China Mining Report

Providing expert analysis, independent forecasts and competitive intelligence on the mining.

Report includes: BMI Industry View, Industry SWOT Analysis, Industry Forecasts, BMI's Petrochemicals Risk Reward Index, Economic Forecasts, Company Profiles and Global, Regional and Country Industry Overviews.

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China Mining Report
Product Price
$1,295.00

BMI View: China's mining sector will continue to be pressurised by low mineral prices over the com ing years. Government-led consolidation will support production growth by state-owned enterprises as smaller miners shut operations , however, depleting reserves, falling ore grades and the relatively short life span of domestic mines will further drive outward Chinese investment.

China Mining Industry Value
2015e 2016f 2017f 2018f 2019f 2020f
e/f = BMI estimate/forecast. Source: National sources, BMI
Mining Industry Value, USDbn 242.10 205.10 192.20 195.50 199.40 203.90
Mining Industry Value, USDbn, % y-o-y -22.13 -15.27 -6.31 1.71 2.01 2.28

Latest Updates & Structural Trends

  • While cooling Chinese economic growth will adversely impact mining operations, we expect the impact to vary across different mineral segments. Copper and tin will do better due to the better price outlook for these minerals than iron ore and coal.

  • China's structural shortfall in domestic production combined with the government's desire for resource security will continue to spur overseas mining deals. Although China's reliance on imports will increase due to the country's depleting reserves, falling ore grades and the relatively short life span of mines, outbound investment will face more caution, as Chinese projects are increasingly faced with rising costs and project delays. As a result, Chinese firms' 2015 mining merger and acquisition activity (M&A) in Latin America slowed to USD2.1bn, a 72.8% y-o-y decrease from 2014. Chinese mining M&A activity in the Middle East and Africa also fell significantly, by 46.0% y-o-y, to USD135mn in 2015. Chinese metal investment in Sub Saharan Africa also dropped in 2015 to USD1.2bn, significantly lower than USD4.0bn in 2014 and USD8.4bn in 2013.

  • We forecast Chinese iron ore production to decline by 10.0% and 5.0% in 2016 and 2017, respectively. Chinese iron ore output will average an annual contraction of 4.0% during 2016-2020 on the back of low iron ore prices and weak steel consumption growth. In addition, a rising environmental regulatory burdens will reduce demand from steel mills for low-grade iron ore. This will limit domestic output, as Chinese ore grades declined from 66% in 2004 to 17% in 2014.

  • Chinese nickel mine production will face significant challenges from slowing growth in fixed-asset investment, which will drag down demand for steel products, and by extension, refined nickel given its use in stainless steel production. We forecast Chinese nickel ore output to average an annual growth of 2.0% during 2016-2020, compared to 5.2% during 2011-2015, with smelters pledging to reduce output by at least 20% in 2016.

  • We forecast China's lead mine production growth to stagnate, averaging an annual growth rate of 0.3% during 2016-2020. This would represent a significant slow-down compared to average annual growth of 6.0% during 2011-2015. Lead mine production in China will reach 2.3 million tonnes (mnt) in 2020. Despite our significant downbeat forecast on lead production growth, we expect China to remain the largest lead producer for the coming years, accounting for an estimated 53.8% of global lead production in 2016.

  • We forecast Chinese tin production to reach 118.8 thousand tonnes per annum by 2020, increasing at an average rate of 3.5% per annum during 2016-2020. Despite the downshift in the Chinese economy, output growth in the tin sector will remain supported by the usage of refined tin in the electronics industry.

