as Fujian, Xinjiang, Guizhou, Inner Mongolia, Jilin, Qinghai, Tibet, Heilongjiang and Henan,
and in seven countries. It is the company controlling the largest volume of metal mineral resources
in China. As of June 2007, the ensured metal (ore) resources/reserves of the Group Company were
as follows: about 591 tons of gold (57 tons of associated gold), about 151 tons of platinum &
palladium, about 8.52 million tons of copper, about 2.38 million tons of zinc, about 544,600 tons
of nickel, about 400,000 tons of plumbum, about 360,000 tons of molybdenum (27,000 tons of
associated molybdenum), about 100,000 tons of tin, 173 million tons of iron ore, and about 300
million tons of coal (the equity method is adopted for the non-controlling subsidiaries). The Group
Company had obtained 163 prospecting rights covering a total area of 5,293.36km2 and 33 mining
rights covering a total area of 50.1912km2.
The Company has undertaken a number of national key projects in scientific and
technological research, and secured an industry-leading position in the utilization of low-grade
gold mine as well as in the technical study and application of hydrometallurgy. With the approval
of the Ministry of Personnel, Zijin established the first Postdoctoral Scientific Research Station of
China's gold industry in 2001. In 2006, the Company was qualified as a state-certified technology
center. The Company advanced a three-step development strategy, taking a leading position in the
gold industry—leading position in the mining industry—coming up to the advanced level in the
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international mining industry.
6.8 Jiangxi Copper Corporation
Jiangxi Copper Corporation (JCC for short), founded in July 1979, is a super-large integrated
enterprise in China's non-ferrous metal industry and its operation covers copper mining, dressing,
smelting and processing. It is the largest copper production base and an important sulfur chemical
raw material, gold and silver producer in China. It is also one of the key enterprises receiving
support from the state. With the headquarters located in Guixi City, Jiangxi province, the company
consists of 93 entities with artificial person qualification such as Jiangxi Copper Company
Limited (consisting of Dexing Copper Mine, Yongping Copper Mine, Wushan Copper Mine and
Guixi Smelter), JCC Copper Products Company Ltd., JCC-Yates Copper Foil Company Ltd., and
11 secondary units and offices such as Chengmenshan Copper Mine. It also has a staff of more
than 30,000 persons and total assets of 13.8 billion yuan. JCC has successfully acquired
controlling shares of Sichuan Kangxi Copper Co. Ltd. and Shanxi Diaoquan Silver-copper Mine
in July 2003 and June 2004 respectively.
JCC is in possession of rich mineral resources and Top Five mines of China. It ranks a
leading position in terms of the raw material self-supply rate. With development of Fujiawu
Section, Dexing Copper Mine, and Chengmenshan Copper Mine, the service life of the mines
have been significantly prolonged.
With strong support from the central government, JCC has built the largest smelter with the
world leading level, Guixi Smelter, after over two decades of large scale development and
construction. The smelter realized the state's first strategic objective in 2000 of annually producing
200,000 tons of commercial copper products. In September 2003, Guixi Smelter Phase III was
completed and put into production. The comprehensive annual capacity then reached 400,000
tons/year, ranking the 10th in the global market.
The main products of JCC include cathode copper, sulfur acid, gold, silver, platinum,
palladium, selenium, tellurium, rhenium, molybdenum, copper sulfate, arsenoxide, copper
concentrate, lead-zinc minerals, zinc concentrate, sulfur concentrate, copper wire bar, copper rod
and bare copper wire etc. Of which, the cathode copper
branded Guiye is a registered product of
London Mental Exchange (LME), and the sulfur acid product of the same brand has won National
Gold Medal. JCC's products have been exported to over 30 countries and regions such as the US,
Japan, Europe, and Southeast Asia. The company has also established technical, economic and
trade ties with more than 30 countries and regions.
In 1997 JCC conducted stock system reform and established Jiangxi Copper CO. Ltd., a joint
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venture that JCC holds controlling shares. It issued H Shares in Hong Kong and London on June
12, 1997 and became the first mineral company of China listed in the overseas markets. On
January 11, 2002, JCC A Share was successfully issued in Shanghai Stock Exchange. Since then
JCC owned two financing channels in both the domestic market and the overseas market and
realized interaction between the virtual economy and entity economy.
Dexing Copper Mine is the major mine of Jiangxi Copper Co. Ltd. located in Dexing city,
Jiangxi province. It is the largest stripe copper mine of China and a world-level copper mine.
Dexing Copper owns rich and reliable resources with the highest copper metal reserve in China.
Dexing Mine features large and concentrated reserves, shallow burying, lower stripping ratio,
excellent beneficability and a number of elements that can be used. Dexing Copper Mine has
equipped with world leading mining and dressing techniques and equipment such as 154tons
electric wheel, 16.8m3 electric excavator, 45R blasthole drill, Φ5.5×8.5M ball mill, Mintech
geological optimization model, GPS truck dispatch system. Now it can process 100,000 tons of
ore every day, reaching the full capacity production. Its main products include copper concentrate,
sulfur concentrate and electrolyzing copper. The mine produced more than 120,000 tons of copper
in 2003, accounting for one fourth of the total copper output of China of the year. Dexing Copper
Mine enjoys a promising prospect. JCC acquired the bankrupt Fujiawu Copper Company in 2001
in accordance with the market rule and then successfully extended the service life of Dexing
Copper Mine to 50 years. Its objective is to grow into the largest nonferrous mine of China and
ascend to the world leading level of copper mine.
Yongping Copper Mine of Jiangxi Copper Co. Ltd. is located in Qianshan county, Jiangxi
province. It was added to the main building projects of the 6th Five Year Plan. With five years of
hard working of ten thousands of workers, a nonferrous opencast pit with daily processing
capacity reaching 10,000 tons was completed. It has a staff of over 4,000 persons and the annual
output of copper concentrate contains about 16,000 tons of copper and more than 800,000 tons of
standard sulfur concentrates (35 percent). As the second largest opencast copper mine, it has
modern mining and ore dressing equipment such as the 4m3 electric excavator, downhole drill and
blasthole drill, imported 42-ton self-dumping truck and imported Φ5.03×6.4M overflow ball mill.
Guixi Smelter of JCC is the first modern copper smelter adopting the world leading oxygen
enrichment flash smelting technology and two-conversion and two absorption acid making
technology. The main processing equipment was imported from Japan and Finland and features
large scale, high technology content, lower energy consumption, environment protection and high
automation. The plant was completed in 1985 and put into production successfully in the same
year. It was awarded honorary titles such as National May 1 Labor Award, National Advanced
Unit of Environment Protection, Top 300 Unit of Forestation and Top 10 Industrial Pollution
Prevention Enterprises. Guixi Smelter Phase III was completed and put into production in 2003. It
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can annually produce 340,000 tons of cathode copper, 1 million tons of sulfur acid, 10 tons of gold
and 220 tons of silver. The main technical and economic indexes such as the flash smelting
furnace operation rate, converter service life and total sulfur utilization rate came up to or
surpassed the world leading level.
Jiangxi Copper Corp. produced 443,000 tons of cathode copper, 1.09 million tons of sulfur
acid, 13 tons of gold, 353 tons of silver and 295,000 tons of copper in 2006. It realized sales
revenue of 3.1 million yuan and pre-tax profits of 9.37 billion yuan. The 3.4 billion yuan copper
smelting project with designed capacity reaching 300,000 tons that was invested by Jiangxi
Copper Corp. in 2006 was in full swing. Currently the main part controlling sections have been
completed and the personnel assignment and training were in place. Fujiawu section that contains
2.57 million tons of copper, the 5,000 tons/day expansion project of Wushan Copper Mine and the
project that Yongping Copper Mine transfers from opencast working to pit mining are under
construction.
Jiangxi Copper Corp. could produce a series of copper products such as the copper rod,
copper wire, copper cable, copper coil, precision copper pipe, enameled wire and optical fiber and
reported sales revenue of 13 billion yuan in 2006. It cooperated with Jiangsu Jinhui Co. Ltd. and
Huarun Copper to set up Jiangxi Jiangrun Copper Co. Ltd. in 2006. The joint venture was
designed to produce 100,000 tons of anode copper annually and will become a stable raw material
supply base of Jiangxi Copper Corp. It has cooperated with the Bureau of Exploitation &
Development of Geology & Mineral Resources of Jiangxi province to set up Jiangxi Province JCC
Geology and Mineral Resource Exploration Company. It cooperated with BioteQ Environmental
Technologies Inc (Canada). to set up an environment protection technologies company. It also
cooperated with EPI (Holdings) Limited and Tongde Electrics Appliance Industry Co. Ltd. to set
up JCC EPI (Qingyuan) Copper Co. Ltd. to build an anode copper board production base with
designed annual capacity reaching 100,000 tons.
7 Appendix
7.1.1 Opinions on Integrating Mineral Resource Exploitation
Guo Ban Fa〔2006〕No. 108
December 31, 2006
The people's government of all provinces, autonomous regions and municipalities, ministries
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and commissions of the State Council and institutions directly affiliated to the State Council:
The State Council has approved the Opinions on Integrating Mineral Resource Exploitation
jointly submitted by the Ministry of Land and Resources, the National Development and Reform
Commission, the Ministry of Public Security, the Ministry of Supervision, the Ministry of Finance,
the Ministry of Commerce, the State Administration for Industry and Commerce, the State
Environmental Protection Administration and the State Administration of Work Safety and now
printed and distributed to you. You are requested to carry through the Opinions earnestly.
General Office, the State Council
Attachment: Opinions on Integrating Mineral Resource Exploitation
Integrating the mineral resource exploitation is an important means to address the irrational
distribution of mineral resource exploitation projects and realize scalized and intensive
exploitation, basic works to effectively rectify the disordered mineral exploitation order and an
effective way to restructure the mineral industry and to enhance changes of the economic growth
means of the mineral industry. It is of significance to build a resource-effective and
environment-friendly society and embark on a new industrialization path. The local governments
made efforts to rectify major minerals such as coal while rectifying and regulating the mineral
resource exploitation order according to requirements of the Circular on Rectifying and
Standardizing Mineral Resource Exploitation Order from the State Council (Guo Fa [2005] No.28)
and made progresses. However, there are some problems to be addressed urgently: some local
governments valued administrative efforts instead of the market and economic rules in the practice,
harming the interests of the state and the legal rights and interests of the mine owners. Some local
governments made little progress in the practice because they did not completely understand the
significance of the rectification works and were afraid of difficulties; some mining enterprises that
broke the relevant laws and regulations tried to put off or even avoid closedown by the name of
rectification. In order to further enhance and standardize the rectification works, the following
opinions are set out:
I. Guideline thought
Restructure the mineral resources that the mining enterprises mined legally and the
production elements of the mining enterprises and gradually form a new structure with the
large-scale mining groups as the main body and harmonious development of the large, medium
and small mining enterprises by means of acquisition, purchasing shares and merger so as to
optimize the resource allocation, distribution of mineral exploitation and enhance the guarantee
capability of the mineral resource to economic and social sustainable development with Deng
Xiaoping's theory and the important thought of "Three Represents" as guideline, carry through the
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scientific outlook to development, use the economic, legal and necessary administrative means in
combination with the requirements of industrial policies and industrial structure restructuring and
according to the requirements of sustainable development.
II Purposes and missions
The rectification is designed to obviously improve the situation of "a great number, small
sized and dispersed" mining enterprises and reasonable mineral exploitation distribution, optimize
the mineral enterprise structure, significantly improve the work safety conditions and ecological
environment of the mining area, and significantly enhance the guarantee capability of mineral
industry for sustainable development of economy and society of China.
(I) Reasonable mineral exploitation distribution. Formulate a mineral right configuration plan
according to the actual situation of the mineral resource distribution, geological conditions and the
mineral resource planning, and re-divide the mining area boundary and decide the exploitation
size. Only one mining right is awarded to one mining area to end the problem of a large mine with
undersized mining efforts or several mining rights. The mining right configuration of important
mining areas and minerals shall meet the planning through the integration.
(II) Significantly optimize the mining enterprise structure. The mineral resources will
centralize towards the leading enterprises with advanced mining technologies, high resource
utilization level, excellent working safety conditions and equipment and effective geological
protection measures by washing out the inferior enterprises and offering support to the strong
enterprises. With integration, the mining enterprises reach a certain scale with obviously improved
intensive production level and reducing number of mining enterprises.
(III) Significantly improve the exploitation and utilization level. Employ scientific mining
methods and ore dressing technique so as to enable the resource recycle ratio and recovery ratio to
the designed standards and the intergrown and associated minerals to be utilized. The solid waste
such as mullock and gangue are stored safely and explored again. With integration, the mineral
resource exploitation and utilization rate is significantly increased.
(IV) The production safety conditions are significantly improved. Earnestly observe the safe
production laws and codes, enforce safety supervision, make the mining enterprises to take the
major responsibilities of safe production, improve the safe production technologies and equipment
and safety awareness of the workers and improve the safe production conditions to prevent
occurrence of important and serious accidents. With integration, the hidden safety troubles caused
by the unreasonable mining distribution are eliminated.
(V) Obviously improve the ecological environment of the mine. Establish and improve the
mine environment rectification and recovery deposit system and draw out the mine ecological
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environment protection and comprehensive administration plan in accordance with the Instruction
on Gradually Establishing Mine Environment Rectification and Ecological Environment Recovery
Responsibility System issued by the Ministry of Finance, the Ministry of Land and Resources and
the State Environmental Protection Administration. With integration, the waste will be stored and
disposed in a unified way; the pollutants are treated in a unified way and discharged after reaching
the standards. The total discharge of main pollutants in the main mines is reduced significantly
and the environment pollution accidents and ecological environment damage practice are
prevented and controlled.
III. Principles
(I) Unified planning and step-by-step implementation. Integration works shall be
implemented step by step according to the mineral resource planning, the central government's
control over the gross volume of the relevant mineral resources and regulations on the industry
restructuring and industrial development planning.
(II) The large enterprises merge the small ones and the excellent enterprises merge the
inferior ones. The integration is conducted according to the resource distribution while observing
the market and economic rules. By means of enterprise restructuring, system reform and
reconstruction, the large mining enterprises with advanced technologies, management and
equipment merge the others.
(III) Underline the main points and offer direction according to their categories. Integration is
made mainly to the small mines and small mine clusters that affect the unified planning and
exploitation of large mines and important minerals and dominant minerals that have important
impact to the national economic development. Integration will be conducted according to the
actual situation of the region, mineral and mining enterprises.
(IV) Government direction and market operation. Base on the resources with the mining right
as the binding tie, stick to combining the government direction with the market operation, use
economic, legal and necessary administrative means to promote mineral resource exploitation
integration.
(V) Make overall plan and take all elements into consideration, be open and fair. Give
attentions to all parties' interests and protect the legal rights and interests of the mining right
holders. Actively and prudently promote the integration works to secure the social stability.
Disclose the integration process and accept supervision of the public.
IV. Integration scope
(I) Important minerals. Coal, iron, manganese, copper, aluminium, plumbum, zinc,
molybdenum, gold, tungsten, tin, stibium, rare earth, phosphor, potassium salts, and other minerals
that have important impact to the economic and social development of various areas.
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(II) Main mining areas. The small mines that impact unified planning and exploitation of
large mines, one mine with several mining rights, undersized exploitation to the large mines, small
mine clusters and mining areas located in the fragile geological environment.
(III) Other minerals. The mines with backward exploitation methods, technologies and
equipment and lower resource utilization level. The mines with production scale not meeting the
design requirements in a long run and lower management level, hidden safety troubles, and poor
social and environmental benefits.
V. Work arrangement
Integration will be conducted with the province-level administration as a unit. The provinces
(autonomous regions, municipalities) shall complete the formulation and archive of the master
integration plan before the end of March 2007. By the end of 2007, integration of three or more
important minerals and five or more mining areas shall be completed; by the end of 2008, the
integration work shall be completed basically. The integration works can be divided into four
stages, naming the master plan formulation, implementation plan formulation, plan
implementation and examination and acceptance stage.
(I) Formulate the master plan. The people's government of the provinces (autonomous
regions, municipalities) shall organize the relevant departments and the city (prefecture) and
county level people's governments to make a survey to the actual situation of the mineral
resources, decide the integration scope and define the tasks, formulate the province-level master
integration plan and submit the plan to the Ministry of Land and Resource and the National
Development and Reform Commission for archiving. The province-level master integration plan
shall consist of the integration objectives, schedule, task division and responsibility fulfillment. If
the integration gets several province-level administration involved, the concerned provinces are
responsible for formulating the master integration plan with negotiation; if no agreement is
reached, the Ministry of Land and Resource and the National Development and Reform
Commission shall finalize the integration plan according to the actual distribution and geological
conditions of the mineral resources.
(II) Formulate the implementation plan. The province-level (autonomous region,
municipality) people's government shall organize the land and resource departments and city
(prefecture) and county level people's government to formulate the integration implementation
plan according to the master plan. The integration implementation plan shall not be implemented
before approved by the province-level people's government. The implementation plan shall cover
the general information of the mineral resources within the integrated mining area, the existing
mining rights, the planned mining right configuration after integration, integration schedule and
guarantee measures.
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(III) Plan implementation. Decide the main body after integration, specify the mining area
boundary with planned mining right, formulate the mine integration technical reform and design
plan according to the general building procedure and reformulate the mineral resource exploitation
and utilization plan according to the approved mining area integration implementation plan. The
relevant license such as the mining license (the coal enterprise shall obtain a new coal production
permit) shall be re-issued. Close down the production system and reform the system. Organize
production in accordance with the post-integration production technology plan after the
production system is examined and accepted. The production technology plan shall employ new
technologies and new processing of resource-conservation and clean production.
(IV) Examination and acceptance. The province-level (autonomous region, municipality)
people's government organizes the relevant departments to examine the integration works in the
jurisdiction and submit a self-examination report to the inter-ministry joint meeting of mineral
resource exploitation order rectification and standardization. The Ministry of Land and Resource
and the National Development and Reform Commission will examine the integration works of the
whole country together with the relevant departments at a right time and submit a report to the
State Council.
