October 11 2004 coal production has increased quickly in China

October 11  2004 the speed of nickel demand increase will slow down

May 10, 2004 A large copper producer in China plans to invest copper properties overseas

Hainan Provincial Bureau of Land and Resources will sign the agreement “Mining Land Reclamation and Environment Recovery” with all the mining companies in Hainan province.  Before mining, the mining companies will pay the deposit which is not less than the actual expenditures for future reclamation.  The fund will deposit in the joint account of the government and mining companies in the designated bank.  The reclamation has to be done according to the requirement of mining project environment evaluation.  The reclamation should be completed within 2 to 6 months after closing the mine.  After evaluating and approving by the government for the reclamation, the deposit and interest will be paid back to the miners.

According to the statistics of the State Coal Mines Safety Monitoring Bureau, China produced 1.23035 billion tons of primary coal by the end of August, being 0.19339 billion tons more than the same period of last year.  From January to August, the State owned coal mines produced 0.60386 billion tons, increasing 12.8% than the same period of last year; the local and private coal mines produced 0.62649 billion tons, increasing 24.85% than the same period of last year. 

The speed of nickel demand increase will slow down

Based on the Chinese nickel market expert analysis, after quickly increasing for the past 5 years, the nickel demand of China will increase to 0.152 million tons in 2005 from that of 0.1445 million tons in 2004.  The increasing speed will slow down. For the past 11 years, the speed of demand increasing averages 12.5% each year.  The increasing rate in 2004 will be 7.4% and the rate in 2005 will be 5%. 

The stainless steel production gradually catching up the stainless steel demand will gradually decrease the nickel demand in China.  China’s stainless steel demand and production in 2004 will be 4.6 million and 2.3 million tons respectively.  China’s stainless steel demand and production in 2003 was 4.2 million and 1.94 million tons respectively.  The production rate is higher than the demand rate.  The stainless production in China may surpass the demand in 2006. 

China Ministry of Science and Technology has planed to develop wide varieties of the refined magnesium alloy products since 2001.  The magnesium projects management office was established in the Ministry.   Some projects have achieved the applicable results.  For example, Chongqing Magnesium Science and Technology Company developed LX150 type motorcycle which use magnesium alloy to reduce 6 kg of weight and 70% of CO and NOx discharge.  Qingdao Jingu Magnesium Company was selected as pilot magnesium alloy producer by the Ministry of Science and Technology and has produced a series of magnesium parts which applied in the shells of cellular phone, portable DVD, CD, MP3 etc.  Fareast Magnesium Alloy Company of Capital Steel also produced 20,000 magnesium alloy bicycles in 2003 and got good feedback from the market.  More favored policies and supports from the Chinese government for the magnesium alloy development will be continually provided. 

China is rich in magnesium resources.  The demonstrated magnesite reserves are 3.145 billion tons.  The demonstrated dolomite reserves are about 4 billion tons. Since building a first magnesium smelter in 1957, China has gradually formed a magnesium industrial system, including mining, smelting, and processing, and has become the largest magnesium producer and exporter in the world.  In mid 1990s, as magnesium price was high in the international market, a lot of magnesium smelters were built in that period.  After a severe competition, many smelters got bankrupt and about 120 magnesium smelters survived.  Most magnesium products exported by China are primary materials, mainly magnesium ingot.

China invest on a lead-zinc deposit in Pakistan

On July 31, China and Pakistan formally signed the agreement on the development of the Duddar lead and zinc deposit in the province of Balochistan of Pakistan.   The two countries have entered into an accord worth $70 million for the development of lead and zinc deposits. It will take two and half years to develop a daily 2,000 tons of mining and dressing capacity.  The mines will produce 100, 000 tons of 54% grade zinc concentrates and 32,600 tons of 64% grade lead concentrates annually.  China has obtained the right to mine the deposit for 15 years. 

The Duddar lead and zinc deposit is not far from Karachi. Soon after its discovery by the Geological Survey of Pakistan (GSP) in late 90s, Pasminco of Australia, the PMDC of Pakistan and the BDA of Balochistan signed an exploration agreement to make the use of these deposits. But the project made no significant headway, despite $12 million investment.

Now China has come out with its own strategy and genuine interests on exploitation of lead and zinc deposits sprawling over the central and northern Balochistan.

Non-ferrous metal shortage is getting worse in China

China has increased non-ferrous metal import annually for the past few years.  For example, in 2003, China imported 5.61 million tons of alumina, which increased 23% and 67% than that of 2002 and 2001 respectively. 

China spent 7.8763 billion US dollars for importing non-ferrous metals, increasing 73% than 2002.  The price of copper, aluminum, lead, zinc, tin, and nickel in 2003 was 1783 US$/ton, 1434 US$/ton, 516US$/ton, 829.2 US$/ton, and 4898.8 US$/ton respectively and increased 14.3%、6.22%、14.2%、6.5%、20.57%和42.7% respectively from 2002. 

Domestic produced alumina, copper concentrates, and lead concentrates can only supply 60% 20% and 80% of the domestic demands respectively.  The major copper producers in China have tended to decrease the production capacity if no new deposit discoveries.  China is becoming a key indicator to affect the price fluctuation in the international metal market.

Sourced from Anhui Daily, Angus & Ross, a British mining company signed an agreement with Anhui Provincial Gold Administrative Bureau recently to joint venture on Zhangmushan gold deposit exploration.  The deposit locates in Tongling County with 1.99 square km.  The registration capital for the joint venture is 5 million RMB.  Angus & Ross will pay 2.55 million Chinese Yuan to take 51% of share. 

Accompanied by the vice director of Sichuan Geology and Mineral Resource Bureau, a group of five with Anglo American Plc, the global mining giant, visited Danba county of Sichuan province on July 8.  They visited a non-ferrous metal dressing plant and two local mining companies and their mines.  As reported by China Daily in the early this year, Anglo American will invest US$20 million over the next three to five years to explore platinum mining in Southwest China's Sichuan Province.  The company started co-operation with China in the mid-1980s and has invested US$50 million in the country, mainly in exploration, marketing and manufacturing. The company's total sales to China hit US$800 million last year, driven by platinum, diamond, iron ore and base metal products.

A large copper producer in China plans to invest copper properties overseas.

Tongling Nonferrous Metal Group, A large copper mining and refining company in Hubei province of China, plans to invest 5 billion RMB Yuan for copper exploration and mining overseas.  “We have capital and technology and we will reserve the domestic resources and explore the resources overseas.” said Mr. Li Dongqing, deputy chief engineer of the group.  The group has contacted the copper mining companies in Chile, Australia, Russia, Vietnam, and Mongolia and plans to invest 20 million RMB to those countries this year.

The revenue of the group in 2003 was 8.7 billion RMB Yuan and may reach 12 billion RMB as the price of copper and other byproducts produced by the group has increased sharply.  The revenue of first quarter 2004 has increased 60%, compared with the same period of 2003.

Bairenba silver multi metal property locates at Keshiketeng Qi of Inner Mongolia.  The estimated reserves include 4,598 tons of silver, 500,000 tons of lead, 150,000 tons of zinc, and 1.68 tons of gold.  The property is jointly owned and developed by Inner Mongolia Mining Company, Chifeng Honghuagou Gold Company, Gansu Shengda Group, Inner Mongolia 9^th Exploration Institute.  The mining and dressing capacity of the property is 2,000 tons per day and 600,000 tons per year.  Planed annual output of silver is 98,000 kg and output of lead and zinc is 1,251 tons and 2,012 tons respectively.  

Tiandeng county of Guangxi Autonomous Region attracts investment to Manganese 

As rich in manganese resource, Tiandeng county has attracted 0.22 billion RMB for manganese processing projects. The county produced 82,000 tons of silica manganese alloy and electrolysis manganese in 2003.  The county has recently signed the agreement with Guangxi Dameng Manganese Company and Hunan Jishou Wulingshan Company to invest 0.13 billion RMB to produce annual 30,000 tons of electrolysis manganese. 

As the hot economic growth and short of iron ore supply, the domestic iron ore concentrate price in China increased 300% to 400% at the end of 2003 than that of 2002. The following stable is recently issued statistics from China.Iron ore concentrate price statistics (unit: RMB Yuan per ton) (Grade 64-66%)

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Shandong Zhaoyuan Gold Group, the largest gold producer in China, acquired the gold ore dressing plant in Tuoli county of Xinjiang autonomous region with 10.6 million RMB Yuan.  The Zhaoyuan Gold Group will start gold exploration this year and will build a gold dressing plant with daily 300 ton ore processing capacity.  Planed total investment on gold development in Tuoli County from the company will be 50 million RMB Yuan.

On April 28, a lead-zinc exploration and mining block in Ganluo county, Sichuan province was on auction.  There were 10 domestic companies bided for the block in the auction.  The bid started at 8 million RMB Yuan and sold at 89.5 million RMB Yuan to Sichuan Hongda Group.  This kind of auction has been getting popular since the China State Council issued an “Administrative Method for Exploration and Mining Rights” in 1998. 

Based on the data provided by China Ministry of Land and Resources, 26 provinces in China auctioned total1,794 mining rights in 2002 and sold for 0.654 billion RMB Yuan, which is 5 times more in number and 3 times more in value than that in 2001.  In January to June of 2003, total 2,693 mining rights were auctioned and sold for 0.683 billion RMB Yuan, which surpassed the auction numbers and values of whole year of 2002.

15 provinces in China auctioned 71 mineral exploration rights in 2002 and sold for 48 million RMB Yuan, which is 4 times more in number and 10 times more in value than that of 2001.  In January to September of 2003, total 161 mineral exploration rights were auctioned and sold for 0.146 billion RMB Yuan, which also surpassed the numbers and values of whole year of 2002.

In September, 2002 an auction for mining right of building material quarry in Dongguan, Guangdong province attracted 30 bidders to bid for 145 times and sold at 37.62 million RMB Yuan.

As more and more mining and exploration projects in China have been bidding up by the domestic companies in China.  International companies have faced more severe local Chinese company’s competitions which they have never experience before.

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