The Mineral Industry of China in 2018
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2017–2018 Minerals Yearbook CHINA [ADVANCE RELEASE] U.S. Department of the Interior September 2020 U.S. Geological Survey The Mineral Industry of China By Sean Xun Note: In this chapter, information for 2017 is followed by information for 2018. In 2017, China had the second largest economy in the world, employed in the mining and manufacturing sectors was following the United States. Economic growth in the past two 4.55 million and 46.36 million, respectively, which accounted decades, largely driven by investment and exports, resulted in for 2.6% and 26.3%, respectively, of the country’s total large increases in China’s production of and demand for mineral nonagricultural employment. In 2017, the total investment commodities. In recent years, owing to the country’s economic in fixed assets (excluding that by rural households; see slowdown since late 2012, the mineral industry in China has reference at the end of the paragraph for a detailed definition) faced some challenges, such as underutilization of production was $9.12 trillion, of which 30.2% was invested in the capacity, slow demand growth, and low profitability. In 2017, manufacturing sector and 1.4% was invested in the mining production of more than one-half of the mineral commodities sector (National Bureau of Statistics of China, 2018, sec. 3–1, listed in table 1 showed modest growth or remained at a 3–3, 3–6, 4–5, 10–6; 2019, sec. 3–6). level similar to that of 2016, which was consistent with the In 2017, the foreign direct investment (FDI, which refers modest and steady growth of the country’s overall economy. to the investments in China by companies based in other The economic performance of the metal sector generally was countries) was $131 billion compared with $126 billion in stronger in 2017 owing mainly to the recovery of metal prices 2016. In 2017, about 1% of the FDI was directed to the mining on the global market during the year. sector and 26% was directed to the manufacturing sector. In In 2017, China invested about $11.1 billion1 in minerals 2017, overseas direct investment (ODI, which refers to the exploration and $131.0 billion in mining activities (development investment in other countries by companies based in China) was and production of fuel and nonfuel minerals), representing $158 billion compared with $196 billion in 2016, representing a year-on-year increase of 1.0% and a decrease of 10.0%, the first decrease since 2003. The value of ODI exceeded FDI respectively. In 2017, China’s output of coal ranked first in for the third consecutive year. In 2017, ODI exceeded FDI by the world, production of natural gas ranked sixth, and crude $27 billion compared with $70 billion in 2016. As of yearend petroleum ranked seventh. China was the leading producer and 2017, the total accumulated value of China’s ODI amounted consumer of energy in the world. In addition, the country’s to $1.81 trillion, and mining and manufacturing accounted for production and consumption of gold, most nonferrous metals, 8.7% and 7.8% of the stock, respectively (National Bureau of and raw steel ranked first in the world; China also accounted Statistics of China, 2018, sec. 11–14, 11–16, 11–20). for a significant share of world production of some other China’s three leading overseas acquisitions in the mining commodities,, such as rare earths (80% of world production), sector were, in terms of transaction value (1) Yanzhou Coal pig iron (61%), aluminum (54%), raw steel (51%), and lead Mining Co. Ltd.’s $2.69 billion acquisition of Rio Tinto Group’s (47%). Details of China’s share of total world production for a Coal & Allied Industries Ltd., which held a 67.6% interest in number of nonfuel mineral commodities in 2017 can be found the Hunter Valley thermal coal operations and interests in some in the U.S. Geological Survey’s Mineral Commodity Summaries other coal assets in Australia; (2) China Molybdenum Co. Ltd.’s 2019 (table 1; BP p.l.c., 2018, p. 16, 28, 38; Ministry of Natural $1.14 billion acquisition, through an agreement with its partner Resources, 2018b, p. 8–13, 15; Bray, 2019; Klochko, 2019 BHR Newwood Investment Management Ltd. of China, of an Tuck, 2019; U.S. Geological Survey, 2019). additional 24% interest in the Tenke Fungurume copper-cobalt mine in Congo (Kinshasa), which increased the company’s total Minerals in the National Economy interest in the mine to 80%; and (3) Shandong Gold Mining Co. Ltd.’s $960 million acquisition of a 50% interest in the China’s real gross domestic product (GDP) rate of growth Veladero Mine in Argentina from Barrick Gold Corp. of Canada was 6.9% in 2017 compared with 6.7% in 2016. The nominal (Austmine Ltd., 2017; Sohu.com, 