VI. Guarantee measures
(I) Enforce guidance and ensure implementation of the integration works. Integration is a
systematic program with strong policy color, wide involvement and many difficulties. The
people's governments of all levels must attach great importance to the work and enforce
organization and guidance in the integration. The province-level people's government shall take an
overall responsibility and the province-level mineral exploitation order rectification and
standardization leading team shall be responsible for taking specific actions. The member units
organize implementation of the work according to their functions and enhance coordination in the
course so as to ensure achievement of the objectives. The relevant departments shall improve the
work efficiency and expedite examination and approval of the relevant certificates that are needed
after the integration. The Ministry of Land and Resource and the National Development and
Reform Commission will cooperate with the relevant departments to enforce guidance and
coordination and address the important issues arising out of the integration.
(II) Well-defined work division and responsibility fulfillment. The local land and resource
agencies of all levels are responsible for conducting a survey to the resources and mining rights
within the jurisdiction and organizing review of the mining area integration plan together with the
development and reform departments. The coal industry agency shall participate in reviewing the
coal mining area integration implementation plan. The land and resource agency is responsible for
defining the mining area boundary and issuing the mining permit by law. The administration of
industry and commerce is responsible for pre-ratification of the enterprise name and registration of
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the planed mining enterprise by law. The environmental protection department is responsible for
applying to the people's government above country level for closing down the mining enterprises
that seriously damage the ecological system and pollute the environment and deliberation and
approval of the environmental impact report of the rectified mines. The work safety supervision
department and the coal mine safety supervision department are responsible for regulation and
supervision of the mine safety production, applying to the local government for closing down the
mines that do not meet the safe production conditions, and deliberation and approval of the safe
production condition of the integrated mines and issuing the safety production permit by law. The
coal industry agency is responsible for issuing the coal production permit to the integrated and
reformed coal mines. The public security department is responsible for mine explosive
management, disposing the explosives of the closedown mines in a timely way by law and
ratifying the explosive dosage of the integrated mine. The supervision department is responsible
for coordination with the relevant departments to enforce supervision and examination,
investigating the illegal practice such as abuse of power, misconduct in office, malpractice for self
ends and falsification and hunt down the responsibility of the persons concerned.
(III) Standardize operation and promote integration by law. The local governments of all
levels shall pay attention to employment of economic means and earnestly protect legal rights of
the mining right holders who participate in the integration. The small mines that impact unified
planning and mining of large mines shall be integrated if possible by means of offering reasonable
compensation, acquisition or joint operation. The integration among state-owned mining
enterprises can be conducted under supervision of the state-owned assets administrative
department by means of total asset transfer. The integration scope shall not be expanded without
authorization by principle. If it is necessary, the expansion must be added to the province-level
master integration plan and submitted to the Ministry of Land and Resource for archiving. The
mines with mining rights that are not disposed with compensation before integration shall be
disposed according to the relevant provisions. The designed production capacity of the mines after
integration shall not be lower than the stipulated mining scale. During the course of integration,
the prospecting right and mining right granting is suspended in the integration area and the
neighborhood. The deliberation and approval for the mining right set up in the integration
implementation plan shall be conducted strictly in accordance with the stipulated jurisdiction. For
the mine that is listed in the integration scope in the implementation plan but unwilling to take part
in the integration, the relevant departments will not prolong the permits and licenses when the
relevant permits and licenses are mature and the local government takes it back by law and add it
to the integration scope. The mining enterprises listed in the closedown list and the mining
enterprises that shall be closed down according to the relevant laws and regulations will not be
covered in the integration. For those mines that the resources need mining and utilization, the
province-level land and resource department will formulate a mining right configuration plan
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according to the mineral resource planning and submit the plan to the province-level people's
government for approval and to the Ministry of Land and Resource for archiving. In the process,
the prospecting right and mining right granting shall be conducted strictly according to their
respective jurisdiction.
(IV) Improve the systems and enforce supervision and guidance. The local governments of
all levels shall organize the relevant departments to set up a supervision and accountability system
to enforce supervision and examination, find out and solve problems, enhance the integration
works, and strictly prevent the integrated mines from practicing falsification and producing
exceeding its designed capacity. The areas that do not complete the integration mission within the
stipulated time, the deliberation and approval of relevant licenses and permits such as the
prospecting right and mining right will be suspended. The local governments shall enforce policy
study, summarize and promote typical experiences and further improve the support system
building for the mining resource planning, mining right market access, mining right market
allocation, mining right price and earnings distribution, mineral resource exploitation management
and the ecological environment recovery compensation system in accordance with the relevant
provisions. Earnestly enforce supervision to the mining enterprises after integration, consolidate
the integration fruits and enhance the mineral industry economy to develop soundly and in a
sustainable way.
The people's government of all provinces, autonomous regions and municipalities shall
formulate specific implementation plan according to the Opinions and the actual situation of the
province (autonomous region, municipality).
7.1.2 Circular on Printing and Distributing the Working Plan of
Rectifying and Standardizing the Mineral Resource Exploitation
Order in 2007
Guo Tu Zi Fa [2007] No. 74
March 30, 2007
Rectifying and Standardizing Mineral Resource Exploitation Order Leading Teams of all
provinces, autonomous regions and municipalities:
In order to ensure fulfillment of the rectification and standardization works of mineral
resource exploitation order as scheduled, the Working Plan of Rectifying and Standardizing the
Mineral Resource Exploitation Order in 2007 has been adopted at the third session of the
195
inter-ministry meeting of rectifying and standardizing mineral resource exploitation order in
accordance with requirements of the Circular on Rectifying and Standardizing Mineral Resource
Exploitation Order from the State Council (Guo Fa [2005] No.28) and the unified deployment of
the working conference on rectifying and standardizing mineral resource exploitation order. Now
the Working Plan of Rectifying and Standardizing the Mineral Resource Exploitation Order in
2007 is printed and distributed to you and you are requested to organize implementation of the
plan according to the actual situation.
Ministry of Land and Resource, National Development and Reform Commission, Ministry of
Public Security, Ministry of Supervision, Ministry of Finance, Ministry of Commerce, State
Administration for Industry and Commerce, State Environmental Protection Administration, State
Administration of Work Safety
Working Plan of Rectifying and Standardizing the Mineral Resource Exploitation Order in
2007
Since the Circular on Rectifying and Standardizing Mineral Resource Exploitation Order
from the State Council (Guo Fa [2005] No.28, hereinafter referred to as No.28 Document) was
promulgated one year ago, obvious achievements have been made in rectifying and standardizing
the mineral resource exploitation order with efforts of local governments and departments. The
Phase I works rectification and standardization of various provinces, autonomous regions and
municipalities have passed examination. However, the deep contradictions existed for years and
problems emerging in the new situation have not been effectively addressed and the wrongdoing
and illegal behaviors may rebound. It is a great challenge to build a new operation mechanism and
management system accommodating the market economy rules and the situation is not optimistic.
2007 is a critical year to complete the rectification and standardization works. The people's
governments of provinces, autonomous regions and municipalities shall better understanding
towards this work, underline the main points, earnestly deploy the works and enforce objective
fulfillment on the basis of the existing achievements so as to fulfill the missions stipulated in No.
28 Document as scheduled.
I Basic working thoughts
The mineral resource exploitation order rectification and standardization in 2007 shall be
conducted with Deng Xiaoping's Theory and the important thought of "Three Represents" as
guidance and the scientific outlook to development as the master thinking, meeting the spirits of
the fifth and sixth Plenary Session of the 16th Central Committee of the CPC and the economic
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working meeting of the central government and requirements of Vice Premier Zeng Peiyan in his
speech made at the mineral resource exploitation order rectification meeting. The basic working
thoughts are to continuously deepen implementation of the spirits of No. 28 Document and to
fulfill missions of rectification and standardization. Earnestly and prudently promote the mineral
resource exploitation integration works according to requirements of the Circular on the General
Office of the State Council Forwarding the Opinions on Integrating Mineral Resources of the
Ministry of Land and Resource and the other Ministries and Departments (Guo Ban Fa [2006] No.
108); maintain the high pressure attitude and resolutely eliminate the dead angles in the
rectification works, consolidate and continuously enlarge the achievements; enforce building of
new mechanism and new system, build a standard mineral resource exploitation procedure, further
promote the mineral resources of China to embark on a resource-efficient development, clean
development, safety development and sustainable development.
II. Work arrangement
(I) Actively and properly enhance mineral resource exploitation integration
1 The people's government of the provinces, autonomous regions and municipalities are the
main body of responsibilities in the integration and shall earnestly fulfill requirements of No. 28
Document, add the integration work to the priority list, enforce guidance and organize special
forces to formulate a specific work plan and do a good job in implementation.
2 The provinces, autonomous regions and municipalities shall formulate a master plan
according to the industrial policies, industrial development planning, mineral resource planning,
relevant requirements of the central government on the gross control of relevant mineral resources
and industrial structure adjustment and submit it to the Ministry of Land and Resource and the
National Development and Reform Commission for archiving. The master plan shall consist of the
integration purposes, schedule, work division and responsibility accountability system and so on.
The mining right quantity shall be reduced by 20 percent compared with that before the
integration. Of which, the quantity and output of small coal mines after integration shall not
exceed the control objectives stipulated in the 11th Five Year Plan of the coal industry. Within the
integration scope, the mineral resource utilization rate shall be increased by 10 percent and the
coal mine accidents and casualties shall be reduced by 10 percent. The mine pollutant discharge
shall reach the standards and maintain the performance steadily. The waste water recycling rate
and the solid waste utilization rate shall be increased.
3 The people's government of provinces, autonomous regions and municipalities shall
organize the land and resource administration departments and the city- and county-level people's
governments to formulate the integration implementation plan of at least three important minerals
and at least five important mining areas according to the master plan before June 2007. The
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implementation plan shall cover the general information of the mineral resources, data of the
existing mining rights and list of the mining enterprises participating in the integration, the
planned mining right plan after integration, integration schedule and guarantee measures and so on.
The integration plans of the other integration areas shall be completed before the end of December
2007.
4 The rectification and standardization leading teams of the provinces, autonomous regions
and municipalities shall make careful arrangement, earnestly organize implementation, properly
handle the relationship of different parties according to the master plan and the implementation
plan to ensure completing integration of three and more important minerals and five and more
important mining areas before the end of December 2007, and submit a written report to the
inter-ministry joint meeting office of mineral resource exploitation order rectification and
standardization (hereinafter referred to as Inter-ministry Joint Meeting Office). The Inter-ministry
Joint Meeting Office organizes examination and review to the integration works of important
minerals and important mining areas.
(II) Consolidate and enlarge the rectification achievements
5 Continue the high pressure attitude, resolutely eliminate the rectification dead angles,
strictly monitor the mineral exploitation order trend, investigate and punish any and all illegal
practices, implement centralized rectification to the area where the illegal practice rebounded and
continuously do a good job in rectification of main mining areas. Further improve and put the
dynamic tour inspection system into effect. Responsible unit and specific responsible person of
supervision shall be clearly defined to any and all mining areas; make examination on a regular
and irregular basis and maintain a normal order of the mining area. For the areas where dead
angles exist in the rectification or illegal practice rebounds after rectification and cause serious
impacts, the leaders of local government shall be claimed for responsibilities by law.
6. Continuously do a good job in closing down the mines. The local governments shall
resolutely close down the mining enterprises that damage the environment, lead to serious
pollution and have no safety production conditions according to the work arrangement and
achieve the purposes of "not keeping equipment, personnel or workshop and destroy the mining
pit". To the closed mine, the public security department shall stop approving and supply civil
explosives and devices; the power supply department shall stop power supply and the relevant
departments shall revoke (cancel) the relevant licenses and certificates.
7 Enforce investigation and punishment to the cases involving violation of laws and
regulations. All the cases that are put on record before the end of 2006 shall be settled before the
end of June 2007. The cases that shall be handed over to the judicial institutions shall be handed
over timely; the investigation results of important cases and cases with influence shall be
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publicized to the public. Seriously investigate and punish the illegal cases involving the
prospecting right and mining right deliberation and approval, project ratification, production
permit, safety production permit, environment appraisal review and enterprise establishment. The
illegal cases involving the functionary-trader collusion, money-for-power practice and the state
functionary taking part in the mineral exploitation and other cases shall be investigated and dealt
with. Set up an occurrence rate assessment system for the occurrence of unauthorized prospecting
and mining and occurrence of the mining right holders' violation of laws and regulations.
(III) Set up and improve new mechanism and new system for the mineral resource
management
8 Earnestly carry through and implement the spirits of Vice Premier Zeng Peiyan's speech
delivered at the working meeting of rectifying and standardizing the mineral resource exploitation
order, set up new operation mechanism and management system accommodating the market
economic rules. Underline the system establishment and improvement such as the mineral
resource planning, paid utilization of mineral resources, mining right management, mine
environment protection, mineral resource development and supervision. Study and draw out the
management methods for protective exploitation of special minerals and rare minerals.
9 The provinces, autonomous regions and municipalities shall make self-examination on
implementation of the Circular on Standardizing Exploration Permit and Mining Permit Granting
Jurisdiction (Guo Tu Zi Fa [2005] No.200). Further improve the management system for the
exploration right and mining right application, renewal, change and cancel. Complete the
formulation of the state-planned coal mining area mining right configuration plan.
10 Earnestly do a good job in reforming the paid usage system of coal and the trial of
sustainable development policy and measures of the coal industry of Shanxi province. Attach
importance to eliminating the practice that the mining enterprises get the mining right of the mines
proven up by the state. Define the policy application scope and do a good job in disposing the
payment of mining rights to solve the problem of "two systems" for acquiring the mining right.
Carry through the provisions on the mineral resource paid usage system reform and earning
distribution system; deepen the reform of transferring the exploration right and mining right by
means of the competition measures such as bidding, auction and quotation; further improve the
relevant policies and measures in relation to the mineral resource paid usage system reform.
11 The people's government of the provinces, autonomous regions and municipalities shall
earnestly carry through the requirements of the Directive Opinions on Gradually Establishing
Mine Environment Rectification and Ecological System Recovery Accountability System of the
Ministry of Finance, the Ministry of Land and Resources and the State Environmental Protection
Bureau (Cai Jian [2006] No. 215); set up a mine environment recovery deposit system by the end
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of 2007 and gradually form a mine environment rectification and ecological environment recovery
accountability system.
12 All departments shall further improve the mineral resource exploitation management
systems such as the deliberation and approval of exploitation right and mining right, project
ratifying, production permit, safety production permit, environment assessment review and
enterprise establishment, draw out prospecting and exploitation qualification management
methods and take a strict market access standards according to their function and responsibility
definition. Practise administration by law, transparent administration and open administration.
13 Enforce the team building; constantly improve the personnel quality and management
level; set up a mine law enforcement supervision team accommodating the mineral resource
exploitation and supervision requirements. Set up and improve the whole-course exploration and
exploitation supervision system, give a full play to the social supervision and mineral supervisors
and enforce daily supervision.
III Guarantee measures
(I) Enforce guidance. The people's governments of all provinces, autonomous regions and
municipalities shall further lift their understanding, enforce their awareness towards the main
responsibility force, add the rectification and standardization works to the annual work objectives
of the governments, and carry out the missions by all levels. The rectification and standardization
working leading team of all provinces, autonomous regions and municipalities shall study and
deploy the rectification and standardization works of 2007, enforce organization and guidance,
further improve the working mechanism, enrich full-time workers to ensure fulfillment of all
missions of rectification and standardization and secure the social stability.
(II) Enforce supervision and inspection. The provinces, autonomous regions and
municipalities shall further enforce supervision and inspection to ensure that the rectification and
standardization works are implemented earnestly. The relevant departments shall carry out special
supervision and inspection according to their function and responsibility definition and the
inter-ministry joint meeting office shall make follow-up supervision and inspection to the special
rectification works of major mining areas publicized by the Ministry of Land and Resource.
(III) Enforce publicity works. Publicize the right models with different channels and methods,
disclose the illegal cases and wrongdoings and direct the public opinions to create a favorable
environment for the rectification and standardization works centering on the mineral resource
development and integration, consolidating the achievements and new system and new mechanism
building.
(IV) Enforce experience exchange. The local governments shall earnestly summarize the
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good practices in rectification and standardization, set up models and publicize and promote the
good practices. The inter-ministry joint meeting shall organize the national mineral resource
exploitation integration working experience exchange meeting to publicize and exchange the
successful experience of different areas.
(V) Improve the relevant working systems. Further improve the working systems such as the
joint law enforcement, dynamic touring inspection, reporting of illegal cases, supervision of
important cases, responsibility investigation, contact person and information exchange systems to
ensure fulfillment of all rectification and standardization works.
The people's governments of all provinces, autonomous regions and municipalities shall
report to the State Council on implementation of the No.28 document before the end of 2007. The
Ministry of Land and Resource and the National Development and Reform Commission will
coordinate with the relevant departments to examine and accept the rectification and
standardization works of all provinces, autonomous regions and municipalities.
7.1.3 Circular about Further Regulating the Management of Transfer of
Mining Right
Guo Tu Zi Fa [2006] No.12
The departments of land and resources (departments of land, environment and resources,
bureaus of land and resources, bureaus of land, resources and housing, bureaus of housing, land
and resources) of all provinces, autonomous regions, and municipalities and the Bureau of State
Land and Resources of Xinjiang Production and Construction Corps:
Since the Measures for the Administration of Invitation to Bid, Auction, and Quotation
Concerning Mineral Prospecting Rights and Mining Rights (trial) (Guo Tu Zi Fa [2003] No. 197of)
were issued and distributed in 2003, the national mining right market construction has seen an
active progress. In accordance with the laws and regulations on mineral resources, as well as the
Circular on Rectifying and Standardizing Mineral Resource Exploitation Order from the State
Council (Guo Fa [2005] No.28), a supplementary notice about perfecting relevant matters as
mentioned in the Measures for the Administration of Invitation to Bid, Auction, and Quotation
Concerning Mineral Prospecting Rights and Mining Rights is hereby given as follows:
I. Classification and ways of transfer of mining rights
According to the statutory power to issue protecting permits or mining permits, the
administrative department of land and resources of the people’s governments at the county level
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and above shall be responsible for the transfer of mining rights in accordance with the law.
