China Mining Report

Published 18 May 2015

  • 115 pages
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$1,295.00
China Mining Report

BMI View: Chinese mining consolidation will continue over the coming quarters due to weak global minerals prices and government supporting consolidation.

We expect China's mining sector to become increasingly consolidated in the coming quarters for the following reasons.

  • First, weak mineral prices will price-out high-cost producers. We believe weak mineral prices will continue to pressure Chinese high-cost producing miners over the coming quarters. While state-owned firms are generally more insulated from the weakness in commodity prices, the economic slowdown in China will diminish the financial resources of these firms, forcing them to cut-back capital expenditures over the coming quarters.

  • Second, government-supported industry consolidation. Beijing's pledge to instil more supply discipline in heavy industry will reduce the number of miners operating within the country. For instance, China's target is to eliminate 97.2mnt of coal over the next five years through the closure of 2,791 small coal mines. Similarly, Chinese policy makers are attempting to tame excess production in the steel sector through a series of forced closures and consolidation.

  • Third, stricter governmental environmental regulations. The government's attempt to curb pollution will put pressure on small-scale low grade ore miners operating within China.

China Slowdown To Drag On Mineral Prices
Select Commodity Prices (% chg y-o-y)

While cooling Chinese economic growth will adversely impact mining operations, we expect the impact to vary across different mineral segments. Lead and tin mining production growth will decline less strongly than iron ore and copper, due to continued, albeit moderate demand growth for these metals. We expect iron ore and copper production growth will decline significantly due to their heavy usage in the construction industry.

Overseas Mining To Continue, Despite Economic Slowdown

Depleting reserves, falling ore grades and the relatively short life span...

Table of Contents

BMI Industry View
7
Overseas Mining To Continue, Despite Economic Slowdown
8
SWOT
10
SWOT
10
Industry Forecast
12
Bauxite: Growth To Cool, Dependency To Rise
12
Bauxite Growth To Slow
12
Imports: Growth In Short Term And Long Term
13
Risks To Production Outlook
15
Table: Bauxite Production Forecast (China 2011-2019)
15
China - Coal: Regulations To Result In Contraction
15
Environmental Regulation To Squeeze Miners
16
Government To Push Consolidation
18
Weak Margins To Subdue Growth
20
Table: China - Select Coal Mining Projects
20
Energy Production To Remain Coal Dominated
20
Table: Coal Production Forecasts (China 2012-2019)
22
Copper: Domestic Shortfall To Sustain Overseas Push
22
Table: China - Select Copper Projects
24
Table: Copper Production Forecast (China 2011-2019)
25
Gold: Five Precious Themes
25
Table: China - Overseas Gold Mining Deals
31
Table: Gold Production Forecast (China 2011-2019)
32
Iron Ore: Further Consolidation Ahead
32
Price Weakness To Hurt Miners
33
Small-Scale Miners To Come Under The Most Pressure
34
Strict Regulations To Increase Import Preference
35
Table: Iron Ore Production Forecast (China 2011-2019)
37
Nickel: Modest Domestic Growth, But Imports To See Further Upside
38
Further Consolidation
39
Table: China - Select Nickel Projects
40
Risks To Outlook
40
Table: Nickel Production Forecast (China 2011-2019)
41
Tin: Yunnan Tin To Drive Growth
41
Risks To Outlook
43
Table: Tin Production Forecast (China 2011-2019)
44
Lead: Growth To Stagnate
44
Table: China - Select Lead Mining Projects
45
Risks To Outlook
46
Table: Lead Production Forecast (China 2011-2019)
46
Zinc: Mining Under Pressure
46
Table: Zinc Production Forecast (China 2011-2019)
49
Industry Risk Reward Ratings
50
China Risk Reward Index
50
Rewards
50
Industry Rewards
50
Country Rewards
50
Risks
51
Industry Risks
51
Country Risks
51
Table: Mining Industry Forecasts (China 2011-2019)
52
Asia Risk/Reward Index
53
Table: Asia - Mining Risk/Reward Index
57
Regulatory Development
58
Trade And Investment Risk Analysis
59
Commodities Forecast
63
Commodity Strategy
63
Ferrous Metals
63
Iron Ore: Price To Remain Under Pressure In 2015-2016
63
Steel: Subdued Prices Until 2017
65
Non-Ferrous Metals
68
Copper: Subdued Outlook, Despite Recent Rally
68
Lead: Prices Weakness To Continue
70
Nickel: Subdued Prices Due To Weak Demand Growth
71
Tin: Supply Deficits To Underpin Rally In Tin Prices
72
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead
73
Table: Select Commodities - Performance & BMI Forecasts
75
Competitive Landscape
76
Majors Firms
76
Table: China - Key Financial Data For Select Listed Mining Companies
77
Company Profile
79
Aluminum Corporation of China (Chalco)
79
Company Overview
81
Latest Financial Results
82
Table: Supply Chain Analysis
83
Table: Chalco - Key Financial Data
84
Jiangxi Copper
85
Table: Supply Chain Analysis
87
Table: Jiangxi Copper - Key Financial Dat
88
Shandong Gold
89
Table: Supply Chain Analysis
91
Table: Shandong Gold - Key Financial Data
91
China Shenhua Energy
92
Table: Shenhua Energy - Supply Chain Analysis
94
Table: Shenhua Energy - Key Financial Data
95
Regional Overview
96
Continued Domination Of Iron Ore Production
96
Indian Coal Consumption To Outperform
97
Table: Less Reliance On Coal
99
Indonesian Ban To Continue
99
Global Industry Overview
101
Global Overview
101
2
104
3
105
4
107
5
109
Methodology
111
Industry Forecast Methodology
111
Sources
112
Risk/Reward Index Methodology
113
Table: Weighting Of Indicators
114

The China Mining Report has been researched at source and features Business Monitor International (BMI)'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.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc