Direct access with our industry experts
| |
|
 This industry-country profile has been compiled by Tony Zhang, Trade Commissioner, Austrade Beijing.
If you have a specific question regarding the information provided, please fill out the following enquiry form.
Registered users only | Not registered yet? Join now!
|
(Last updated: 03 Mar 2008)
Trends and opportunities
The market
China is the world’s largest producer of coal, steel, cement, aluminium, lead, zinc, tin, magnesium, tungsten, antimony mercury, rare earth, and fluorspar. The mining industry as a whole has about 80,000 state-owned mining companies and approximately 200,000 collectively-owned mines.
China has 158 recognised minerals with proven reserves, among which, there are 10 identified energy minerals, 54 metal minerals, 91 non-metal minerals, and three water and gas minerals. Reserves of major minerals such as iron, manganese, aluminium, copper, lead, zinc, sulphur and phosphorus are limited, mainly low-grade and less competitive in the international market place. However, rare earth minerals that are competitive and of high quality include tungsten, tin, molybdenum, niobium, magnesite, fluorite, barite, bentonite, graphite, talcum, Glauber's salt, and gypsum.
China's proven mineral resources make up about 12 per cent of the world's total in volume, and ranks number three in the world, just behind the USA and Russia. The main characteristics of China's mineral resources are as follows:
- Rich in total volume, but deficient in per capita volume
- Pivotal minerals (eg. oil, natural gas, high-grade iron ores) are lacking in reserves, low-grade, hard exploited and hard-beneficiated
- Some narrow-use, rare earth minerals are of high grade
- Mostly medium-small sized mineral deposits
- Resource distribution does not match the distribution of refineries and production
Mineral asset distribution:
- Oil – north-eastern, northern and north-western regions
- Coal – north-western and northern regions
- Iron – north-eastern, northern and south-western regions
- Copper – medium-lower reaches of the Yangtze River
- Phosphorus – south-western and south-middle areas
- Manganese, tin and antimony – Hunan, Jiangxi, Yunnan and Guizhou provinces (municipalities)
- Some unexploited large or super-large mineral deposits are located in China's western remote regions
The government will complete its reform of the mining industry by the end of 2008 to ensure only one company is allowed to exploit one mine, aiming to create more efficient, more productive, more environment-friendly and safer industry. Smaller mines will be merged, acquired by the big mining companies or closed if they still remain inefficient and unsafe.
China is engaging in direct investment overseas in the resources industry. The Chinese government encourages domestic enterprises to invest offshore and make the best use of foreign resources. This offers opportunities to Australian mining services and consulting companies to help ambitious Chinese companies to become successful investors abroad in way of operating in accordance with international standard and best practices.
China is also opening its mining industry to overseas investment. With the improvement of mining investment environment, foreign investment in the mining industry covers multiple areas including prospecting, and mineral exploitation.
As in many sectors in China, locally manufactured equipment is increasing and prices are generally lower than foreign equipment. Market reforms are also driving Chinese mining and processing companies to seek productivity-enhancing capital investments, resulting in a fresh look at foreign capabilities and leading-edge technologies. Demand for such equipment is expected to remain strong.
The Chinese Government has completed a reform of its management structure in the mining industry, and almost all of the state-owned mining enterprises have now been passed onto the relevant provincial government. The State Administration of Work Safety (SAWS) was established to supervise production safety in the fields of coal mining, metallurgical mining, gold mining, nonferrous metals minerals mining, chemical and building materials mining industry. Ongoing improvements in minerals related infrastructure such as upgrades of ports and the building of new railways and roads should also have a positive effect on the mining sector.
Western China, which is rich in mineral resources, attracts investment from both domestic and overseas on new mining projects, and offers potential for mining equipment. In the long-term, the Government plans to invest US$1.2 billion on upgrading technology in 70 coal mines and convert state-owned mining enterprises into shareholding companies.
Opportunities
Given the ongoing efforts of the Chinese industry to increase productivity and reduce environmental impact, there are opportunities for the supply of more efficient and modern mining equipment and processing technology as well as related environmental technology and expertise.
The increased decision-making power of trading enterprises over commercial matters should also lead to growing demand for imported minerals.
Prospects for Australian suppliers are emerging as a result of:
- New exploration projects, particularly in the western development region.
- Further exploration in the existing mines requiring deep penetration and high resolution exploration technology and deep mining technology.
- Restructuring of the industry gives new powers to trading companies and makes importing less restrictive.
- China’s accession to the World Trade Organization (WTO).
- Stricter requirements for mine health and safety, especially in the coal mining industry.
- Increasing need to incorporate environment protection, such as clean coal technology and tailings treatment.
Gold
The gold market in China opened gradually after China’s accession to WTO. Industry experts predict the Chinese gold industry will play an important role in the world’s trade by 2010. Gold imports will be increased from the present 350 tonnes per annum to around 500 tonnes or more per annum, with the majority of the gold imported destined for the jewellery trade.
Iron and steel
China is now the world’s largest iron ore consumer and producer in terms of tonnage. It ranks only third, behind Australia and Brazil, in terms of iron ore content. China is expected to remain the world’s largest iron ore importer, a position it assumed in 2003.
In order to be competitive in the world’s steel market, Chinese plants need technical renovation requiring investment:
- Blast furnaces under 100 cubic metres will be closed down
- 100–300 cubic metre furnaces will be renovated
- Steel making rotary furnaces under 15 tonnes capacity will be closed
- Electric furnaces under 10 tonnes capacity will be closed
- 10-15 tonnes capacity of rotary furnaces and 10-30 tonnes capacity of electric furnaces will be renovated over the next five years or so
- Many rolling mills will be upgraded and renovated to a high standard
Coal
China is the largest coal producer and consumer in the world. About 70 per cent of the country’s electricity is generated from coal. The demand for coal is being driven higher due to China’s growing demand for energy. The central government is consolidating the coal industry by establishing 8 to 10 flagship enterprises with production capacity over 50 million tonnes each.
During the 11th Five-Year Plan (2006-2010), China will build 10 modernised open cut coal mines and 10 underground coal mines with production capacity of over 10 million tonnes each. Mechanisation in big mines, medium-sized mines and small mines will reach 95, 80 and 40 per cent, respectively. Extraction of coal bed methane will reach 10 billion cubic metres.
Nonferrous metals
During the 10th Five-Year Plan period, China’s production of 10 common nonferrous metals increased 2.08 times with annual growth rate of 15.8 per cent. China’s production of the 10 common nonferrous metals now ranks the first in the world.
Growth on the basis of optimized economic structure and efficient returns was given priority by the China National People's Congress (NPC). Upgrading technology, rational utilisation of resources and becoming more environmentally friendly have become medium to long-term goals (2006-2020) of China’s nonferrous metals industry.
The priority will be given to the following fields:
- Technologies to increase mining/beneficiation recovery rate and synergy utilisation rate.
- Deep penetration and high resolution exploration technology and deep mining technology.
- Energy saving equipment and technology.
- Environmental protection technology and equipment, especially waste water and SO2 recycling equipment and technology.
- Mine site rehabilitation.
- Tailings and other solid disposals recycling.
|