(I) With regard to the prospecting of Class 1 minerals which are listed in the Classified
Catalogue for the Protecting and Exploitation of Minerals (hereinafter referred to as the Classified
Catalogue, see attachment) and which locate in the blank area of mineral prospecting work or in
areas where mineral prospecting has been carried out but no further mineral prospecting place has
been obtained, the mineral prospecting right shall be transferred according to the principle of “he
who applies first gets registered first”.
(II) Under any of the following circumstances, the mineral prospecting rights shall be
transferred by bidding, auction or quotation.
1. Class II minerals as listed in the Classified Catalogue;
2. For any Class I mineral as listed in the Classified Catalogue, mineral prospecting has been
carried out and ore-field has been obtained for further prospecting or prior mining activities
shows there exists ore-field for further prospecting.
(III) Under any of the following circumstances, no prospecting right may be created and the
mining right shall be transferred directly by bidding, auction or quotation.
(a) Class III minerals as listed in the Classified Catalogue;
(b)For an ore-field with any Class I and Class II mineral as listed in the Classified Catalogue, the
prospecting right has been lost, but the mineral prospecting has reached the extent for careful
prospecting or higher level, and the ore-field meets the exploitation design requirements;
(c)For an ore-field with any Class I and Class II mineral, the prospecting right has been lost, or
prospecting activities have ever been carried out therein, and it is found upon verification that
there is any mineral deposit or mineral resource with economic value.
(IV) The prospecting and exploitation of oil, natural gas, coal-bed gas, uranium and thorium
mineral resources shall be administered and be gradually perfected under the prevailing provisions.
(V) Where the transfer of a prospecting right or mining right by bidding, auction or quotation is
under any of the following circumstances, the transfer is permitted to, after approval, be conducted
with agreement.
1. The major mineral resource exploitation projects approved by the State Council and the
ore-field offering support resources for the major building projects approved by the State Council;
2. The created mining rights that need integration or the neighborhood areas that utilize the
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existing production system to enlarge the prospecting and exploitation scope;
3. The large scale mineral resource exploitation projects approved by the province
government (autonomous region, municipality) and formally submitted to the Ministry of Land
and Resource for approval;
4. The prospecting projects that are invested by the central government for the exhausted
mines to look for successive resources.
The transfer of prospecting right and exploitation right with agreement must be conducted
with joint checkup and strict provisions shall be followed in the practice. The price of prospecting
right and mining right transferred with agreement shall not be lower than the market price under
similar conditions.
(VI) Under any of the following circumstances, the prospecting right and mining right shall
be transferred with public bidding.
1. The environment-sensitive areas where new prospecting right and mining right can be
created in accordance with the laws, regulations and national policies and the areas that have not
come up to the stipulated environment quality standards;
2. The ore-fields featuring many inter-growing minerals and requesting high technical levels
for comprehensive exploitation and utilization;
3. Other conditions stipulated in the mineral resource planning.
II. Other provisions
(I) The prospecting right holder who applies for the mining right for the area that it explored
for mineral resource and meet the relevant provisions shall be approved so as to protect the legal
rights and interests of the prospecting right holder.
(II) The land and resource agencies shall set up the mining right in accordance with the
Circular after confirming the application meeting the mining right setup provisions in the event a
prospecting right application and a mining right application for the same area are submitted.
(III) The provincial (autonomous region, municipality) land and resource agencies shall clean
up and bulletin the ore-fields within the jurisdiction which have been explored and mined for
mineral resources and do not meet the provisions of the Circular of transferring the prospecting
right with the methods "he who applies first get registered first" and submit the information to the
Ministry of Land and Resource for archiving.
(IV) The land and resource agencies of all provinces (autonomous regions, municipalities)
may adjust the mining right transfer means according to the actual situation of the areas under the
jurisdiction, the depth of mineral prospecting and geological structure, draw out specific
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management methods and submit those to the Ministry of Land and Resource for archiving. For
any special conditions that shall be stipulated separately, the provisions shall be submitted to the
Ministry of Land and Resource for approval before execution.
(V) For the provisions of the Article 7, 8 and 9 of the original Administration of Invitation to
Bid, Auction, and Quotation Concerning Mineral Prospecting Rights and Mining Rights (trial), the
Circular shall prevail. The land and resource agencies of all provinces (autonomous regions and
municipalities) shall clean up the prior provisions according to this Circular.
Attachment: Classified Catalogue for the Protecting and Exploitation of Minerals
Ministry of Land and Resource
January 24, 2006
Attachment:
Classified Catalogue for the Protecting and Exploitation of Minerals
I. Minerals of which the prospecting right can be transferred according to the principle of "he
who applies first gets registered first" (Class 1):
Geothermy (igneous rock, metamorphic rock structural crack type), manganese, chrome,
vanadium, copper, plumbum, zinc, bauxite deposit, nickel, cobalt, tungsten, tin, bismuth,
molybdenum, hydrargyrum, stibium, magnesium, platinum, palladium, ruthenium, osmium,
iridium, rhodium, gold, silver, columbium, tantalum, Beryllium, lithium, zirconium, strontium,
rubidium, cesium, lanthanum, cerium, praseodymium, neodymium, scythe, europium, yttrium,
gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutecium, scandium,
germanium, gallium, indium, thallium, hafnium, rhenium, cadmium, selenium, tellurium, diamond,
natural sulfur, pyrite, kalium salt, cyanite, asbestos, blue asbestos, garnet, vermiculite, zeolite,
barite, calcite, Iceland spar, fluorite, gem, bowlder, groundwater ((igneous rock, metamorphic rock
structural crack type), carbon dioxide, sulfureted hydrogen, helium and niton.
,
II. Minerals of which the prospecting right can be transferred by bidding auction and
quotation (Class 2)
Coal, stone coal, oil shale, oil sand, natural asphalt, geothermy (aggradation stratum type),
iron, black lead, phosphor, boron, crystal, corundum, sillimanite, andalusite, wollastonite, soda
saltpeter, talcum, isinglass, feldspar, Pyrophyllite, diopside, tremolite, alunite, mirabilite
(including calcium mirabilite), gesso (including anhydrite), witherite, natural soda, magnesite,
topaz, tourmaline, agate, pigment, limestone (others), marlite, chalk, potassium bearing rock,
dolomite, quartzite, sandstone (others), natural quartz sand (others), vein quartz, powdery quartz,
natural whetstone, kalium-bearing sandshale, diatomite, shale (others), kaoline, ceramic soil,
saggar, attapulgite clay, sepiolite clay, illite clay, Rectorite clay, bentonite, laterite, other clays,
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peridotite, Serpentinite, basalt, diabase, andesite, diorite, granite, Maifan stone, perlite, obsidian,
turpentine, floatstone, trachyte, nepheline-syenite, tuff, pozzolana, volcano cinder, marbles, slate,
gneiss, amphibolite, turf, rock salt (lake salt, rock salt, natural halogen), magnesium salt, iodine,
magnesium salt, arsenic, groundwater (aggradation stratum type), mineral water.
III. Minerals of which the mining rights can be transferred by bidding, auction and quotation
(Class 3)
Limestone (building material), sandstone (brick and tile), natural quartz sand (building, brick and
tile), clay (brick and tile), shale (brick and tile)
7.1.4 The Circular on Strengthening Reform of the System for Obtaining
Mineral Exploration Rights and Mining Rights for Value
(Cai Jian [2006] No. 694)
All ministries and commissions of the State Council, all institutions directly under the State
Council, financial bureaus of all provinces, autonomous regions, municipalities directly under the
Central Government and directly under separate planning scheme, the Ministry of Land and
Resources, and relevant central enterprises:
In order to promote the reform of the system of paid use of mineral resource, rectify the price
formation mechanism of mineral resource, and promote the resource conservation, in accordance
with relevant requirements of Notice Concerning the Comprehensive Rectification and
Standardization of the Regulation of Mineral Resource Development, Guo Fa [2005] No. 28 and
Pilot Program on Deepening Reform of the System of Obtaining Coal Mining Rights for Value
(“Pilot Program”), Guo Han [2006] No. 102 as well as other laws, rules and regulations, the
relevant issues concerned with strengthening reform of the system for obtaining mineral
exploration rights and mining rights for value are notified as follows:
I Overall implementation of system for obtaining mineral exploration rights and mining rights for
value. The state will transfer the newly established mineral exploration rights and mining rights,
other mineral exploration rights and mining rights shall be transferred by such forms as tender,
auction and nominal quotation and other market competition ways, unless otherwise specified to
be transferred by precede mode or protocol mode.
II The persons who owns the mineral exploration rights and mining rights shall pay the money for
mineral exploration rights and mining rights to the state in full amount and in time in accordance
with relevant regulations of the state. Unless otherwise specified by the circular, the payments for
exploration rights and mining rights shall not paid by State-owned capital increase or conversion
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into equity interest.
III For the exploration rights of proved field and mining rights with the capital contribution from
the State (including those from central finance, local finances and joint contributions by central
and local finances, same as below) obtained by the persons free of charge, shall be liquidated by
the Ministry of Land and Resources and Ministry of Finance, and evaluate for the exploration
rights and mining rights after liquidation. The mining rights shall be evaluated according to
remaining resources reserves. The exploration rights shall be evaluated according to the payments
affirmed, approved or recorded by the administrative organ of exploration rights. The payments
for mineral exploration rights and mining rights shall be paid in cash to the State firstly; if there is
difficulty in paying the said payments, it can be paid by the way of conversion into equity interest
in accordance with the principles of voluntary compliance and after approval by relevant
regulations pursuant to the circular hereof.
IV Where there is difficulty in paying the payments for exploration rights and mining rights in one
time, it can be paid by installment within the period of validity of exploration rights and mining
rights after approval by the registration administrative institutions for exploration rights and
mining rights. The payments for exploration rights can be paid in two years. The payment
proportion in the first year shall be no less than 60% of the total payments; the payments for
mining rights can be paid in ten years, and the payment in the first year shall be no less than 20%
of the total payments. The persons who pays the exploration rights and mining rights price by
installment shall, bear the fund possession cost not lower than the band loan rate in same term.
V For the exploration rights and mining rights with the capital contribution from central finance,
local finances and joint contributions by central and local finances, same as below) obtained by
the persons free of charge before the issuance of the circular, and there is difficulty in paying the
payments for exploration rights and mining rights and meet one of the following circumstances, it
can be paid by the way of conversion into equity interest totally or partially in accordance with the
principles of voluntary compliance and after approval by the Ministry of Finance and the Ministry
of Land and Resources:
(1) The exploration rights and mining rights obtained free of charge before the issuance of
Measures for the Area Registration Administration of Mineral Resources Exploration and
Survey (Decree No. 240 of the State Council) and Measures for the Registration
Administration of Mineral Resources Exploitation (Decree No. 241 of the State Council), and
are still within the validity of the exploration rights and mining rights;
(2) Reconstruction and reform approved by the State Council and People’s Government at the
provincial level, and enter the transforming enterprise by the value of exploration rights and
mining rights;
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(3) Clearly defined by the documents of the State Council or approved by the State Council;
Partial payments for exploration rights and mining rights paid to the State by the way of
conversion into equity interest, the remainder payments shall be paid to the State in cash.
VI Where the payments for exploration rights and mining rights are paid by the way of conversion
into equity interest, the equity interest shall be calculated according to its proportion of enterprise
net asset and shall be managed in accordance with following principles:
(1) The exploration rights and mining rights with the capital contribution from central finance, the
equity interest formed by conversion shall be held by Managing Central Geological
Exploration Fund.
(2) The exploration rights and mining rights with the capital contribution from joint contributions
by central and local finances, the equity interest formed by conversion shall be held by
Managing Central Geological Exploration Fund and local relevant institutions pursuant to the
contribution proportion of central finance and local finance.
The specific measures of the payments for exploration rights and mining rights by the way of
conversion into equity interest and the equity interest held by Managing Central Geological
Exploration Fund shall be worked out by the Ministry of Finance and Ministry of Land and
Resources separately.
VII Where total or partial payments for exploration rights and mining rights have been transferred
to the State-owned capital increase through the approval of the Ministry of Finance and Ministry
of Land and Resources or provincial finance department and ministry of land and resources,
persons with exploration rights and mining rights shall make a supplementary payment for
exploration rights and mining rights to the State in cash; if there is difficulty in paying by cash, the
persons with exploration rights and mining rights may also pay the said payments by the way of
conversion into equity interest. The payments matters shall be transacted in accordance with the
above said regulations.
VIII For the exploration rights and mining rights with the capital contribution from local finances
obtained by the persons free of charge before the issuance of the circular, the payments for the
exploration rights and mining rights by the way of conversion into equity interest may be executed
in accordance with the regulations of article IV to VI.
IX For the exploration rights and mining rights with the capital contribution from central finances
that have been held by the State-owned geological prospecting units before the assurance of this
circular, the payments method can also follow the policy of conversion payments into State-owned
capital increase. It shall comply with the regulations of the state unless otherwise specified by the
state.
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X For the State-owned special type of ores that cannot enter the market, such as uranium mine, the
exploration rights and mining rights shall not be capitalized.
XI For the persons with exploration rights and mining rights who have not paid the payments for
exploration rights and mining rights in full amount in accordance with the above regulations, the
ministry of land and resources at all levels shall make punishment in accordance with documents
of Decree No. 240 and Decree No. 241 of the State Council. Where the exploration and mining
licenses expire, they shall not be continued.
XII The circular shall go into effect upon the issuing date. Any other relevant regulations not agree
with the regulations hereof, shall be subject to the circular. Notice of the Ministry of Finance and
the Ministry of State Land and Resources about Printing and Distributing the Measures for the
Administration of the State-owned Capital Increase from the Payments for the Mineral
Prospecting Right and Mining Right (2004 No. 262) is abolished simultaneously.
The Ministry of Finance of the People’s Republic of China
The Ministry of Land and Resources P.R.C
Oct. 25, 2006
7.1.5 Aluminum industry access conditions
Proclamation of National Development and Reform Commission (NDRC) of People's
Republic of China
No.64, 2007
In order to speed up the industry structure adjustment, standardize the investment acts in
aluminum industry, promote the sustainable and healthy development of the industry, the
Aluminum Industry Access Conditions are established according to relevant state laws, regulations
and industry policies.
I.
Requirements on enterprises distribution, scale and external conditions
New or renovated alumyte mines, aluminum smelting (electrolytic aluminum, alumina,
regenerated aluminum) and fabrication projects must shall comply with national industry policies
and layout plan, the land utilization general plan, land supply and land utilization standard. Land
requisition compensation, farmland occupation and compensation balance and land reclaimation
shall be properly done according to the law. Environmental influence evaluation and “Three
Simultaneities” acceptance principle shall be stringently executed according to the law.
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Each place shall discuss and define the gross volume of aluminum smelting to the key and
optimized development areas and reasonably select plant sites according to the national aluminum
smelting development general plan and ecological function area sections. Construction of new
aluminum smelting (electrolytic aluminum, alumina, regenerated aluminum) enterprises and
facilities are forbidden in drinking water resource reserves, basic farmland protection areas, nature
reserves, famous scenic sites, ecological function reserves and other areas requiring special
protection defined in national laws, regulations and administrative regulations and plans or
approved by the people’s government above county level, large and middle cities and the outskirts,
and the areas one kilometer to residential communities, sanitaria, hospitals as well as food,
pharmceutical, electronical and other enterprises with high environmental requirements.
Mineral resources law and safe production law and regulations, mineral resource plan and
relevant policies shall be abided by for exploring alumyte resource with legal mining permit.
Mining entity shall explore in accordance with the strictly approved exploration and utilization
plan. Survey and exploration without permits, abused exploration and resource waste are
stringently forbidden.
Standard design and exploration must be followed for new alumyte exploration projects.
Mine investment project should be transacted according to the requirements on the catalogue of
government-confirmed investment projects publicized in Decision of the State Council on
Reforming the Investment System. Mine development projects with total investment of 500mil
yuan and above shall be ratified by the investment authorities of the State Council. Other mine
development projects shall be ratified by the investment authorities in provincial governments.
The lowest production and construction scale of mines applying for confirmation should not be
lower than 300,000t/a with service year above 15 years.
New alumina projects must be ratified by the investment authority of the State Council. The
threshold capacity scale of alumina projects utilizing domestic alumyte resources must hit 800,000
t/a
and above. Alumyte supply and traffic and other external conditions shall be prepared. The
material from self-built alumyte mines shall be above 85%, and the general service life for service
mines must be above 30years. New alumina enterprises should firstly apply alumyte mining right
within the mineral resource plan permitted range and explore the alumyte resources according to
the development and utilization plan approved by mineral resource development and registration
management department. Alumina enterprises should not purchase alumyte developed by
enterprises without licenses. The threshold capacity scale of alumina projects utilizing imported
alumyte resources must hit 600,000 t/a and above and have a long-term reliable raw material
supply from abroad. Obtaining above 60% raw materials supply of total demand from
5-year-above alumyte supply contracts through joint investment and cooperation. Traffic and
external production conditions shall be prepared.
Electrolytic aluminum projects with expanded capacity must obtain the verification of the
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investment authority of the State Council. Only environmental protection renovation projects and
outdated capacity replacement and renovated projects according to the national plan shall be
verified recently. Renovated electrolytic aluminum projects should have alumina material supply,
power supply, traffic resources and other internal and external preparations. Necessary
environmental protection renovation projects and outdated capacity replacement projects can only
transact project land supply and environment evaluation approval procedures after the approval of
state investment authorities and the early preparation.
New aluminium regeneration projects should have capacity above 50000t/a. The production
access scale for existing aluminium regeneration enterprises shall be above 20000t/a. Renovated
and expanded aluminium regeneration projects should have capacity above 30000t/a.
The products of new aluminium fabrication projects must focus on sheets, strips, foils or
extruded pipes and industrial profiles. The capacity of comprehensive aluminium fabrication
projects must be above 100,000t/a. The capacity of aluminium fabrication projects for single
product production should be: 50,000t/a for sheet and strip products, 30,000t/a for foil products,
and 50,000t/a above for extruded products.
The project capital percentage for alumyte mines, aluminum smelting and regeneration
projects shall be 35% and above.