China - Mineral Round Up
2005 2010 2015e 2020f
e/f= BMI estimate/forecast. Source: USGS, BMI calculation
Copper Ore Production (% of global) 5.2 7.5 8.6 8.5
Refined Copper Production (% of global) 15.8 24.5 35.1 35.3
Refined Copper Consumption (% of global) 23.6 39.8 46.4 47.2
Refined Copper Balance (kt) -1143.1 -2944.3 -2,465.3 -3,035.3
Tin Ore Production (% of global) 41.3 46.6 41.6 43.6
Refined Tin Production (% of global) 0.4 43.8 51.4 53.0
Refined Tin Consumption (% of global) 0.4 47.0 53.6 55.4
Refined Tin Balance (kt) -2.8 -17.8 -11.3 -10.4
Bauxite Mine Production (% of global) 12.3 18.7 24.0 20.8
Aluminium Production (% of global) 24.5 38.2 55.1 58.7
Aluminium Consumption (% of global) 22.5 38.6 52.6 55.4
Aluminium Balance (kt) 681.6 389.3 2,044.2 1,809.8
GOLD: Gold mine production, moz, % of global 9.1 13.4 16.3 15.7
Iron Ore Production (% of global) 27.3 41.3 44.2 35.8
Steel Production (% of global) 31.0 44.6 49.6 45.9
Steel Consumption (% of global) 31.8 43.5 44.1 39.9
Steel Balance (kt) -6,160.0 26,683.0 94,826.9 95,965.6
Nickel Ore Production (% of global) na 5.2 5.0 4.6
Refined Nickel Production (% of global) 7.9 20.7 17.5 17.7
Refined Nickel Consumption (% of global) 13.6 29.1 30.1 29.0
Refined Nickel Balance (kt) -75.0 -127.7 -250.6 -247.0
Lead Ore Production (% of global) 32.4 44.5 44.7 42.7
Refined Lead Production (% of global) 31.3 42.6 38.9 37.1
Refined Lead Consumption (% of global) 25.7 43.2 40.3 38.0
Refined Lead Balance (kt) 406.4 -36.9 -107.8 -130.1
Zinc Ore Production (% of global) 25.7 30.3 36.3 35.3
Refined Zinc Production (% of global) 26.7 40.6 44.9 45.4
Refined Zinc Consumption (% of global) 30.5 45.3 48.1 48.0
Refined Zinc Balance (kt) -474.0 -435.0 -386.4 -420.7
BMI Industry View
7
Table: China Mining Industry Value
7
Latest Updates & Structural Trends
7
Table: China - Mineral Round Up
8
SWOT
10
Industry Forecast
12
China - 13th Five-Year Plan Signals Further Mining Consolidation
12
Bauxite: Imports To Remain Strong
17
Latest Developments
17
Table: Bauxite Production Forecast (China 2012-2020)
17
Structural Trends
17
Imports: Growth In Short Term And Long Term
18
Risks To Production Outlook
20
Coal: Government Consolidation To Hamper Growth
20
Latest Developments
20
Table: Coal Production Forecasts
20
Table: China - Select Coal Mining Projects
21
Structural Trends
22
Copper: Slow Growth Ahead
29
Latest Developments
29
Table: Copper Production Forecast (China 2012-2020)
29
Table: China - Select Copper Projects
30
Structural Trends
32
Gold: Overseas Investment To Remain Strong
35
Table: Gold Production Forecast (China 2012-2020)
35
Table: China - Overseas Gold Mining Deals
41
Iron Ore: Output To Decline, Imports To Slow
42
Latest Developments
42
Table: China Iron Ore Production Forecast
42
Table: China Iron Ore Projects
43
Structural Trends
44
Price Weakness To Hurt Miners
44
Small-Scale Miners To Come Under The Most Pressure
45
Strict Regulations To Increase Import Preference
46
Nickel: Weak Ore Production And Imports, Strong Refined Imports
48
Latest Developments
48
Table: Nickel Production Forecast (China 2012-2020)
48
Table: China - Select Nickel Projects
49
Structural Trends
49
Further Consolidation
51
Risks To Outlook
51
Tin: Yunnan Tin To Support Growth
53
Latest Developments
53
Table: Tin Production Forecast (China 2012-2020)
53
Table: China Selected Tin Projects
53
Structural Trends
53
Risks To Outlook
55
Lead: Stagnant Growth Ahead
56
Latest Developments
56
Table: Lead Production Forecast (China 2012-2020)
56
Table: China - Select Lead Mining Projects
56
Structural Trends
57
Risks To Outlook
58
Zinc: Growth To Slow, Imports To Rise
59
Latest Developments
59
Table: Zinc Production Forecast (China 2012-2020)
59
Table: China - Select Zinc Projects
59
Structural Trends
60
Industry Risk Reward Ratings
64
Risk/Reward Index
64
Rewards
64
Industry Rewards
64
Country Rewards
64
Risks
64
Industry Risks
64
Country Risks
65
Asia Risk/Reward Index
65
Key Takeaways
65
Latest Revisions
66
Table: Asia - Mining Risk/Reward Index
67
Regulatory Development
68
Trade And Investment Risk Analysis
68
Commodities Forecast
72
Commodity Strategy
72
Ferrous Metals
72
Iron Ore: Price Weakness To Continue Over Coming Years
72
Steel: Oversupply To Drag Down Prices
74
Non-Ferrous Metals
77
Aluminium: Continued Weakness, But No Sharp Downturn
77
Copper: Recent Relief Rally To Fade
79
Lead: Prices Weakness To Continue
80
Nickel: Subdued Prices Due To Weak Demand Growth
81
Tin: Supply Deficits To Underpin Rally In Tin Prices
82
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead
83
Table: Select Commodities - Performance & BMI Forecasts
85
Competitive Landscape
86
Majors Firms
87
Table: China - Key Financial Data For Select Listed Mining Companies
87
Company Profile
89
Jiangxi Copper
89
Table: Supply Chain Analysis
92
Table: Jiangxi Copper - Key Financial Data
92
Shandong Gold
94
Table: Supply Chain Analysis
96
Table: Shandong Gold - Key Financial Data
96
Global Company Strategy - Aluminum Corporation of China (Chalco) - Q3 2016
98
Table: Select Commodities - Price Forecasts
100
Company Background
100
Table: Chalco - Key Financial Data
105
China Shenhua Energy
106
Table: Shenhua Energy - Supply Chain Analysis
108
Table: China Shenhua Energy - Key Financial Data
109
Regional Overview
110
Asia Overview
110
Slowing Iron Ore Production
110
Indian Coal Consumption To Outperform
111
China & India To Lead In Outbound Investment
112
Indonesian Ban Moderation Ahead
114
Chinese Coal & Steel Sectors To Consolidate Slowly
115
Methodology
117
Industry Forecast Methodology
117
Sources
118
Risk/Reward Index Methodology
119
Table: Weighting Of Indicators
120

The China Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's China Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in China.

Key Benefits

  • Use BMI's independent industry forecasts on China to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in China's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in China.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Industry SWOT analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.

BMI Industry Forecasts

Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

  • Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
  • Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
  • Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI’s Mining Risk Reward Index

BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.