As the world’s factory, China’s companies produce a huge range of goods, with a resultant voracious appetite for metals and minerals. Although the focus of the country’s economy is moving from manufacturing to services (under the 2016-20 Five-Year Plan), China will remain a major consumer of metals, and a significant force in the global mining sector.
Indeed, the current strategic plan (the country’s 13th) is described as a “decisive battle” for the nonferrous metal industry, and incorporates a ‘Made in China’ initiative. It is intended that strategic industries will be built in national defence, science and technology. To meet these objectives, in October 2016 the Ministry of Industry and Information Technology announced plans for the country’s metals industry to achieve world-ranking status. The plan called for state-owned enterprises and private firms to be deployed in resource-rich countries around the world.
Although China is by far the world’s largest importer of metals and minerals, it has its own very extensive resources. The country contains 153 different minerals, including the world’s largest resources of bauxite, coal, copper, iron ore, lead, manganese, molybdenum, tin and zinc. The country has over 1,000 Bt of coal reserves, in excess of 40 Bt of iron-ore reserves and China’s national reserves of rare-earth metals far exceed the combined total for the rest of the world.
To encourage development of the local mining sector, China established a new ministry, the Ministry of Natural Resources (MNR), in April 2018 to take over the responsibilities of the Ministry of Land and Resources, State Oceanic Administration and the National Administration of Surveying, Mapping and Geoinformation. By the middle of last year, the MNR had released 85,000 items of geological information that had previously been kept secret.
The country’s leading mining companies include China Shenhua Energy Co. (an integrated energy company that operates primarily through its coal division), China Coal Energy Co. (operator of 12 coal mines), Zijin Mining Group (principally involved in gold mining and smelting), China Northern Rare Earth Group High-Tech Co. (formerly known as the Inner Mongolia Baotou Steel Rare Group), Jiangxi Copper Co. (China’s largest copper producer) and Shaanxi Coal Industry Co. (provider of electricity generation).
Although it boasts rich endowments of many minerals, China lacks significant resources of cobalt, platinum-group metals and lithium. Two strategies have been launched to secure control of these important resources for China’s industrial effort; China’s state-owned enterprises (SOEs) will deploy development finance and infrastructure investment, while state-linked private firms will use direct investment.
China’s high tolerance of political and security risk have enabled Chinese SOEs to gain exposure to many natural-resource markets. This has been particularly notable in the Democratic Republic of Congo (DRC), where China has staked out a dominant position in cobalt by developing strong political ties and investing in production assets and related infrastructure.
China has also proven to be agile in market-oriented, democratic countries, where privately-owned companies have been backed by state capital. By incrementally acquiring equity stakes in major local resource companies, and financing junior developers, Chinese firms have strengthened their market presence. A good example of this is China’s involvement in Argentina, Australia and Chile over the past six years, where Chinese companies have come to dominate the global lithium market.
China is also seeking to expand its dominant market position in vanadium and graphite, securing additional supplies and building integrated supply chains.
The region’s largest mining investment forum, Mines and Money Asia, taking place in Hong Kong in March 2020 will take a deep dive into how the Chinese are investing into commodities.
Zijin Mining’s Executive Director and Senior Vice President George Fang, Zhaojin International Mining’s MD and CEO Leo Zhao and Hanking Industrial Group’s CEO and Vice Chairman Guocheng Pan are among the line up of speakers who will discuss how the Chinese are approaching mining deals and which projects and regions are on their radar.
The event is free to attend for investors, where they will benefit from meeting with a variety of mining projects seeking investment at the event, including Sri Lankan project from Ceylon Graphite (TSX-V: CYL), as well as cobalt projects from Cape Lambert Resources (ASX: CFE) and Element 25 (ASX: E25).
Mines and Money Asia is the region’s largest mining investment forum, bringing together investors and miners to Hong Kong from 31 March – 1 April 2020, for two days of networking, learning, and deal-making. Showcasing more than 100 mining projects from around the globe and across the commodity spectrum; there’ll be conversations and new opportunities waiting at every turn. It’s the only place to gain access to more than 400 leading investors, and with networking from breakfast right through to evening drinks, delegates will leave with new connections, deals and business opportunities. https://asia.minesandmoney.com/
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