II. Process and equipment
New large and middle mines shall apply advanced mining method suitable for mine
exploration conditions and use large equipment as much as possible to properly improve
automation level.
Bayer process, combination process and other processes with high efficiency, advanced
technology, low energy consumption, qualified environmental indexes and good integrated
resource utilization results may be applied based on the situation of alumyte resource for alumina
projects. Facilities for integrated utilization of resources and energy-saving should be built.
Remaining heat collection and other process and facilities must be equipped according to the
requirements in Energy Conservation Law, Cleaner Production Promotion Law, Environmental
Protection Law and other laws and regulations..
The outdated production capacity replacement and environmental protection renovation
project on electrolytic aluminum applying for ratification must apply 200KA and above large
pre-baked cells with the anode effect coefficient below 0.08pc/cell.day for new lines. It is
forbidden to renovate the washed-out self-baked cells.
Aluminum fluorides production with wet process is forbidden. Continuous mix and pinch
technology of carbon anode projects for aluminum electrolysis should be applied. Independent
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aluminium carbon projects with capacity below 100,000t are forbidden to set up.
Develop recycling economy, improve the technology and environmental protection level of
aluminium regeneration and recovery enterprises, follow the mass production and environmental
friendly development road to recover and use regenerated resources. It is forbidden to use
reverberators with direct coal-combustion or other reverberators for regenerating aluminium.
Using crucible furnace to regenerate aluminium alloys is also forbidden.
Continuous casting and rolling or hot continuous rolling and other continuous processes with
high automation level, advanced technologies, high product quality and integrated finished
product rate must be applied for new aluminium fabrication projects. “Two-person-operating”
rollers are forbidden to use for fabricating aluminium products.
According to the regulations in the Circular Published by the State Council for a Plan of
Energy Efficiency and Pollutant Discharge Reduction (Guo Fa [2007] 15#),
Industrial Structure
Guiding Catalogue (2005 Edition), Circular on Accelerating Aluminium Industry Structure
Adjustment and other industrial policies, outdated aluminium electrolysis capacity shall be washed
out, revival of laggard aluminium electrolysis production with self-baking cells shall be avoided,
above 160KA large pre-baking cell smelting shall be applied at the end of the 11th five-year period,
and crucible smelting of regenerated aluminium alloy and “two-person-operating” rollers for
aluminium fabrication shall be washed out immediately.
III. Energy consumption
Based on the new standard conversion coefficient of 1kwh equaling to 0.1229kg standard
coal, the following access indexes for aluminium industry energy consumption are submitted.
The comprehensive energy consumption of underground and open exploration of alumyte
shall be lower than 25kg and 13kg standard coal/ton respectively.
The integrated energy consumption of Bayer alumina production system should be below
500kg standard coal/ton alumina. The integrated energy consumption of other alumina production
system should be below 800kg standard coal/ton alumina. The integrated energy consumption of
existing Bayer alumina production system should be below 520kg standard coal/ton alumina, and
the integrated energy consumption of other alumina production system should be below 900kg
standard coal/ton alumina.
The integrated AC power consumption should be below 14300kwh/ton aluminium for
renovated aluminium electrolysis projects and the current efficiency should be higher than 94%.
The integrated AC power consumption should be below 14500kwh/ton aluminium for existing
aluminium electrolysis projects and the current efficiency should be higher than 93%. Enterprises
with integrated AC power consumption higher than access level are not allowed to enter into the
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industry. Existing enterprises compliant with integrated AC power consumption access conditions
shall save energy and reduce consumption through technical renovations to achieve the energy
consumption level of new enterprises before the end of the 11th five-year plan period.
New and existing regenerating aluminium alloy projects should be equipped with
energy-saving facilities and advanced process and equipment to ensure the compliance with state
energy consumption standard.
The comprehensive energy consumption of new aluminium fabrication projects shall be
lower than 350kg standard coal/ton, and the integrated power consumption shall be lower than
1150kwh/t. Existing enterprises shall save energy and reduce consumption through technical
renovations to achieve the energy consumption level of new enterprises before the end of the 11th
five-year plan period.
IV. Resource consumption and integrated utilization
The loss rate for alumyte underground mining shall be not above 12%, for open mining not
above 8%. The mining dilution rate for underground mining and open mining shall not exceed
10% and 8% respectively. Alumyte mines and dressing plants with low resource utilization rate
are forbidden to build. Mineral resource development and utilization plan formulated according to
above requirements shall be reported to the land and resource authorities for approval by mine
enterprises. The actual mining loss rate and recovery rate of dressing shall not be lower than the
approved design standard in the mineral resource development and utilization plan.
The integrated recovery rate of new Bayer-process alumina production system shall reach
81% above. The fresh water consumption shall be lower than 8 tons/ton alumina. The floor space
shall be lower than 1m2/t alumina. The integrated recovery rate of new other process alumina
production system shall reach 90% above. The fresh water consumption shall be lower than 7
tons/ton alumina. The floor space shall be lower than 1.2m2/t alumina. Existing enterprises shall
save energy and reduce consumption through technical renovations to achieve the energy
As for renovated aluminium electrolysis production capacity, the unit consumption of
alumina shall be lower than 1920kg/t aluminium. The fluorination salt consumed by raw
aluminium solution shall be lower than 25kg/t aluminium. The net consumption of carbon anode
shall be lower than 410kg/t aluminium, and the fresh water consumption shall be lower than
7tons/t aluminium, and floor space lower than 3m2/t aluminium. As for existing aluminium
electrolysis production capacity, the unit consumption of alumina shall be lower than 1930kg/t
aluminium. The fluorination salt consumed by raw aluminium solution shall be lower than 30kg/t
aluminium. The net consumption of carbon anode shall be lower than 430kg/t aluminium, and the
fresh water consumption shall be lower than 7.5tons/t aluminium. Existing enterprises shall save
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energy and reduce consumption through technical renovations to achieve the energy consumption
level of new enterprises before the end of the 11th five-year plan period.
As for new aluminium fabrication enterprises, the metal consumption shall be lower than
1025kg/t, of which the metal consumption of aluminium profiles shall be lower than 1015kg/t.
The integrated finished goods rate of fabricated aluminium products shall be higher than 75%. The
finished goods rate of fabricated products shall be higher than 78%, the smelting finished goods
rate higher than 91%, aluminium sheet fabrication finished goods rate higher than 70%,
aluminium strip fabrication finished goods rate higher than 77%, aluminium foil fabrication
finished goods rate higher than 79%, and aluminium profile fabrication finished goods rate higher
than 88%. As for existing aluminium fabrication enterprises, the metal consumption shall be lower
than 1035kg/t, of which the metal consumption of aluminium profiles shall be lower than 1020kg/t.
The integrated finished goods rate of fabricated aluminium products shall be higher than 72%. The
finished goods rate of fabricated products shall be higher than 78%, the smelting finished goods
rate higher than 91%, aluminium sheet fabrication finished goods rate higher than 69%,
aluminium strip fabrication finished goods rate higher than 75%, aluminium foil fabrication
finished goods rate higher than 78%, and aluminium profile fabrication finished goods rate higher
than 87%. Existing enterprises shall save energy and reduce consumption through technical
renovations to achieve the energy consumption level of new enterprises before the end of the 11th
five-year plan period.
V. Environmental protection and land reclaimation
Mine enterprises are forbidden to destroy land and pollute environment. Environment
influence evaluation document approval and environmental facility “Three Simultaneities”
acceptance procedure shall be earnestly implemented. Land reclaimation regulations shall be
stringently executed. The principle of “the one who destroys shall be responsible for the
reclaimation” shall be insisted on to perform statutory land reclaimation obligations. According to
the requirements in the Circular on Strengthening the Land Reclaimation Management in
Production and Construction Projects (Guo Tu Zi Fa [2006] No 225) promulgated by Ministry of
Land and Resources, NDRC and other five ministries, the land reclaimation plan shall be
formulated. The land reclaimation fee shall enter into production cost and be budgeted in the full
amount. Land reclaimation fee dedicated in land reclaimation shall be paid according to the law.
Efforts shall be made to achieve “simultaneous development and reclaimation”. In accordance
with the requirements in Guidance Opinions on Gradually Establishing Mine Environmental
Treatment and Ecological Recovery Responsibility Mechanism issued by Ministry of Finance,
Ministry of Land and Resources and State Environmental Protection Administration, increasingly
setting up environmental treatment and recovery deposit system for specially application in mine
environmental treatment and ecological recovery. The environmental protection design of mine
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investment projects should be examined and approved by authorized environmental departments
according to relevant regulations of State Environmental Protection Bureau and the
government-verified investment project list released in Decision of the State Council on
Reforming the Investment System. Mining area environment should be recovered according to
environmental protection and water and soil resource preservation requirements. Requirements in
Emission standard of air pollutants for industrial kiln and furnace ( GB 9078-1996) and
Integrated emission standard of air pollutants ( GB 16297-1996), Integrated wastewater discharge
standard (GB8978—1996), industrial solid wastes and hazardous wastes disposal regulations and
relevant local standards shall be followed by aluminium smelting and fabrication enterprises in
pollutants discharge. The control values and gross volume index requirements regulated in legally
approved environment influence evaluation documents should be satisfied. “Zero drainage” of
waste water in alumina plants shall be achieved. The final disposal of red mud (incl. sludge
ground) shall stringently follow the approved requirements in the environment evaluation
document. Pollution of aluminium electrolysis smelting-produced fluorides, dusts and other
harmful matters and pollution from random piling of alumina red mud shall be avoided.
Discharged fluorides (incl. non-statistic emission) of aluminium electrolysis projects shall be
lower than 1kg. It is forbidden to mix the fluorine-contained electrolysis slags into coal for
combustion.
Raw material processing, intermediate material crushing, smelting and loading/unloading and
dusty places for aluminium smelting projects shall be equipped with dedusting and recovery
treatment facilities and a qualified automatic monitoring system checked by the environment
monitoring instrument supervision institution designated by the general administration of
Advanced process and equipment should be applied for new and existing aluminium
regeneration projects and the collection and treatment of waste and scrapped aluminium. It is
forbidden to burn in an open place for removing the plastics, rubber and scrap impurities from
waste aluminium-core wires and cables. The emitted air pollutants from the pre-treatment to waste
aluminium-core wires and cables and aluminium scraps through fire process shall comply with
relevant requirements in Pollution control standard for hazardous wastes incineration
（GB18484-2001） and related local standards.
According to Environmental Protection Law and other relevant laws and regulations, all new,
renovated and expanded projects should strictly follow the environmental influence evaluation
system and discharge pollution with license (except areas without pollution permit system) and in
accordance with the standard. New alumyte mines, aluminum smelting and fabrication projects
should qualify the acceptance of relevant departments and transact the Pollution Discharge Permit
(except areas without pollution permit system) first, and then start the production, sale and other
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operations. The renovation and expansion of existing enterprises shall also go through relevant
procedures of Pollution Discharge Permit and relevant procedures after qualifying the acceptance
of relevant provincial authorities. Environmental protection authorities shall make supervisions
and inspections to existing aluminium smelting enterprises on the execution of environmental
protection standard, regularly publicize the list of enterprises satisfying environmental protection
standards and rectify enterprises unqualified or exceeding total pollution quantity within a limited
period. Enterprises still not qualified after rectification shall be shut down or closed by local
government according to the law.
VI. Safe production and occupational harm
Mine, smelting and fabrication projects must comply with regulations in Safe Production Law,
Law of Mine Safety and Occupational Disease Prevention and Treatment Law, have corresponding
safe production and occupational harm prevention conditions, establish and perfect safe
production responsibility and various regulations. Safe facilities and occupational harm prevention
facilities for new, renovated and expanded projects should be designed, constructed and operated
simultaneously. Before the safety design, operation and application of alumyte and alumina
projects, examination and acceptance of safe production management department shall be
obtained according to the law. Occupational harm prevention facilities, individual labor protection
appliances meeting related state standards, accident prevention facilities for aluminum solution
leakage, explosion, fire, lightning, equipment failure, mechanical injury, body falling, burns and
scalds shall be equipped. Facility for safe power supply, water supply and removing poisonous and
harmful matters shall be available. Relevant systems shall be established and perfected.
Acceptance of local administrative authorities should be obtained.
According to the Regulations on License to Work Safety (Decree No．397 of the State
Council), mine enterprises should only start operation after obtain Safe Production Permit. Red
mud sludge ground of alumina enterprises shall satisfy state related safe management regulations
and technical rules for tailings storage.
VII. Supervision and management
New and renovated alumyte mines, aluminum smelting and fabrication projects must comply
with above access conditions. The investment management, land supply, environmental influence
evaluation and other procedures for these projects should be transacted according to the industry
policies and access conditions. Construction unit should submit environment influence report
according to the classification audit regulation promulgated by State Environmental Protection
Administration. Environment assessment report for electrolytic aluminium and alumina projects
should be reported to State Environmental Protection Administration according to regulations.
Existing enterprises complying with industry policy shall achieve the access conditions for new
enterprises in the aspects of integrated resource utilization, energy consumption and environment
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by means of technical renovation.
Before the operation of new or renovated alumyte mines, aluminum smelting (alumina,
electrolytic aluminum, regenerated aluminum) and fabrication projects, the supervision and
inspection of united inspection group consisting of administrative authorities above provincial
level on investment, land and resource, environmental protection, safety supervision, labor and
health and quality inspection and relevant experts shall be made to check if the work complies
with relevant requirements in the access condition. If it is deemed that the access conditions are
not satisfied, the investment authorities shall charge the construction unit to improve relevant
aspects within a period according to design requirements. As for those do not obtain land
according to the law or do not use land according to regulated conditions and land use contract
according to the regulations, or do not perform land reclaimation obligations or carry out the land
reclaimation measures according to the regulations, the land and resource authorities shall rectify
and punish them according to land management regulations and land using contract, order them to
correct within a period and do not issue land using license to them. Various behaviours breaching
the law in mining shall be attacked according to the law.
Environmental protection authorities
shall penalize those fail to meet safety and environmental protection requirements according to
relevant laws and regulations and ask them to improve within a period.
Local development and reform commissions, economy commission (economy and trade
commission), industry office and environmental protection, industrial and commercial, safe
production supervision, labor and health administrative authorities of all levels make supervision
and inspection to the local new and renovated alumyte mines, aluminum smelting and fabrication
projects on the implementation of Aluminum Industry Access Conditions. China Nonferrous
Metals Association shall help related departments to do well in follow-up supervisions.
As for new or renovated alumyte mines, aluminum smelting and fabrication projects
noncompliant with industry policy and these access conditions, investment management
department shall not verify or register. Land administrative authorities shall not transact
construction land application approval procedures, environmental protection authorities shall not
approve the environmental influence assessment report, finance institutions shall not provide
credit support and electric enterprises shall stop power supply according to the law. Enterprises
cancelled or ordered to be closed according to the law shall go to the industrial and commercial
administrative authorities to alter or cancel registration accordingly.
NDRC shall regularly proclaim the list of alumyte mines, aluminum smelting and fabrication
projects complying with the access permit conditions. Social supervision and dynamic
management shall be executed.
VIII Supplementary provisions
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This access conditions are applicable for all types of alumyte mines, aluminum smelting and
fabrication enterprises within the territory of the People’s Republic of China (Excluding Taiwan,
Hong Kong and Macao SARs).
Revised new standards shall be followed in implementation if revisions are made to national
standards concerned in this access condition.
The access conditions shall come into effect from the day of promulgation with NDRC
responsible for interpretation and subject to revision according to the industry development
situation and the requirement of macro control.
7.1.6 Cooper smelting industry access conditions
Republic of China
No.40, 2006
In order to speed up the industry structure adjustment, standardize the investment acts in
cooper smelting industry, promote the sustainable and healthy development of copper industry, ,
the Cooper Industry Access Conditions are established according to relevant state laws,
regulations and industry policies.
I. Requirements on enterprises distribution, scale and external conditions
Construction of new cooper smelting enterprises and facilities are forbidden in drinking water
resource reserves, nature reserves, famous scenic sites, ecological function reserves and other
areas requiring special protection defined in national laws, regulations and administrative
regulations and plans or approved by the people’s government above county level, large and
middle cities and the outskirts, and the areas one kilometer to residential communities, sanitaria,
hospitals as well as food, pharmaceutical, electronic and other enterprises with high environmental
requirements.
New or renovated cooper smelting projects must satisfy the laws and regulations in the
aspects of environmental protection, energy-saving and resource management etc., the
requirements of national industry polices and plan and the regulations in the general land use plan,
land supply policies and land use standard etc.
.
The single system cooper smelting capacity should hit 100,000 t/a. And cooper concentrates
supply and traffic and other external conditions shall be prepared. The raw material from its own
mines for copper smelteries shall reach a share of above 25% (or having own mine ores or
obtaining above 40% raw materials supply of total demand from 5-year-above mine contracts
through joint investment and cooperation). The project capital percentage shall be 35% or above.
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As for new copper smelting projects, the crude copper smelting should apply advanced
processes like flash smelting, top-blowing smelting, Nomada smelting and Baiyin furnace
smelting, synthetic furnace smelting and bottom-blowing smelting, which have independent
intellectual property and other oxygen-enrichment tank smelting or oxygen-enrichment floatation
smelting which have high productivity, advanced technology, low energy consumption, qualified
environmental indexes and good integrated resource utilization.
Facilities for acid-making, integrated utilization of resources and energy-saving shall be built.
Flue acid-making, dedusting and remaining heat collection facilities must be equipped for fire
smelting. Flue acid-making shall apply diluted acid-washing and purification, two-converter and
two-absorber (or three-converter and three-absorber) process. Hot and strong acid-washing
process is forbidden for flue acid-making. Requirements in Energy Conservation Law, Cleaner
Production Promotion Law, Environmental Protection Law and other laws and regulations should
be satisfied for the remaining heat recovery of smelting-produced tailgas, dust collection process
and equipment.
It is forbidden to use reverberators with direct coal-combustion for smelting waste and scrap
copper. In the aspect of crude copper smelting process and equipment, sealed blast furnace of
1.5m2 and below should be washed out at once according to the law. Reverberators, electric
furnaces and sealed blast furnace for smelting of 1.5-10m2 (excluding 10m2) shall be eliminated
before the end of 2006. All blast furnaces shall be washed out before the end of 2007.
New copper smelting enterprises: The integrated energy consumption for crude copper
smelting is below 550kg standard coal/ton. The integrated energy consumption for electrolysis and
refining parts (incl. electrolysis solution purification) shall be below 250kg standard coal/ton and
electrolized cooper production shall have DC power consumption of below 285kwh/ton.
Existing copper smelting enterprises: The integrated energy consumption for crude copper
smelting is below 900kg standard coal/ton. The electrolized cooper production shall have DC
power consumption of below 310kwh/ton. These copper smelting enterprises shall save energy
and reduce consumption through technical renovations to achieve the energy consumption level of
new enterprises within two years upon the issue of the access conditions.
IV. Integrated utilization of resources
New copper smelting enterprises: total recovery rate above 97%, crude copper smelting
recovery rate above 98%, water recycle utilization rate above 95%, refresh water consumption per
ton cooper below 25 tons and floor space below 4m2/ton copper. The total sulfur capture rate shall
be above 98%, and sulfur recovery rate above 96%.
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Existing copper smelting enterprises: total recovery rate above 96%, crude copper smelting
recovery rate above 97%, water recycle utilization rate above 90%, refresh water consumption per
ton cooper below 28 tons. The total sulfur capture rate shall be above 98%, and sulfur recovery
rate above 95%. These copper smelting enterprises shall save energy and reduce consumption
through technical renovations to achieve the energy consumption level of new enterprises within
two years upon the issue of the access conditions.
V. Environmental protection
accordance with the standard. Environmental protection authorities shall make supervisions and
inspections to existing copper smelting enterprises on the execution of environmental protection
standard, regularly publicize the list of enterprises not satisfying environmental protection
standards and rectify enterprises unqualified or exceeding total pollution quantity within a limited
period. Enterprises still not qualified after rectification shall be shut down or closed by local
government according to the law.
Requirements in Emission standard of air pollutants for industrial kiln and furnace (GB9078
一 1996), Integrated wastewater discharge standard (GB8978—1996) and relevant local standards
shall be followed for pollutants from copper smelting.
VI. Safe production and labor and health
Safe production conditions regulated in national safe production laws, regulations, industry
rules and standards must be provided. The safe production responsibility shall be established and
perfected. Safe facilities for new, renovated and expanded projects should be designed,
constructed and operated simultaneously.
Before the safety design, operation and application of acid-making and oxygen-making
systems, examination and acceptance of safe production management department shall be
obtained. Labor protection and industry health facility must be established. Relevant systems shall
be established and perfected. Acceptance of local administrative authorities should be obtained.
New and renovated copper smelting projects must comply with above access conditions. The
investment management, land supply, environmental influence evaluation and other procedures for
copper smelting projects should be transacted according to the access conditions. Construction
unit should submit environment influence report according to the classification audit regulation
promulgated by State Environmental Protection Administration. Environment assessment report
for crude copper smelting project should be reported to State Environmental Protection
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Administration according to regulations. Existing copper smelting enterprises complying with
industry policy shall achieve the access conditions for new enterprises in the aspects of integrated
resource utilization, energy consumption and environment by means of technical renovation.
Before the operation of new or renovated copper smelting projects, the supervision and
inspection of united inspection group consisting of administrative authorities above provincial
level on investment, land supply, environmental protection, safe production, labor and health and
quality inspection and relevant experts shall be made to check if the work complies with relevant
requirements in the access condition. If it is deemed that the access conditions are not satisfied, the
investment authorities shall charge the construction unit to improve relevant aspects within a
period according to design requirements. As for those do not obtain land according to the law or
do not use land according to regulated conditions and land use contract according to the
regulations, the land and resource authorities shall rectify and punish them according to land
management regulations and land using contract, order them to correct within a period and do not
issue land using license to them..
The new copper smelting enterprises should qualify the acceptance of relevant departments
and transact the Pollution Discharge Permit (except areas without pollution permit system) first,
and then start the production, sale and other operations. Enterprises involving acid-making and
oxygen-making systems shall transact the Hazardous Chemicals Enterprises Safe Production
Permit according to relevant regulations. The renovation and expansion of existing enterprises
shall also go through relevant procedures of Pollution Discharge Permit and Hazardous Chemicals
Enterprises Safe Production Permit after qualifying the acceptance of relevant provincial
authorities.
production, labor and health administrative authorities of all levels make supervision and
inspection to the local copper smelting enterprises on the implementation of Copper Industry
Access Conditions. China Nonferrous Metals Association shall help related department to do well
in follow-up supervisions.
As for new or renovated copper smelting enterprises noncompliant with industry policy and
this access permit, investment management department shall not register. Land administrative
authorities shall not transact land using procedures, environmental protection authorities shall not
approve the environmental influence assessment report, finance institutions shall not provide
credit support and electric enterprises shall stop power supply according to the law. Enterprises
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NDRC shall regularly proclaim the list of copper smelting enterprises complying with the
access permit conditions. Social supervision and dynamic management shall be executed.
This access conditions are applicable for all types of cooper smelting enterprises within the
territory of the People’s Republic of China (Excluding Taiwan, Hong Kong and Macao SARs).
The access conditions shall also be applicable to the smelting production with equipment
renovated into copper smelting facilities.
The access conditions shall come into effect from July 1, 2006 with NDRC responsible for
interpretation and subject to revision according to the industry development situation and the
requirement of macro control.
7.1.7 Lead and zinc industry access conditions
Republic of China
No.13, 2007
In order to speed up the industry structure adjustment, promote the sustainable and healthy
development of lead and zinc industry, strengthen environmental protection, comprehensively
utilize resources, further improve industry access threshold, standardize the investment acts in lead
and zinc industry, deter blind investment and low-level redundant development, NDRC, together
with relevant departments, established Lead and Zinc Industry Access Conditions and proclaimed
herein according to relevant state laws, regulations and industry policies.
All related departments shall follow this industry access conditions in the work of investment
confirmation, registration management, land supply, industrial and commercial registration,
environmental influence evaluation and credit financing etc. to the projects of lead and zinc mines,
smelteries and regeneration facilities.
National Development and Reform Commission of People's Republic of China
Mar. 6, 2007
Appendix：Lead and zinc industry access conditions
In order to speed up the industry structure adjustment, standardize the investment acts in lead
and zinc industry and promote the sustainable and healthy development of lead and zinc industry,
the Lead and Zinc Industry Access Conditions is formulated according to relevant state laws,
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regulations and industry policies.
I. Requirements on enterprises distribution, scale and external conditions
（I）New and expanded or renovated projects of lead and zinc mines, smelteries and
regeneration facilities shall comply with national industry policies and plan, the land utilization
general plan, land supply and land utilization standard. Environmental influence evaluation and
“Three Simultaneities” acceptance principle shall be stringently executed according to the law.
Each place shall discuss and define the gross volume of lead and zinc smelting to the key and
optimized development areas and reasonably select plant sites according to the ecological function
area sections.
Construction of new lead and zinc smelting projects and expansion of these
projects excluding environmental protection renovation are forbidden in nature reserves,
ecological function reserves, famous scenic sites, drinking water resource reserves and other areas
requiring special protection defined in national laws, regulations and administrative regulations
and plans or approved by the people’s government above county level, large and middle cities and
the outskirts, and the areas one kilometer to residential communities, sanitaria, hospitals as well as
food, pharmaceutical and other enterprises with high environmental requirements. The
requirements for incineration plant site selection in Pollution control standard for hazardous
wastes incineration （GB18484-2001）shall be followed for the site selection of lead and zinc
regeneration plants.
As for new lead and zinc smelting projects, the single system lead smelting capacity should
hit 50,000 t/a (excluding) above and the single system zinc smelting capacity should hit 100.000
t/a and above. Lead and zinc concentrates supply and traffic and other external conditions shall be
prepared. The raw material from its own mines for new lead and zinc smelteries shall reach a
share of above 30%. Enterprises compliant with relevant policies are allowed to expand capacity
to above 50,000 t/a (excluding) and 100.000 t/a and above for lead and zinc smelting respectively
through washing out outdated processes.
The production access scale for existing lead regeneration enterprises shall be above 10000t/a.
Renovated and expanded lead regeneration projects should have capacity above 20000t/a. New
lead regeneration projects should have capacity above 50000t/a. Large and middle lead smelteries
merge and acquisition of small regeneration lead plants, combined treatment with lead smelting
furnaces or subsidiary recovery and treatment of regenerated lead are encouraged.
Mineral Resources Law and relevant management regulation shall be abided by for exploring
lead and zinc resource and applying for mining permit. Mining entity shall explore in accordance
with the strictly approved exploration and utilization plan. Survey and exploration without permits,
abused exploration and resource waste are stringently forbidden. Administrative departments for
land resources should stringently standardize lead and zinc mine survey and mining approval
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system. In accordance with laws, regulations and relevant provisions, the transfer mode and
approval authority and mine survey rights shall be strictly executed. The approval exceeding
authority and the transfer of complete deposit are forbidden.
The lowest production and construction scale of new lead and zinc mines should not be lower
than 30000t/a (100t/d) for monomer mine with service year above 15 years. The monomer mine
size for middle mines shall be above 300,000t/a (1000t/d).
Dressing plants applying floatation should have ore processing quantity above 1000t/d.
Mine investment project should be transacted according to the requirements on the catalogue
of government-confirmed investment projects publicized in Decision of the State Council on
Reforming the Investment System. Mine development projects with total investment of 500mil
yuan and above shall be ratified by the investment authorities of the State Council. Other mine
development projects shall be ratified by the investment authorities in provincial governments.
The project capital percentage for lead and zinc mines, smelteries and regeneration projects
shall be 35% or above.
As for new lead smelting projects, the crude lead smelting should apply advanced processes
with independent intellectual properties, like oxygen enrichment bottom- or top- blowing intensive
smelting, which has high productivity, low energy consumption, qualified environmental indexes
and good integrated resource utilization, and two-converter and two-absorber acid-making system.
As for new zinc smelting projects, the boiling and roasting process with high sulfur utilization rate
and qualified tailgas index should be applied for the baking of zinc sulfide concentrates. The
hearth area for single boiled roaster should be 109m2-above s and have two-converter and
two-absorber acid-making system.
Integrated resource utilization and remaining heat recovery and other energy-saving facilities
should be equipped. Hot and strong acid-washing process is forbidden for flue acid-making.
Requirements in Energy Conservation Law, Cleaner Production Promotion Law, Environmental
Protection Law and other laws and regulations should be satisfied for the remaining heat recovery
of smelting-produced tailgas, dust collection or tailgas SO2-content treatment processes and
equipment. Fire metallurgy should be under sealed condition to avoid the escape of hazardous
gases and dusts and realize proper emission. Moreover, tailgas purification system, alarm system
and emergency response facilities must be installed. Effluent gas dehumidity and purification
facilities must be equipped for smelting with wet metallurgy process.
Develop recycling economy, support the recovery and utilization of lead and zinc
regeneration resources, improve the technology and environmental protection level of lead
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regeneration and recovery enterprises, follow the mass production and environmental friendly
development road. Advanced process and equipment should be applied for new and existing lead
and zinc regeneration projects and the treatment of waste and scrapped lead and zinc. Zinc
regeneration enterprises must collect complete waste lead and acid accumulators, store them
according to Standard for pollution control on hazardous waste storage （GB18597-2001）, crush
and sort with machines to separately collect and process plastics, lead plate, lead-contained
materials and waste acid solution. Closed water recycling for sorting during the crushing process
should be applied to avoid leakage if applying water power for sorting. Pre-desulfurization must
be made to the sorted diachylum (or sent to lead sulfide concentrates smelteries for combined
treatment). The mother liquor of desulfurization must be treated and the by-products should be
reclaimed. It is forbidden to directly smelt waste lead accumulators with shells. Internationally
advanced short kilns or equivalent equipment should be applied for smelting and refining.
Machinized operation should be applied for material adding, feeding and casting ingots refining
during refining. Manual crushing and crushing in open places to waste lead accumulators are
forbidden. It is forbidden to use reverberators with direct coal-combustion for lead and zinc
regeneration projects.
Strengthen the recovery management of the resource of regenerated zinc, concentratively
process and collect galvanized sheet iron and other galvanized steel products and effectively
collect zinc, lead, antimony and other secondary metals from it. Encourage the research and
development and operation installation of secondary metals from collected dry batteries.
Temporarily no scale limits for the production scale of the plant.
New large and middle mines shall apply advanced mining methods suitable for deposit
exploration conditions. Large equipment shall be employed as many as possible to properly
improve automation level. Floatation process should be applied for ore dressing.
According to the regulations in 2005 Guiding Catalogue of Industrial Structure Regulation
and other industrial policies, local agglomeration disks, simple furnaces, agglomeration pans and
disks for lead smelting shall be immediately eliminated. Regenerated lead through crucible
smelting and zinc smelting or zinc oxide production through outdated simple Muffle furnaces,
manger-shape furnaces, horizontal tanks, small vertical tanks to reductively refine and then chill
down with simple zinc collection facilities shall be removed at once. Before the end of 2008, lead
smelting with sintering machines noncompliant with environmental protection requirements on
lead dusts and tailgas effluent after renovation with equipment of acid-making system shall be
washed out.
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The integrated energy consumption of lead smelting is 600kg standard coal/ton. Crude lead
smelting has the integrated energy consumption of 600kg standard coal/ton below and coke
consumption of 350kg/ton below. Electrolyzed lead shall have power consumption reduced to
120kwh/ton. Integrated energy consumption for new electrolyzed zinc projects shall be lower than
1700kg standard coal/ton, and electrolized zinc production has DC power consumption of below
2900kwh/ton with a zinc electrolysis current efficiency above 88%. The standard coal
consumption for distilled zinc is below 1250kg/ton.
Existing lead smelting enterprises: the integrated energy consumption is below 650kg
standard coal/t; the integrated energy consumption for crude lead refining is below 460kg standard
coal/t; the coke consumption for crude lead refining is below 360kg/t; the DC power consumption
for electrolyzed lead shall be reduced to 121kwh/t and the lead electrolysis current efficiency shall
be above 95%. Existing zinc smelting enterprises: the integrated energy consumption of rectified
zinc is below 2200kg standard coal/t; the integrated energy consumption for electrolyzed zinc is
below 1850kg standard coal/t; the standard coal consumption for distilled zinc process shall be
below 1650kg/t; the DC power consumption for electrolyzed zinc shall be reduced to 3100kwh/t
and the zinc electrolysis current efficiency shall be above 87%. Existing smelting enterprises shall
save energy and reduce consumption through technical renovations to achieve the energy
New and existing lead and zinc projects should be equipped with energy-saving facilities and
advanced process and equipment to ensure the compliance with state energy consumption standard.
The energy consumption for lead regeneration projects should be below 130kg standard coal/ton
lead and 100kwh/ton lead for power consumption.
The comprehensive energy consumption of the raw ores for lead and zinc pit mines shall be
lower than 7.1kg standard coal/ton ores. The integrated energy consumption for lead and zinc
concentrates shall be below 14kg standard coal/ton ores. The ore power consumption is below
45kwh/ton.
IV. Integrated utilization of resources
New lead smelting projects: total recovery rate achieving 96.5%, crude lead smelting
recovery rate above 97%, zinc refining recovery rate above 99%, total sulfur utilization above
95%, sulfur capture above 99%, and water recycle utilization rate above 95%. New zinc smelting
projects: total smelting recovery rate achieving 95%; distilled zinc smelting recovery rate
achieving 98%; electrolyzed zinc recovery rate (wet process) achieving 95%; total sulfur
utilization rate above 96%, sulfur capture above 99%, and water recycle utilization rate above
95%.
All lead and zinc smelting investment projects should have the contents on the
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comprehensive utilization of valuable metals. And 95% projects should have the recovery system
for valuable associated metals.
Existing lead and zinc smelting enterprises: total recovery rate for lead smelting achieving
95% above, crude lead smelting recovery rate above 96%, total sulfur utilization above 94%,
sulfur capture above 96%, and water recycle utilization rate above 90%. Zinc smelting projects:
distilled zinc smelting recovery rate achieving 96%; rectified zinc smelting recovery rate
achieving 94%;
electrolyzed zinc recovery rate achieving 93% and above; total sulfur utilization
rate above 96% (above 94% for ISP process), total sulfur capture above 99%, and water recycle
utilization rate above 90%. Existing zinc smelting enterprises shall save energy and reduce
consumption through technical renovations to achieve the energy consumption level of new
enterprises before the end of the 11th five-year plan period.
The total recovery rate for new lead regeneration enterprise will be above 97%. The total
recovery rate of existing lead enterprises shall be above 95%. The lead content in the smelting slag
shall be lower than 2%. And the waste water recycle rate shall be above 90%.
The loss rate for lead and zinc pit mining (underground mines) shall be not above 10%, for
open mining (open mines) not above 5%. The mining dilution rate for pit mining (underground
mines) and open mining (open mines) shall not exceed 10% and 4.5% respectively. The actual
recovery rate for lead metal in sulfurized mine dressing reaches 87%, the recovery rate for zinc
concentrates reaches 90% above and the recovery rate of zinc and lead for combined (difficult to
dress) concentrates achieves 85% above. The power consumption per ton ores shall be lower than
35kwh in average. The water consumption per ton ores shall be lower than 4 tons/ton ores. The
waste water recycling rate shall be above 75%. Lead and zinc mines and dressing plants with low
resource utilization rate are forbidden to build. Mineral resource development and utilization plan
shall be stringently examined by the land and resource authorities when checking the mining right.
The actual mining loss rate, dilution rate and recovery rate of lead and zinc mines shall not be
lower than the approved design standard.
