In the fight of Beijing
against environmental pollution, the mining industry is not spared. New
regulations are restricting mining licenses, cutting down smaller enterprises,
and increasing taxes. The efforts are leading to higher production costs and
less supply of Chinese minerals in the world market, opening opportunities of
exporters to meet China’s growing demand for minerals and ores.
has increased her measurements to limit environmental pollution since 2016
significantly and the country shows no sign to slow down the efforts. Many
heavy polluting industries like Chemicals, Pharmaceuticals, and Biotechnology
have witnessed periodically inspections followed by shutdowns of small and
middle-sized companies as well as production limitations for the bigger
Beijing is increasing the pressure on the mining industry. According to
Reuters, the middle kingdom has announced to cancel about a third of its iron
ore mining licenses, which are blamed for polluting the air and decreasing air
talk in numbers, the cancellation of mining rights is going to affect more than
1,000 companies. Among them mostly small miner who don’t have the means to
fight against environmental pollution of their business.
raw iron mine in China is mostly low grade, consisting of less than
30% iron content in general. In comparison, international players have normally
iron ore products with over 60%.
iron mining, China is putting pressure on plenty more mining industries. For
example, according to market intelligence form CCM, the Ministry of Land and
Resources has recently approved the new mineral resources plan of Hainan
Province, one of China’s most important mining region.
new plan regulates the total exploitation of minerals such as ilmenite,
molybdenum, zircon, fluorite, and more in order to implement the strong marine
province strategy via constructing oil and gas resources exploitation service
mining sector has been a crucial part of China’s rapid economic expansion in
the last three decades, but poor regulation and weak enforcement of standards
has contaminated much of the country’s soil and left parts of its land and
water supplies unfit for human use, threatening public health.
is worth noticing, that China’s mining industry is lacking the efforts in
investment, which might be the cause of a low production in the future and
hence less competitive advantage in the international market.
New environmental protection
tax law in 2018
fact, from 2018 onwards, China’s new environmental protection tax law is coming
into effect, adding, even more, pressure on the mining and processing industry.
With the new law, companies will have to pay specific environmental protection
taxes for the first time in the country, replacing the current pollutant
the new law, companies have to pay unit rates counting how much air pollution,
water pollution, coal waste, and hazardous waste have been emitted.
industry experts have voiced their concern, that with the new law a big amount
of China’s mining companies might become uneconomic to run, which can lead to a
significantly lower supply of mined raw materials in the world market.
mining industry in China is going to face higher production costs along with
reduces production in general, which will also affect the global supply chain.
The impact has been to raise prices and to restrict exports of metals into
overseas markets. Prices in Europe are now expected to close in on domestic
China price levels, which have been markedly higher in many areas, particularly
in spot markets.
analysts believe that the mining cost will have a significant increase even if
the miners are approved to mine under the current regulations. In the meantime,
the mineral resources regulations are also affecting downstream industries of
mining. For example, mining restrictions on titanium, barium sulphate, and
calcium carbonate companies will increase the production cost of their
downstream coating companies.
Higher mineral imports
side effect of the new regulations for China’s mining industry is an increasing
amount of imports for China’s enterprises. For example, China’s import volume
of ironstone has reached its historical peak in September 2017. The high import
volume was the result of limited domestic supply due to environmental
inspections in the industry.
regard to the development of China’s mining industry, CCM believes that
environment inspections and mineral resources controls are both affecting the
current status quo. In the titanium industry, one of CCM’s core market research
areas, multiple environment inspections in major provinces have lower the
supply of ilmenite, which drove up the TiO2 price. Moreover, mass import of
ilmenite in 2017 led to further price increase. According to China Customs
data, the total import volume of ilmenite increased from January to September
2017 by 37.20% compared to the corresponding period in 2016.
Switching from land to
fighting the pollution of mining minerals on land, China is simultaneously
exploring new ways of mining, including deep sea mining. This method is used
especially for mining “rare earth” materials, the minerals used in high-tech
devices of which China is the worldwide supplier, dominating the global market
share by more than 90%.
a result of the increasing demand for rare earth in electronic devices as well
as green technology products and electric cars, the land-based supplies of
China are getting less and more difficult to reach.
to sea-based mining for minerals have become much more cost-effective in recent
years, making it a profitable alternative to traditional mining. China has
become one of the major players in deep-sea mining, learning to build the
digging machines as well as the vessels where they are attached to.
at the high pollution of mining at land, especially rare earth
mining, the dive into deep waters might be the next big step to counter
environmental pollution in the country.
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