2017; Sykora, 2017; China GDP was about $11.8 trillion in 2017. In 2017, mining and Molybdenum Co. Ltd., 2018, p. 18). manufacturing contributed 2.6% and 29.3% to the GDP, respectively, compared with 2.5% and 29.0%, respectively, Government Policies and Programs in 2016. The portion of the GDP generated by the mining sector increased by 15.1% in 2017 compared with a decrease On December 25, 2016, the Environmental Protection of 4.4% in 2016, and the portion of the GDP generated by Tax Law of the People’s Republic of China was released as the manufacturing sector increased by 12.2% compared with Presidential Decree No. 61 to take effect on January 1, 2018. On an increase of 5.9% in 2016. In 2017, the number of people December 25, 2017, the State Council released the Regulations on the Implementation of the Environmental Protection Tax Law of the People’s Republic of China, which also would take effect 1Where necessary, values have been converted from Chinese yuan renminbi (CNY) to U.S. dollars at an annual average exchange rate of CNY7.030=$1.00 on January 1, 2018. This was the first special tax law in China for 2017 and CNY6.620=$1.00 for 2018. to symbolize the “green tax system” and promote social and CHINA—2017–2018 [ADVANCE RELEASE] 9.1 environmental reform and development. According to the law, Structure of the Mineral Industry producers of fly ash, smelting slag, slag, and other solid wastes would be charged CNY 25 ($3.56) per metric ton; tailings, In China, the majority of the mining and mineral-processing CNY 15 ($2.13) per metric ton; and coal gangue, CNY 5 ($0.71) activities were conducted by state-owned or state-holding per metric ton. Other mineral-related materials subject to the enterprises. The share of state ownership was high in the Environmental Protection Tax included atmospheric pollutants, energy sectors and relatively low in the downstream metal hazardous waste, industrial noise, and water pollutants. Fees manufacturing sectors, and the state-owned companies were on waste material discharge would cease in China starting on mostly large in terms of production quantity and market share, January 1, 2018, when the Environmental Protection Tax takes whereas private enterprises were small. Foreign ownership effect (Ministry of Natural Resources, 2018b, p. 30–31). in China’s mineral industry was insignificant. In recent years, On June 7, the Ministry of Natural Resources began a pilot reorganization of enterprises was one of the major measures program that transferred the regulatory power to approve the Government adopted to increase the efficiency and exploration for and extraction of mineral resources from the competitiveness of state-owned enterprises and gain better Ministry of Natural Resources to six Provincial land and control of existing and new production capacities. In 2017, a resource authorities (Fujian, Guizhou, Hubei, Jiangxi, Shanxi major reorganization in the mining sector was the merger of and Xinjiang). This reform was part of the Government’s state-owned China Guodian Corp. and Shenhua Group Corp. Ltd. efforts to decentralize and standardize the management of to form a new company—National Energy Investment Group mineral rights registration. The reform would be implemented Co. Ltd. (National Energy Group), which was the leading coal nationwide in 2019 based on the experience and lessons learned mining company in the world (table 2; Xinhuanet.com, 2017b; from the results in these six Provinces (Ministry of Natural National Bureau of Statistics of China, 2018, sec. 13–4, 13–6). Resources, 2018b, p. 28–29). Mineral Trade Production In 2017, the total value of exported goods was $2.26 trillion The output of iron ore (gross weight of crude ore) was compared with $2.10 trillion in 2016. The value of mineral 1.23 billion metric tons (Gt) in 2017, which was a decrease product exports accounted for 1.7% of total exports compared of 3.9% compared with that of 2016; raw steel, 871 million with 1.4% in 2016; exports of base metals and the articles metric tons (Mt) (an increase of 7.8%); and rolled steel, 1.05 Gt made of them accounted for 7.3% of the total compared with (a decrease of 7.6%). The output of refined copper (primary 7.4% in 2016. In 2017, the total value of imported goods was and secondary) was 8.92 Mt in 2017, which was an increase $1.84 trillion compared with $1.59 trillion in 2016. The value of 5.6% compared with that of 2016, and primary aluminum, of mineral product imports accounted for 20.7% of the total 32.3 Mt (a decrease of 1.3%). In 2017, the output of mined compared with 17.3% in 2016; imports of base metals and the gold was about 426 metric tons (t), which was a decrease of articles made of them accounted for about 5.18% of the total 6.0% compared with that of 2016.