V. Environmental protection
Requirements in Emission standard of air pollutants for industrial kiln and furnace (GB9078
一 1996), Integrated emission standard of air pollutants ( GB l6297—1996), Integrated wastewater
discharge standard (GB8978—1996), solid wastes pollution prevention laws and regulations and
Hazardous waste treatment requirements and relevant local standards shall be followed for lead
and zinc smelting and pollutants from mine dressing. Avoid SO2 pollution from lead smelting and
pollution caused from the hot-acid leaching process of roasted zinc dusts containing hydrargyrum,
cadmium, arsenic and other soluble harmful heavy metal ions. Ensure the qualified emission of
SO2 and dusts. Strictly forbid the unqualified drainage of waste water from lead and zinc
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smelteries containing heavy metal ions, benzene and hydroxybenzene and other hazardous matter.
Follow the Emission standard of pollutants from nonferrous metal industry—lead and zinc
industry upon its promulgation.
Raw material processing, intermediate material crushing, smelting and loading/unloading at
dusty places for the lead and zinc smelting projects shall be equipped with dedusting and recovery
treatment facilities and a qualified automatic monitoring system checked by the environment
monitoring instrument supervision institution designated by the general administration of
Advanced process and equipment should be applied for new and existing lead and zinc
regeneration projects and the collection and treatment of waste and scrapped lead and zinc to
ensure the compliance with national environmental standard and local standards. It is forbidden to
directly drain the waste acid from destroying accumulator to the environment without treatment.
Waste water discharge shall comply with Integrated wastewater discharge standard
（GB8978-1996）. Waste gas produced from smelting and refining procedures should be properly
emitted to the dedusting system. Waste gas emission shall comply with Pollution control standard
for hazardous wastes incineration（GB18484-2001）. Waste slags from smelting procedure, sludge
from waste water treatment system, lead-contained flue (ash) collected and purified by dedusting
system, discarded materials from dedusting system and slags should have been harmlessly treated.
Sludge with high lead content from water treatment system and lead dust (ash) must be returned to
furnace for smelting. Work conditions should satisfy the requirements in Health Standard for
Industry Enterprise Design（GBZ1-2002） and Limits for Occupational Contacts of Hazardous
Factors at Work Sites（GBZ2-2002）. All employees should have regular physical check with
record kept. Enterprises should have perfect emergency preplan for sudden environment accidents
and corresponding facilities and equipment. Enterprises should have be equipped with complete
waste water and gas purification facilities with automatic monitoring equipment. Lead
regeneration enterprises and those engaged in the collection, utilization and disposal of
lead-contained wastes should obtain hazardous waste operation license according to the law.
accordance with the standard. Compulsory clean production audit should be made to existing lead
and zinc mining and smelting enterprises. Environmental protection authorities shall make
supervisions and inspections to existing lead and zinc smelting enterprises on the execution of
environmental protection standard, regularly publicize the list of enterprises satisfying
environmental protection standards and rectify enterprises unqualified or exceeding total pollution
quantity within a limited period. Enterprises still not qualified after rectification shall be shut
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down or closed by local government according to the law.
Mine enterprises are forbidden to destroy and pollute environment. Environmental impact
assessment document approval and the “Three Simultaneities” principle for environmental
protection facilities shall be earnestly implemented. Land reclaimation regulations shall be strictly
executed to implement the land reclaimation obligation. In accordance with the requirements in
Guidance Opinions on Gradually Establishing Mine Environmental Treatment and Ecological
Recovery Responsibility Mechanism issued by Ministry of Finance, Ministry of Land and
Resources and State Environmental Protection Administration, increasingly setting up
environmental treatment and recovery deposit system for specially using mine environmental
treatment and ecological recovery. The environmental protection design of mine investment
projects should be examined and approved by authorized environmental departments according to
relevant regulations of State Environmental Protection Bureau and the government-verified
investment project list released in Decision of the State Council on Reforming the Investment
System. Open mining area environment should be recovered according to environmental
protection and water and soil resource preservation requirements. Waste residues and waste water
shall be reused. Discarded slags shall be solidfied and treated to harmlessness. Sewage shall be
fully recycled for use. Back-fill method for underground mining shall be applied. Waste stones and
other solid wastes and tailing sands shall be filled back to the mined-out area to control the
subsiding area and protect surface environment. Earth surface displacement is not allowed for the
mines applying filling mining method. Earth surface displacement for mines applying other
methods should not destroy the vegetation, natural sceneries and buildings etc.
VI. Safe production and occupational harm
Lead and zinc projects must comply with regulations in Safe Production Law, Law of Mine
Safety and Occupational Disease Prevention and Treatment Law, have corresponding safe
production and occupational harm prevention conditions, establish and perfect safe production
responsibility. Safe facilities and occupational harm prevention facilities for new, renovated and
expanded projects should be designed, constructed and operated simultaneously. Before the safety
design, operation and application of lead and zinc mines, lead and zinc smelting and acid-making
and oxygen-making systems, examination and acceptance of safe production management
department shall be obtained. Occupational harm prevention facilities, individual labor protection
appliances, accident prevention facilities for fire, lightning, equipment failure, mechanical injury
and body falling shall be equipped. Facility for safe power supply, water supply and removing
poisonous and harmful matters shall be available. Relevant systems shall be established.
Acceptance of local administrative authorities should be obtained.
According to the Regulations on License to Work Safety (Decree No．397 of the State
Council), lead and zinc mine enterprises should obtain Safe Production Permit and cannot produce
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without the permit.
New and renovated lead and zinc mine and smelting projects must comply with above access
conditions. The investment management, land supply, environmental influence evaluation and
other procedures for lead and zinc mine and smelting projects should be transacted according to
the access conditions. The financing procedures should meet the regulation of industry policy and
access conditions. Construction unit should submit environment influence report according to the
classification audit regulation promulgated by State Environmental Protection Administration.
Existing lead and zinc smelting enterprises complying with industry policy shall achieve the
access conditions for new enterprises in the aspects of integrated resource utilization, energy
consumption and environment by means of technical renovation.
Before the operation of new or renovated lead and zinc mines, smelteries and regenerated
lead and zinc recovery enterprises, the supervision and inspection of united inspection group
consisting of administrative authorities above provincial level on investment, land supply,
environmental protection, safe production, labor and health and quality inspection and relevant
experts shall be made to check if the work complies with relevant requirements in the access
condition. If it is deemed that the access conditions are not satisfied, the investment authorities
shall charge the construction unit to improve relevant aspects within a period according to design
requirements. As for those do not obtain land according to the law or do not use land according to
regulated conditions and land use contract and do not perform land reclaimation obligations or
carry out the land reclaimation measures according to the regulations, the land and resource
authorities shall rectify and punish them according to land management regulations and land using
contract, order them to correct within a period and do not issue land using license to them. Various
behaviours breaching the law in mining shall be attacked according to the law.
Criminal
responsibilities shall be pursued for those constituting criminal offenses by transferring to the
judicatory authorities. Environmental protection authorities shall penalize according to relevant
laws and regulations and improve within a period.
The new lead and zinc mines, smelteries and regenerated lead and zinc recovery enterprises
should qualify the acceptance of relevant departments and transact the Pollution Discharge Permit
(except areas without pollution permit system) first, and then start the production, sale and other
operations. Enterprises involving acid-making and oxygen-making systems shall transact the
Hazardous Chemicals Enterprises Safe Production Permit according to relevant regulations. The
renovation and expansion of existing enterprises shall also go through relevant procedures of
Pollution Discharge Permit and Hazardous Chemicals Enterprises Safe Production Permit after
qualifying the acceptance of relevant provincial authorities.
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production, labor and health administrative authorities of all levels make supervision and
inspection to the local lead and zinc enterprises on the implementation of Lead and Zinc Access
Conditions. China Nonferrous Metals Association shall help related department to do well in
follow-up supervisions.
As for new or renovated lead and zinc mines, smelteries and regenerated lead and zinc
recovery enterprises noncompliant with industry policy and this access permit, investment
management department shall not register. Land and resource department shall not transact land
using procedures, environmental protection authorities shall not approve the environmental
influence assessment report, finance institutions shall not provide credit support and electric
enterprises shall stop power supply according to the law. Enterprises with relevant licenses
NDRC shall regularly proclaim the list of lead and zinc mines, smelteries and regenerated
lead and zinc recovery enterprises complying with the access permit conditions. Social
supervision and dynamic management shall be executed.
This access conditions are applicable for all types of lead and zinc mines, smelteries and
regenerated lead and zinc recovery enterprises within the territory of the People’s Republic of
China (Excluding Taiwan, Hong Kong and Macao SARs).
The access conditions shall also be applicable to the smelting production with equipment
renovated into lead and zinc smelting facilities.
The access conditions shall come into effect from Mar. 10, 2007 with NDRC responsible for
interpretation and subject to revision according to the industry development situation and the
7.1.8 Tungsten industry access conditions
Republic of China
No. 94, 2006
230
Tungsten, stannum and antimony are important and predominant mineral resources in China
with leading reserves, outputs and exports in the world as well as a critical position in global
market. In order to reasonably develop and utilize these predominent resources of tungsten,
stannum and antimony, further strengthen the management and direction to the exploration, use
and export and promote the optimization and upgrading of industry structure, NDRC, together
with relevant departments, established Tungsten Industry Access Conditions, Stannum Industry
Access Conditions and Antimony Industry Access Conditions and promulgated as follows in
accordance with national related laws, regulations and the requirements of industry policies.
All related departments shall follow this Proclamation in investment management, land
supply, environmental examination and approval and credit financing involving tungsten, stannum
and antimony production enterprises.
Dec. 22, 2006
Appendix：I. Tungsten Industry Access Conditions
I. Establishment and distribution of production enterprises
（I）New and expanded or renovated tungsten smelting and processing projects shall comply
with national industry policies, mineral resource general plan and tungsten industry development
plan and have stable raw material supply channels (Signing raw material purchase contract with
legal mines and purchasing illegally explored mine products is forbidden.). The proportion of
self-possessed fund in project investment shall not be lower than 50%.
（II）Construction of new tungsten smelting and processing enterprises are forbidden in
nature reserves, ecological function reserves, famous scenic sites, forest parks, drinking water
resource reserves defined in national laws, regulations and administrative regulations and plans or
approved by the people’s government above county level, large and middle cities and the outskirts,
and the areas one kilometer to residential communities, sanitaria, hospitals as well as food,
pharmaceutical, electronical and other enterprises with high environmental requirements. Existing
tungsten smelting and processing enterprises in these areas shall be gradually relocated by means
of move, production change and shutdown etc. according to the plan of the area.
II. Production scale
Tungsten smelting: new and expanded or renovated projects should have annual
comprehensive capacity of above 5000 tons ammonium paratungstate and above 2000 tons
tungsten powder tungsten carbide.
Tungsten material: new and expanded or renovated projects should have annual
comprehensive capacity of above 100 tons tungsten bars.
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Hard alloy: new and expanded or renovated projects should have annual capacity of above
200 tons.
III. Resource recovery and energy consumption
Tungsten smelting (working procedures from tungsten concentrates to ammonium
paratungstates production) has tungsten trioxide recovery rate≥96% (calculating on the basis of
standard concentrates). The comprehensive energy consumption of ammonium paratungstates
shall be lower than 1t coal equivalent/t. Water resource shall be reused with water recycling rate
≥95%.
IV. Environmental protection
（I）Environmental Impact Assessment Law shall be strictly followed for new and expanded
or renovated projects. Environmental impact assessment documents shall be reported to
environmental protection administrative authorities with approval right according to the Law.
Corresponding environmental protection facilities shall be installed in compliance with the “Three
Simultaneities” principle of environmental protection. Environmental protection acceptance upon
project completion shall be made according to the law.
（II）Waste gas
Dedusting and flue purification installations shall be equipped in all procedures producing
dusts from material handling, transporting, smelting to processing etc. Bag-type dedusting
facilities or other advanced flue purification and dedusting equipment shall be installed for all
kilns and furnaces to enable the gas emission to satisfy Emission standard of air pollutants for
industrial kiln and furnace ( GB 9078-1996) and Integrated emission standard of air pollutants
( GB 16297-1996). Those emitting air pollutants in the place with local emission standards shall
abide by the local standards.
（III）Waste water
（GB8978-1996）. The main indexes are: PH value: 6～9, suspended solid below 70ml/L, COD
below 100mg/L, oils below 10mg/L, ammonia and nitrogen below 15mg/L, sulfide below
1.5mg/L, total copper below 0.5mg/L, total zinc below 2.0mg/L and total manganese below
2.0mg/L etc. Those discharging pollutants to water in the place with local discharge standards
shall abide by the local standards.
（IV）Waste residues
Dedicated waste residues storage and disposal site shall be prepared and meet the Standards
for pollution control on the storage and disposal site for general industrial solid wastes
（GB18599-2001）.
（V）Noise
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The noise in the plant shall comply with Standard of noise at boundary of industrial
enterprises (GB12348-90Ⅲ).
（ VI ） New industry standards shall be followed for implementation after the state
promulgates industry pollutant discharge standard.
V. Product quality
Enterprises shall have independent quality inspection institutions and professional inspectors
as well as complete quality inspection management system. The quality of ammonium
paratungstates comply with current state standard. The quality of tungsten material and hard alloy
meets the state standards GB/T4181-1007 and GB/T18376-2000 respectively.
In accordance with the PRC Administration Regulations on Industrial Product Manufacturing
Permission License and the Safety Administration Regulations of the Hazardous Chemicals,
enterprises producing products controlled by the state permission system shall obtain industrial
production permission license according to the law and shall not produce and sell products without
production licenses or use them in operations.
VI. Safe production and occupational disease prevention and treatment
（I）Occupational disease harm and safety pre-evaluations shall be made for new, expanded
and renovated smelting projects. Enterprises shall abide by Safe Production Law, Occupational
Disease Prevention and Treatment Law and implement state standard or industrial standard to
guarantee safe production.
（II）Enterprises shall have healthy safe production organization and management system,
employee safe production training system and safe production inspection system.
（III）Enterprises shall abide by the Safety Administration Regulations of the Hazardous
Chemicals. Hazardous chemicals production facilities shall put into operation after safety
evaluation and acquiring Safety Production Permit.
（IV）Enterprises shall have occupational harm prevention and treatment measures and
detection, evaluation and control measures and emergency preplans for critical danger sources as
well as necessary appliances and equipment. State health standard shall be satisfied at working
sites with dusts and poisons.
VII. Labor insurance
Enterprises shall abide by relevant state laws and regulations, take part in endowment,
unemployment, medical and work-related injury insurances and fully pay related insurance
premium.
VIII. Supervision and management
（I）New and expanded or renovated tungsten smelting and processing projects shall comply
233
with the access permit conditions. Existing tungsten smelting and processing enterprises shall
gradually satisfy the requirements in this access permit conditions in the aspects of environmental
protection, energy consumption, integrated resource utilization, product quality, safe production
and occupational disease prevention and treatment and labor insurance etc. in accordance with the
requirement of industrial structure optimization and upgrading.
All related department shall follow this access permit conditions in the issues of investment
management, land supply, environmental protection approval, credit and financing etc. As for new
and expanded or renovated tungsten smelting and processing projects noncompliant with this
access permit, investment management department shall not approve, confirm and register.
Finance institutions shall not provide loans and credit support in other forms. Land management,
urban planning and construction, environmental protection, fire fighting, health, safety supervision
and other department should not handle relevant procedures.
（II）Tungsten industry authorities and relevant law enforcement departments are responsible
for the supervision and inspection to the local production enterprises. Environmental protection
departments of all levels shall enforce the supervision and inspection to tungsten production
enterprises. China Nonferrous Metals Association, China Tungsten Industry Association shall help
related governmental department to do well in supervision and management.
（III）NDRC shall regularly proclaim the list of tungsten production enterprises complying
with the access permit conditions. Enterprises noncompliant with the conditions shall not obtain
export supply qualification and product export permit nor the import permit for tungsten-contained
wastes.
IX. Supplementary provisions
（I）Access conditions for other tungsten smelting intermediate products shall be developed
in accordance with above regulations.
（II）The Access Conditions shall come into effect from Jan. 1, 2007 with NDRC responsible
for the interpretation and correction at the proper time according to the industry development
situation and the requirement of macro control.
7.1.9 Stannum industry access conditions
Republic of China
No. 94, 2006
234
accordence with national related laws, regulations and the requirements of industry policies.
Dec. 22, 2006
Appendix：
II. Stannum Industry Access Conditions
（I）New and expanded or renovated stannum smelting projects shall comply with national
industry policies, mineral resource general plan and stannum industry development plan and have
stable raw material supply channels (Signing raw material purchase contract with legal mines and
purchasing illegally explored mine products is forbidden.). The proportion of self-possessed fund
in project investment shall not be lower than 50%.
（II）Construction of new stannum smelting enterprises are forbidden in nature reserves,
ecological function reserves, famous scenic sites, forest parks, drinking water resource reserves
defined in national laws, regulations and administrative regulations and plans or approved by the
people’s government above county level, large and middle cities and the outskirts, and the areas
one kilometer to residential communities, sanitaria, hospitals as well as food, pharmaceutical,
electronical and other enterprises with high environmental requirements. Existing stannum
smelting enterprises in these areas shall be gradually relocated by means of move, production
change and shutdown etc. according to the plan of the area.
II. Production scale and process equipment
(I) New and expanded or renovated stannum smelting projects with minerals as main raw
materials shall have annual production of 8000tons block tin (or crude tin) and complete process
including crude smelting, refined smelting, volatilization, vacuuming, remaining heat utilization
and “three wastes” treatment etc.
235
Crude smelting shall develop towards intensified smelting. Oxygen top blown smelting
furnace or large reverberatory furnace and other advanced processes shall be applied. The area of
the bed of reverberatory furnace shall not be lower than 25m2. Low density SO2 flue treatment
system shall be installed.
Fire-refining applies processes equipped with autothermic electrothermal crystallization
machine with capacity above 30t/d/set , vacuum furnace with capacity above 10t/d/set and other
advanced processes. Wet process applies electrolysis and other advanced processes and efficient
and energy-saving rectifiers.
The bed of volatilization furnace shall be above 4m2. Oxygen top blown smelting furnace,
large reverberatory furnace and volatilization furnace are linked with remaining heat boiler for the
collection and utilization of the remaining heat of high temperature flue.
(II) New and expanded or renovated stannum smelting projects with stannum-contained
scraps as raw materials shall have annual production of 3000tons block tin (or crude tin), above
400KVA electric furnaces as main production equipment and complete process including
integrated recovery and “three wastes” treatment.
Stannum integrated recovery rate≥95%; integrated energy consumption of unit product
≤2400kg coal equivalent/ton ; integrated recovery rate of valuable metals ≥80%. Integrated
recovery of water shall be achieved with water recycling rate ≥95%.
（II）Waste gas
dusts from material handling, transporting to smelting etc. Bag-type dedusting facilities or other
advanced flue purification and dedusting equipment shall be installed for all kilns and furnaces to
enable the gas emission to satisfy Emission standard of air pollutants for industrial kiln and
furnace. ( GB 9078-1996) and Integrated emission standard of air pollutants ( GB 16297-1996).
SO2 online automatic monitoring system accepted by provincial environmental protection
department shall be installed.
Main indexes: for enterprises established and operated before Jan. 1, 1997, SO2 emission
236
shall below 1200mg/m3, particle size below 150 mg/m3, sulfuric acid mist below 70 mg/m3,
plumbum and its compound below 0.9mg/m3, hydrargyrum and its compound below 0.015mg/m3,
cadmium and its compound below 1.0mg/m3 and stannum and its compound below 10mg/m3; for
enterprises established and operated after Jan. 1, 1997, SO2 emission shall below 960mg/m3,
particle size below 120 mg/m3, sulfuric acid mist below 45mg/m3, plumbum and its compound
below 0.70mg/m3, hydrargyrum and its compound below 0.012mg/m3, cadmium and its
compound below 0.85mg/m3 and stannum and its compound below 8.5mg/m3. Those emitting air
pollutants in the place with local emission standards shall abide by the local standards.
（GB8978-1996）. The main indexes are: PH value: 6～9, suspended solid below 70ml/L, oils
below 10mg/L, sulfide below 1.5mg/L, total copper below 0.5mg/L, total zinc below 2.0mg/L and
total manganese below 2.0mg/L etc. Those discharging pollutants to water in the place with local
discharge standards shall abide by the local standards.
Dedicated waste residues storage and disposal site shall be prepared and meet the Standards
for pollution control on the storage and disposal site for general industrial solid wastes
（GB18599-2001）. Waste residues containing arsenic shall be piled in dedicated anti-seepage,
anti-leakage and waterproof places and treated in a safe and reliable way. Hazardous waste
specialty identification shall be made to arsenic-contained waste residues. If it doesn’t belong to
hazardous wastes, it shall be managed as normal industrial solid wastes. If it belongs to harzardous
wastes, it shall be managed as harzardous wastes. The storage facility shall comply with the
regulations in Harzardous Wastes Storage Pollution Control Standard （GB18597-2001） and
Hazardous Wastes Landfill Pollution Control Standard （GB18598-2001）.
（V）Noise
（V）Noise
V. Product quality
237
as well as complete quality inspection management system. The quality of block tin shall comply
with the state standard GB/T728-1998. The quality of foundry stannum and plumbum welding
material shall meet the state standards GB/T8012-2000 and the stannum and plumbum brazing
quality shall meet GB/T3131-2001..
premium.
（I）New and expanded or renovated stannum smelting projects shall comply with the access
permit conditions. Existing stannum smelting enterprises shall gradually satisfy the requirements
in this access permit conditions in the aspects of environmental protection, energy consumption,
integrated resource utilization, product quality, safe production and occupational disease
prevention and treatment and labor insurance etc. in accordance with the requirement of industrial
structure optimization and upgrading.
238
All related departments shall follow this access permit conditions in the issues of investment
and expanded or renovated stannum smelting projects noncompliant with this access permit,
investment management department shall not approve, confirm and register. Finance institutions
shall not provide loans and credit support in other forms. Land management, urban planning and
construction, environmental protection, fire fighting, health, safety supervision and other
department should not handle relevant procedures.
（II）Stannum industry authorities and relevant law enforcement departments are responsible
for the supervision and inspection to the local production enterprises. Environmental protection
departments of all levels shall enforce the supervision and inspection to stannum production
enterprises. China Nonferrous Metals Association shall help related governmental department to
do well in supervision and management.
（III）NDRC shall regularly proclaim the list of stannum production enterprises complying
export supply qualification and product export permit nor the import permit for stannum-contained
wastes.
The Access Conditions shall come into effect from Jan. 1, 2007 with NDRC responsible for
the interpretation and correction at the proper time according to the industry development situation
and the requirement of macro control.
7.1.10 Antimony industry access conditions
Republic of China
No. 94, 2006
accordence with national related laws, regulations and the requirements of industry policies.
239
Dec. 22, 2006
Appendix：
III. Antimony Industry Access Conditions
（I）New and expanded or renovated antimony smelting projects shall comply with national
industry policies, mineral resource general plan and antimony industry development plan and have
stable raw material supply channels (Signing raw material purchase contract with legal mines and
purchasing illegally explored mine products is forbidden.). The proportion of self-possessed fund
in project investment shall not be lower than 50%.
（II）Construction of new antimony smelting enterprises are forbidden in nature reserves,
ecological function reserves, famous scenic sites, forest parks, drinking water resource reserves
defined in national laws, regulations and administrative regulations and plans or approved by the
people’s government above county level, large and middle cities and the outskirts, and the areas
one kilometer to residential communities, sanitaria, hospitals as well as food, pharmaceutical,
electronical and other enterprises with high environmental requirements. Existing antimony
smelting enterprises in these areas shall be gradually relocated by means of move, production
change and shutdown etc. according to the plan of the area.
II. Production scale and process equipment
New and expanded or renovated refined antimony (antimony ingot) or antimony white
(antimony trioxide) projects shall have annual production above 5000 tons. The section area of the
air mouth area of the main equipment blast furnace shall not be smaller than 1m/set, the hearth of
the reverberator shall not be smaller than 10m2/set, the leaching vat shall not smaller than 5m2/set.
It shall have a complete process including integrated reuse and “three wastes” treatment.
（I）Refined antimony
(I) Refined antimony
Smelting comprehensive recovery rate: antimony≥90% with sulfur and oxygen mixed ores as
material; antimony≥88% with oxide ores as material; antimony≥95% with sulfurized ores as
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material; antimony≥80% and plumbum≥88% with jamesonite as material. The comprehensive
recovery rate of valuable metals ≥80%.
The comprehensive energy consumption is lower than 1.03t standard coal/ton and below
460kwh/ton for power consumption per ton refined antimony.
(II) Antimony white (antimony trioxide)
Antimony white production through direct process: antimony recovery rate ≥90%;
comprehensive energy consumption of unit product≤1.03t standard coal/ton; power consumption
per ton refined antimony≤450kwh/ton.
Antimony white production through indirect process: antimony recovery rate ≥99%;
comprehensive energy consumption of unit product≤0.02t standard coal/ton; power consumption
per ton refined antimony≤100kwh/ton.
（III）The integrated recovery rate of antimony trisulfide produced with liquation method:
antimony≥98%.
(IV)
Comprehensive recovery and application of water resource, water resource utilization
rate ≥95%
（II）Waste gas
dusts from material handling, transporting to smelting etc. Bag-type dedusting facilities or other
advanced flue purification and dedusting equipment shall be installed for all kilns and furnaces to
enable the gas emission to satisfy Emission standard of air pollutants for industrial kiln and
furnace. ( GB 9078-1996) and Integrated emission standard of air pollutants ( GB 16297-1996).
SO2 online automatic monitoring system accepted by provincial environmental protection
department shall be installed.
Main indexes: for enterprises established and operated before Jan. 1, 1997, SO2 emission
shall below 1200mg/m3, particle size below 150 mg/m3, sulfuric acid mist below 70 mg/m3,
plumbum and its compound below 0.9mg/m3, hydrargyrum and its compound below 0.015mg/m3,
cadmium and its compound below 1.0mg/m3 and stannum and its compound below 10mg/m3; for
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enterprises established and operated after Jan. 1, 1997, SO2 emission shall below 960mg/m3,
particle size below 120 mg/m3, sulfuric acid mist below 45mg/m3, plumbum and its compound
below 0.70mg/m3, hydrargyrum and its compound below 0.012mg/m3, cadmium and its
compound below 0.85mg/m3 and stannum and its compound below 8.5mg/m3. Those emitting air
pollutants in the place with local emission standards shall abide by the local standards.
（GB8978-1996）. The main indexes are: PH value: 6～9, suspended solid below 70ml/L, oils
below 10mg/L, sulfide below 1.5mg/L, total copper below 0.5mg/L, total zinc below 2.0mg/L and
total manganese below 2.0mg/L etc. Those discharging pollutants to water in the place with local
discharge standards shall abide by the local standards.
Dedicated blast furnace slag storage and disposal site shall be prepared and meet the
Standards for pollution control on the storage and disposal site for general industrial solid wastes
（GB18599-2001）. Hazardous waste specialty identification shall be made to arsenic- and
antimony-contained waste residues. If it doesn’t belong to hazardous wastes, it shall be managed
as normal industrial solid wastes. If it belongs to hazardous wastes, it shall be managed as
hazardous wastes. The storage facility shall comply with the regulations in Hazardous Wastes
Storage Pollution Control Standard （GB18597-2001） and
Hazardous Wastes Landfill Pollution
Control Standard （GB18598-2001）.
（V）Noise
V. Product quality
as well as complete quality inspection management system. The quality of refined antimony
(antimony ingot) shall comply with the state standard GB/T1599-2002. The quality of antimony
white (antimony trioxide) shall meet the state standards GB/5226-86 and the quality of other
antimony products shall meet the product quality standards issued by the ministry, province and
industry.
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premium.
（I）New and expanded or renovated antimony smelting projects shall comply with the
access permit conditions. Existing antimony smelting enterprises shall gradually satisfy the
requirements in this access permit conditions in the aspects of environmental protection, energy
consumption, integrated resource utilization, product quality, safe production and occupational
disease prevention and treatment and labor insurance etc. in accordance with the requirement of
industrial structure optimization and upgrading.
All related departments shall follow this access permit conditions in the issues of investment
and expanded or renovated antimony smelting projects noncompliant with this access permit,
investment management department shall not approve, confirm and register. Finance institutions
shall not provide loans and credit support in other forms. Land management, urban planning and
construction, environmental protection, fire fighting, health, safety supervision and other
department should not handle relevant procedures.
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（ II ） Antimony industry authorities and relevant law enforcement departments are
responsible for the supervision and inspection to the local production enterprises. Environmental
protection departments of all levels shall enforce the supervision and inspection to stannum
production enterprises. China Nonferrous Metals Association shall help related governmental
department to do well in supervision and management.
（III）NDRC shall regularly proclaim the list of antimony production enterprises complying
export supply qualification and product export permit.
The Access Conditions shall come into effect from Jan. 1, 2007 with NDRC responsible for
the interpretation and correction at the proper time according to the industry development situation
and the requirement of macro control.
7.1.11 Electrolyzed manganese enterprise industry access conditions
Republic of China
No. 49, 2006
In order to restrict the low-level redundant development and blind expansion trend of
manganese production with electrolysis process, promote the industry structure upgrading,
standardize industry development and maintaining market competition order, NDRC, together
with relevant departments, established electrolyzed manganese enterprise industry access
conditions and proclaimed herein.
supply, environmental examination and approval, credit financing and power supply etc.
involving electrolyzed manganese production and construction projects.
Aug. 8, 2006
Appendix：Electrolyzed manganese enterprise industry access conditions
In order to restrict the low-level redundant development and blind expansion trend of
manganese production with electrolysis process and promote the industry structure upgrading,
electrolyzed manganese enterprise industry access conditions are presented as follows according
to relevant laws, regulations, industry policies as well as the principles of structure adjustment,
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efficient competition, consumption reduction, environment protection and safe production.
I. Process and equipment
(I) The capacity for one line (one set of transformer) reaches 10000t/a or above, and the gross
production scale of the enterprise hits 30000t/a or above.
（II）Effective volume of combination tank≥250m3。
（III）Applying high pressure film filter press, and the filtration slag water content ≤25%
with manganese carbonate ores as raw material or ≤28% with manganese oxide ores as raw
material.
（IV）Slag field and slag dam shall be built inside the plant. Treatment facilities and an
emergency drainage pond for chrome-contained water shall be equipped to ensure waste water
compliant with standard. Automatic loading system with dust collection facilities shall be applied.
Material crushing, loading/unloading and transfer and other dusty places shall be equipped with
dedusting and recovery facilities. All facilities for pollution prevention should be simultaneously
designed, built and employed with the major works of the project of electrolyzed manganese
production.
（V）Accident prevention facilities for preventing fires, lightning strikes, equipment failures,
mechanical injuries and falling down from height, as well as safe power and water supply facilities
and poisonous and hazardous matter removal equipment shall be installed.
All facilities for safe
production and safety inspection should be simultaneously designed, built and employed with the
major works of the project of electrolyzed manganese production.
（VI）Existing electrolyzed manganese enterprises with the capacity for one line (one set of
transformer) of 3000t/a or below should be washed out according to regulations.
II. Energy and resource consumption
Producing electrolyzed manganese according to YB/T051-2003: integrated power
consumption for grade A and grade B products not more than 8600kwh/t and for grade C and
grade D not higher than 6500kwh/t.
Soluble manganese recovery rate in the raw material≥82%
Fresh water consumption ≤3 t/t
Filtration slag≤6t/t
III. Environmental protection
（I）Construction of new electrolyzed manganese enterprises and expansion of manganese
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enterprises are forbidden in nature reserves, ecological function reserves, famous scenic sites,
drinking water resource reserves defined in national laws, regulations and administrative
regulations and plans or approved by the people’s government above county level, large and
middle cities and the outskirts, and the areas one kilometer to residential communities, sanitaria,
with special environmental protection requirements.
（II）Waste water discharge shall comply with Integrated wastewater discharge standard
（GB8978-1996）and relevant local standards. Chrome-contained water shall qualify the discharge
limit of Class A pollutants at the plant or at the drainage mouth of the plant’s treatment facility.
Water intake shall be strictly measured. Pollutant discharge outlets shall be equipped with
automatic monitoring facilities linking with relevant regulatory environmental authorities for the
control of main pollutants of hexavalent chromium, total manganese, PH and suspended solid etc.
Cooling water shall be recycled and not allowed to drain outside.
（III）The discharge of dusts and waste gases shall comply with Integrated emission standard
of air pollutants ( GB 16297-1996) . The noise shall comply with Standard of noise at boundary of
industrial enterprises (GB12348-90).
（IV）New slag disposal pits shall satisfy relevant regulations in Standards for pollution
control on the storage and disposal site for general industrial solid wastes（GB18599-2001）. Slag
disposal pits causing ground water pollution shall be shut down and remedy measures shall be
applied to remove pollution. Slag disposal pits not causing ground water pollution shall be earthed
up and forested
When the manganese slag in the pit reaches designed elevation, it shall be earthed up, pressed
and forested. Channels shall be built around the pit to avoid runoff flowing into the pit, the
increase of percolate and landslide. Percolate collection equipment shall be installed at the
downstream of the slag dam to lead percolate to production waste water treatment pond or make
site treatment for qualifying the standard and draining out. Direct discharge of percolate is
forbidden. Direct flushing the cloth of filter press near the slag disposal pit is strictly forbidden.
Chrome-contained sludge produced from chrome-contained water treatment shall be
delivered to qualified plants for harmless treatment and not be stored with other general slags.
（V）Sewage collection and discharge piping inside the plant shall be clearly arranged. A
system diverting rainwater and sewage as well as recycling water and sewage shall be applied.
Leakage, overflow and drippling shall be forbidden. Manganese mineral powder shall be sealed or
storage or stored with dustproof means. Anti-seepage, anti-leakage and anti-corrosion measures
shall be applied to the floor in the workshop and treatment of hardness to be made to the road
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inside the plant.
New standards shall be executed upon the revision of above environmental protection
standards.
Relevant requirements in Electrolyzed Manganese Clean Production Standard shall be
followed upon the promulgation.
IV. Supervision and management
（I）
New and expanded or renovated electrolyzied manganese projects shall comply
with above access permit conditions. The investment management, land supply
or lease and credit and financing of electrolyzed manganese projects shall also
abide by above conditions. Environmental influence evaluation documents shall
be reported to environmental protection authorities above provincial level for
examination and approval for new and expanded or renovated electrolyzied
manganese projects. Existing electrolyzied manganese enterprises shall satisfy
the access permit conditions in the aspects of environmental protection, energy
consumption and safe production etc.
（II）
Development and reform (economy and trade) and environmental protection
administrative authorities of all levels make supervision and inspection to the
local electrolyzed manganese enterprises’ implementation of Electrolyzed
manganese enterprise industry access conditions. China Ferroalloys Industry
Association and China Manganese Industry Technical Commission shall help
related governmental departments to do well in the supervision and management
of the implementation of Electrolyzed manganese enterprise industry access
conditions.
（III）
As for new and expanded or renovated electrolyzied manganese projects
noncompliant with this access permit, finance institutions shall not provide
credit support, electric enterprises shall stop power supply, and environmental
protection authorities shall not transact the examination and approval procedures.
As for enterprises determined to be cancelled or ordered to be closed by local
people’s government or relevant authorities according to the law, the industrial
and commercial administrative authorities shall order them to alter or cancel
registration.
（IV）
NDRC shall regularly proclaim the list of electrolyzed manganese production
enterprises complying with the access permit conditions.
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V. Supplementary provisions
（I）The access conditions shall be applicable to all types of electrolyzed manganese
enterprises within the territory of the People’s Republic of China (Excluding Taiwan, Hong Kong
and Macao SARs).
(II) The access conditions shall also be applicable to electrolyzed manganese dioxide
enterprises which switch to the production of manganese.
（III）The access conditions shall come into effect from Sept. 1, 2006 with NDRC
responsible for interpretation and revision according to the industry development situation and the
7.1.12 Circular of Standardizing the Lead and Zinc Trade Investment
Act,Quickening Structure Adjustment Guiding Suggestion
Fa Gai Yun Xing [2006] No. 1898
National Development and Reform Commission, Ministry of Finance, Ministry of Land and
Resources, Ministry of Commerce, The People’s Bank of China, General Administration of
Customs, State Administration of Taxation, State Environmental Protection Administration, State
The People's Governments of Provinces, Autonomous Regions and Municipalities, Ministries
and Commissions of the State Council and institutions directly under the State Council
municipalities, , enterprise groups specifically designated in the state plan,
All provinces, autonomous regions, municipalities and cities specifically designated in the
state plan, Xinjiang Production and Construction Corp, National Development and Reform
Commission, Economy and Trade Commission (Economy Commission, Industry Office), finance
departments (bureaus), land and resource departments (bureaus), departments in charge of
commerces, The People’s Bank of China Shanghai Headquarters, its all branches, business
management divisions and central sub-branches of capitals,
the Sub-Administration of General
Administration of Customs of Guangdong, the Special Commissioners’ Offices in Tianjin and
Shanghai, the customs offices directly affiliated to the General Administration of Customs, State
Administration of Taxation, State Environmental Protection Administration, State Administration
of Work Safety:
In order to carry out the spirit of the Decision of the State Council on Promulgating the
“Interim Provisions on Promoting Industrial Structure Adjustment” for Implementation (Guo Fa
[2005] No. 40), standardize the lead and zinc trade investment acts and quicken the structure
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adjustment, the guiding suggestions as follows are presented.
I. Importance of standardizing the investment acts in lead and zinc industries and promoting
structure adjustment
Lead and zinc are basic raw materials closely related with industry development and social
life. The industry mainly consists of lead and zinc mining and smelting. By the end of 2005, there
have been 411 mining enterprises above statistics threshold and 466 lead and zinc smelting
enterprises. The production capacity at the end of 2005 was about 2.2mil tons of rough lead,
2.8mil tons of electrolyzed lead and 3.4mil tons of zinc.
In recent years, the lead smelting technology of oxidizing in bottom blowing furnace and
reduction smelting in blast furnace has been successfully applied. Advanced ISA furnaces and
Kaldo furnaces are imported. Fluldized roasting of zinc smelting process is applied, resulting in
high sulfur utilization rate and qualified tailgas emission. The comprehensive application of lead
and zinc smelting enterprises’ resources achieved obvious effects with the recovery of 13 kinds of
rare valuable metals including gold and silver etc. The technical progress promotes the upgrading
of the lead and zinc smelting process in China. It is the time for washing out the outdated
technology.
Along with the booming of the industry, the gross and structure problems of the lead and zinc
industry and some structural and systematic profound contradictions leading to investment fever
have become arresting, mainly presented as follows.
(I) Shortage of resources seriously influences the sustainable development of the lead and
zinc industry. Smelting enterprises have developed in an extensive mode for years. Limited by
enterprise’s power and resource survey degree, construction of small-scale mines is dominant,
resulting in serious shortage of lead and zinc resources in domestic market, less than 50% raw
material self-supply rate in large and middle-sized smelting enterprises and continuous price
increase. Tight concentrate supply causes mine abuse, rising import and resource fights among
smelteries. Lack of resources restricts the sustainable development of the lead and zinc industry
and seriously influences the industry structure adjustment in China.
(II) Structural contradiction is sharp, and the industry profit shifts to mining industry
excessively. Currently, the lead and zinc smelting capacity is higher than the market demand and
the mining capacity. The structural contradiction causes the insufficient operation of smelting
capacity and shifts the industry profit to mining industry greatly. It is difficult for mines and
smelteries to share the profit, resulting in continuous rise of the raw material cost percentage in the
total cost. In 2005, the concentrated lead and zinc total in mines was only 48% of the output of the
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lead and zinc smelted products, but the profit of that was 1.43 times of the smelting industry. From
Jan. to May this year, the concentrated lead and zinc total in mines was only 45% of the output of
the lead and zinc smelted products, but the profit of that was 1.5 times of the smelting industry. If
no recovery of valuable metals, the profit level of the smelting industry will be difficult to be kept.
(III)The industry concentration degree decreases and the enterprise’s competitiveness is low.
In 2001, the output shares of top 10 lead and zinc enterprises were 52% and 64%, which dropped
to 41% and 49% in 2005 respectively. The one-decade-above boom of lead and zinc industry was
only the simple increase of the quantity and output of independent mines and smelteries and had
no real improvement of international competitiveness.
(IV) The lead smelting process and technical equipment are outdated. Underdeveloped zinc
smelting capacity still has a certain percentage. Lead smelting is a metal smelting industry with
outdated technical equipment, poorest production conditions, lowest sulfur recovery rate and
heaviest pollution in the whole nonferrous metal smelting industry. Some enterprises still continue
using the agglomeration boiler and disk or even simple agglomeration disk and simple furnace for
lead smelting, which are forbidden according to the industry policy. Currently, about 30% of lead
smelting capacity applies outdated process. Some of zinc smelteries also apply outdated local
methods or simple Muffle furnaces, manger-shape furnaces, horizontal tanks, small vertical tanks
to bake and then chill down and dedust with simple facilities to smelter zinc or zinc oxide.
(V) Big environment influences, and some enterprises waste resources seriously. SO2 flue
and lead dust produced from the agglomeration process of outdated lead smelting process are not
recovered, resulting in bad production environment and serious pollution to environment due to
the vent of SO2 and dusts. The zinc smelting with boiling-bed roasters also has the problem of the
improper treatment of hot-acid leaching process of roasted zinc dusts containing hydrargyrum,
cadmium, arsenic and other soluble harmful heavy metal ions, causing the contamination to
ground water. Many small-sized lead and zinc smelteries often directly drain out waste water
without treatment, resulting in the pollution to water sources by heavy metal ions, benzene and
hydroxybenzene and other injurants. In addition, there are excessive middle and small-sized lead
and zinc smelteries. Some of them have annual output less than 2000 tons and do not recover other
valuable metals. These enterprises seriously waste resources and belong to those to be washed out
according to the industry policy.
(VI)The blind investment in lead and zinc smelting industry is serious. Overseas reduction of
smelting capacity caused the continuous increase of lead and zinc market price after 2004.
Meanwhile, the explosion of domestic downstream industry’s capacity stimulated the dramatic rise
of the market demand at the stage, changing the situation of about 1/3 lead and zinc products
consumed through export and causing the boom of investment in lead and zinc industries,
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especially in the smelteries. Since the lack of systematic lead and zinc smelting enterprise access
conditions and the missing of effective supervision to the construction of lead and zinc smelting,
new projects breaching industry policies cannot be forbidden and the size of them are small. New
small smelteries often apply outdated process and reduce investment cost to obtain economic
profit through jeopardizing environmental protection.
Investigation shows the accumulated completed investment of lead and zinc smelteries above
statistics threshold increased by 1.4 times and mine concentration investment increased by 1.4
times in 2004. In 2005, the accumulated completed investment of lead and zinc smelteries grew by
70% year on year and mine concentration by 61.9%. Currently, totally 169 lead and zinc projects
with planned gross investment of 12.5bil yuan are under construction. 132 of them are for capacity
expansion with planned total investment of 11.2bil yuan. 74 new projects with total investment of
2bil yuan started in 2006, including 60 projects for capacity expansion with planned investment
nearly 1.7bil yuan while average construction scale dropping down by 8.8%. The total capacity of
62 projects with clarified size is above 3.15mil tons, including 30 lead smelting projects under
construction with capacity about 1.5mil tons, 32 zinc smelting projects with capacity about
1.65mil tons. There are also a lot of projects under plan (about 400 thd tons of capacity for lead
smelting and 1.2 mil tons of capacity for zinc smelting.) If all the projects come into operation, the
capacity of 1.9 mil tons of lead and 2.9 mil tons of zinc will be increased. Although there are 191
mine investment projects, most of them are small mines with low supply of lead and zinc
concentrates.
Some investors, with the price increase stimulus and the optimistic market expectation,
concentrated on smelting projects construction without considering resource and environment
conditions, resulting in continuous and quick expansion of lead and zinc smeltery investment and
a drastic explosion of smelting capacity in a short term. Upon the full completion and operation of
all the operations, the smelting capacity will be seriously above the mine supply. The insufficiency
of mines will then restrict the utilization of smelting capacity. Meanwhile, the environment
problem of small smelteries will be more arresting. Industry structure adjustment should be timely
accelerated. The investment acts in lead and zinc industry shall be standardized.
II. Guidelines and main objectives of lead and zinc industry structure adjustment
(I) Guidelines. Centering around standardizing the investment acts and changing the growth
mode and focusing on structure adjustment, execute macro guidance in accordance with the
principles of structure optimization, technical progress, scientific plan, energy-saving and
consumption reduction, environmental protection and safe production to realize investment
standardization, orderly development, improve enterprise’s equipment level, strengthen
environmental protection, adjust industry structure, improve product structure and promote
sustainable development of lead and zinc industry.
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(II) Main objectives. Keep the basic balance of supply and demand of lead and zinc, develop
orderly according to the plan and restrict the blind growth of lead and zinc smelting capacity. After
washing out laggard production capacity in 2010, the refined lead annual capacity shall be under
4mil tons and the zinc annual capacity under 5 mil tons. Reinforce the development and utilization
of domestic resource, speed up the implementation of “going global” strategy, improve raw
material supply, greatly develop lead and zinc reuse industry for a recycle resource consumption
share of 30% of total consumption.
As for enterprise’s organization, under the precondition of controlling the blind growth of
smelting capacity, support the good and wash out the bad, adjust structure, promote the union and
restructure of key smelting and mine enterprises to enable the output of key smelting enterprises to
reach 70% of the gross output.
In the aspects of technical structure, oxygen-enriched intensive smelting, ISA furnace
smelting, Kaldo furnace smelting and other advanced lead smelting process with high resource
recovery rate, low energy consumption and qualified environmental protection indexes shall be
applied in lead smelting. The integrated energy consumption of lead smelting is 600kg standard
coal/ton and the general recovery rate is 97%. Crude lead smelting has the coke consumption of
350kg/ton, electrolyzed lead with power consumption reduced to 110kwh/ton, total sulfur
utilization rate above 95% and recycle water utilization rate of 95%. For zinc smelting, rectified
zinc has integrated energy consumption of 1900kg standard coal/ton, electrolyzed zinc with
energy consumption of 1700kg standard coal/ton, integrated smelting recovery rate of 98%,
distilled zinc with coal consumption 1250kg/ton, electrolized zinc with power consumption
reduced to 2900kwh/ton, total sulfur utilization rate above 96%, recycle water utilization rate of
95%, qualified emission of SO2 and dusts and valuable metal recovery rate of 95%.
III. Main policies and measures
(I) Strengthen the guidance on industry policy and industry planning and layout
In accordance with the requirement of sustainable development, formulate the industry
development policy for lead and zinc industry and do well in planning and arrangement with the
integrated consideration on resources, environment, energy and other factors. Closely combine the
planned new capacity with the objective for washing out outdated enterprises for structure
adjustment, hurry up in formulating the lead and zinc smelting market access conditions, control
rigidly in the aspects of layout, external production condition, process and equipment, energy
consumption, resource consumption, environmental protection and safe production to promote the
structure optimization.
(II)Enhance the coordination among industry policy and policies on land, credit,
environmental protection and safety and strictly control new launched projects
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Enhance land and credit examination and approval, insist on strictest land management
system, strictly control the credit and loan to lead and zinc smelting industries. Provide supports to
lead and zinc smelting projects qualifying the state industry policy, market access condition and
credit principle. No land supply, no new credit supports in any form and no transaction provision
on environmental protection, safe production, industrial health and relevant procedures to those
blindly-invested lead and zinc projects and enterprises noncompliant with industry policy and
market access conditions with eliminated production process and not registered according to
regulated procedures. Adjust the Catalogue for the Guidance of Foreign Investment Industries to
forbid the access of foreign-fund projects with low technology level, high consumption and
serious pollution. According to the regulations in 2005 Guiding Catalogue of Industrial Structure
Regulation (NDRC Decree No. 40) approved by the State Council, it is forbidden to build new
smelting projects with outdated production capacity and insufficient economy scale. As for new
lead smelting projects, the unit system scale should hit 50,000 t/a (excluding) above and apply
advanced processes like oxygen enrichment intensive smelting, ISA furnace smelting and Kaldo
furnace smelting and two-converter and two-absorber acid-making system with recycle water
utilization rate above 95%. As for new zinc smelting projects, the unit system scale should hit
100.000 t/a and above and apply advanced smelting process with 109m2-above boiled roasters and
two-converter and two-absorber acid-making system with recycle water utilization rate above
95%.
(III)Strengthen industry structure adjustment and wash out outdated capacity
According to the regulations in 2005 Guiding Catalogue of Industrial Structure Regulation
and other industrial policies, local agglomeration disks, simple furnaces, agglomeration pans and
disks for lead smelting shall be immediately eliminated. Regenerated lead through crucible
smelting and zinc smelting or zinc oxide production through outdated simple Muffle furnaces,
manger-shape furnaces, horizontal tanks, small vertical tanks to bake and then chill down and
dedust with simple facilities shall be removed at once. Before the end of 2008, lead smelting with
sintering machines noncompliant with environmental protection requirements after renovation or
without acid-making and tail gas absorption system shall be washed out.
Different electricity prices shall be employed to outdated production facilities and
newly-operated zinc smelting projects breaching the industry policy.
Economic means shall be
used to remove the outdated production facilities.
Develop recycling economy to support the recovery of lead and zinc reused resources and
encourage the recovery industry to pave a sizable and environmental friendly development way.
Improve the technical and environmental level of lead recycle and recovery enterprises. The
capacity of new lead regeneration project should be above 10,000 t/a. Reverberators with direct
coal combustion are forbidden in lead regeneration project. Zinc regeneration industry is at the
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starting period, and the development of the industry shall be standardized.
Support good enterprises to continue reform, restructure and renovation to improve
international competitiveness. Support the union of smelting and mine enterprises. Restrict
unqualified mine enterprises to build smelting projects. Strengthen the support to key enterprises
and improve industry concentration. Standardize market order and avoid orderless competition.
Insist on the combination of technical renovation and washing out the outdated capacity, the
construction of big ones and closing of small ones, and set up an exit system with policy support.
Local governments and relevant departments shall strictly standardize the restructure of lead and
zinc enterprises and apply effective measures to avoid enterprises escaping from bank debts
through restructure.
(IV) Comprehensively utilize and save resources and strengthen the supports to the survey
and overseas resource development of lead, zinc resources
All lead and zinc smelting investment projects should involve valuable metal comprehensive
application and construction. Otherwise, no registration will be made to these projects. Support the
research and development of the key technology for recovering and utilizing valuable metals
associated to lead and zinc. Encourage enterprises to improve the utilization efficiency and the
integrated recovery of valuable metals through technical renovation. Insist on resource
development and saving with saving of foremost importance. Support good smelting enterprises to
cooperate with local survey enterprises, strengthen mine survey to increase backup resources.
Standardize the lead and zinc mine construction, seriously strike lead and zinc mine survey and
exploration without licenses, close mines destroying and polluting environment, actively promote
the integration of lead and zinc resources, reasonably arrange and realize the sizeable and
intensive resource exploration in accordance with the spirit of Circular Concerning the
Comprehensive Rectification and Standardization of the Regulation of Mineral Resource
Development ( Guo Fa [2005] No. 28). According to the Regulations on License to Work Safety
(Decree No．397 of the State Council), lead and zinc mine enterprises should obtain Safe
Production Permit and cannot produce without the permit. Formulate overseas resource
development strategy and plan for a full utilization of domestic and overseas resources. Besides
lead and zinc concentrates, building smelting enterprises overseas is also encouraged to change the
mode of simple import of lots of concentrates.
(V) Intensify environmental protection and harmonious development
Intensify environmental protection enforcement; strictly follow the requirements in Emission
standard of air pollutants for industrial kiln and furnace (GB9078 一 1996), Integrated emission
standard of air pollutants. ( GB l6297—1996), Integrated wastewater discharge standard
(GB8978—1996) and Hazardous waste treatment requirements for supervision; follow
the
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Emission standard of pollutants from nonferrous metal industry—lead and zinc industry upon its
promulgation to avoid SO2 pollution from lead smelting and pollution caused from the hot-acid
leaching process of roasted zinc dusts containing hydrargyrum, cadmium, arsenic and other
soluble harmful heavy metal ions. Strictly forbid the unqualified drainage of waste water from
lead and zinc smelteries containing heavy metal ions, benzene and hydroxybenzene and other
hazardous matter.
(VI) Intensify import/export management
Relevant policies on lead and zinc products import/export taxation shall be studied and
gradually improved. Fully display the function of key enterprises, industry associations and
chambers, strengthen the coordination and daily supervision on lead and zinc concentrate import;
and give full play of intermediate organizations for good industry self-discipline and standardizing
import/export order.
National Development and Reform Commission, Ministry of Finance, Ministry of Land and
Resources, Ministry of Commerce, The People’s Bank of China, General Administration of
Customs, State Administration of Taxation, State Environmental Protection Administration, State
Sept. 13, 2006
7.1.13 Circular on Adjusting the Applicable Tax Rate of Resources Tax
for Lead and Zinc Ores and Other Ores
Cau Shui [2007) No. 100
Finance departments (bureaus) and local taxation bureaus of all provinces, autonomous
regions, municipalities and cities specifically designated in the state plan, finance bureau of
Xinjiang Production and Construction Corp.:
In accordance with the market price and production and operation situation of lead and zinc
ores, cooper ores and tungsten ores, the applicable tax rates for these products are adjusted as
follows from Aug. 1, 2007 upon discussion and decision.
I. Unit tax rate for lead and zinc ores：20yuan/t for Class A mines, 18 yuan/t for Class B
mines, 16yuan for Class C, 13 yuan for Class D and 10yuan for Class E.
II. Unit tax rate for copper ores：7yuan/t for Class A mines, 6.5 yuan/t for Class B mines, 6
yuan for Class C, 5.5
yuan for Class D and 5 yuan for Class E.
255
III. Unit tax rate for tungsten ores： 9 yuan/t for Class C mines, 8 yuan for Class D and 7
yuan for Class E.
Please execute upon the instruction.
Ministry of Finance
State Administration of Taxation
July 5, 2007
256

Chinese Business Guide Mining Volume China

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