Problems and potential
China, the world's largest coal producer, accounts
for one-third of the world's total production.
However, it has only exported approximately 30
million tons of coal annually for years, a mere
6 per cent of the world total.
The average coal production a year is around
1 billion tons every year, leaving a total of
over 100 million tons unsold annually.
Four-fifths of domestic coal mines failed to
generate profits last year.
Occupational hazards are reported at over half
a million industrial plants and mines, and more
than 25 million employees are exposed to dust,
noise or toxic chemicals.
Despite the huge extent of the problem, preventive
measures have been slow in coming. Steps
taken so far include the closing of 12,000
small mines and the upgrading of safety equipment
at 81 mostly large state-owned coal mining companies.
Last year, 17 Chinese miners died for each
1 million tons of coal extracted from small
mines and just under two deaths were recorded
for every million tons at large state-owned
mines. By contrast,
the United States, the largest coal producer
after China, had just 0.039 deaths per million
tons. Australia had a total of just five coal
mining deaths last year.
In a bid to alleviate the coal glut on the
domestic market, China is continuing to support
coal exporters by extending its charge-slashing
policy on exports for another two years.
These policies include the reduction of port
charges, and exemption from railway construction
tolls on four major transportation routes, including
the railway from Datong, the major coal production
base in North China's Shanxi Province, to Qinhuangdao,
the major port in Hebei Province.
Growing coal exports
Increasing exports is vital for the coal
mining industry, which has been seriously affected
by overproduction for years.
China is expected to export a record
amount of 85 million tons of coal this year,
about 27 million tons, or 31 percent, more than
last year, according to coal industry officials.
Experts attribute China's rapid increase in
coal exports to increased coal import by the
Republic of Korea and Japan from China and the
policy made by the Chinese government to encourage
coal exports. Improved quality of the exported
coal has also contributed to the increase. After years of redundancy reduction
and closing down thousands of small coal mines,
China's coal mining industry has turned deficit
into profit for the first time in years.
Sources said the China National Coal Import
and Export Corp. whose exports accounted for
two-thirds of the national total, its exports
increased by 55 per cent, 11.1 million tons,
and expects to export 47.4 million tons this
year, compared with 39.2 million tons in 2000.
The Latest Moves
Joint venture of Rio Tinto and Baosteel:
Rio Tinto has forged a deal with China抯 largest
steel maker, Shanghai Baosteel Group Corporation
(Baosteel), to form an unincorporated iron ore
joint venture operation in Western Australia.
The agreement has been reached by Hamersley
Iron (100% owned by Rio Tinto) in Shanghai on
20th December with Baosteel.
Under the agreement, Hamersley will supply Baosteel
with 200 million tonnes of products, averaging
ten million tonnes of ore per year over the
20-year life of the joint venture. Hamersley
will hold a 54 per cent equity share with the
remaining 46 per cent held by Baosteel.
Initial capital outlay by the joint venture
will be A$124 million (US$64 million) to develop
a new mine, 10 kilometres east of the Paraburdoo
mine in the Pilbara region of Western Australia.
揟he joint venture with Baosteel continues Hamersley抯
tradition of working in partnership with major
Chinese customers for the mutual benefit of
both sides. We are delighted to have secured
this agreement in the fastest growing market
for imported iron ore. The joint venture will
consolidate Hamersley抯 position as the leading
supplier of iron ore to China,?lt;SPAN class=c2> according
to Mr Chris Renwick, Chairman of Hamersley Iron.
China will bring in more investment and up-to-date
technology from abroad to mine for and collect
its gold resources, according to a senior Chinese
The country will open more fundraising channels
to help pay for the mining of gold and adopt
a multi-outlet investment system.
In a process of establishing a gold market
in the country, adapting to the global gold
market as well as the influence of the operation,
laws and industrial framework of the global
gold market on the reform of its gold market,
China will shift its emphasis of mining for
gold in the east and central areas to the western
part of the country.
Opportunities in China's Western Region
Efficient utilization of mineral resources
is playing an important role in the development
of China抯 western region.
At the same time, the Chinese government is
encouraging, yet regulating foreign investment
to participate in the process. For foreign investment to benefit
from the opportunities that created by the mining
industry, understanding of the Chinese government
policy in the region is crucial and fundamental
to move forward and monitor the future development.
Mining rights in the west that are created
by State-funded prospecting and the price for
the mining rights can, if they meet the relevant
conditions, be partly or wholly turned into
State capital of the State-owned mining enterprises
or land prospecting units.
Application for tax exemption or a fee waiver
in respect of use of prospecting or mining rights
can be made for prospecting and mining minerals
resources in the western regions.
Foreign invested prospecting, if not for oil
and gas, will have the fee for using the prospecting
and mining right waived for one year and halved
for two years, in addition to all the other
relevant preferential treatment specified by
the State. Foreign capital engaging in mining
resources other than oil and gas as listed in
the 揑nvestment Directory for Foreign-Invested
Enterprises?will be exempted from paying the
mineral resources compensation fee for five
years. The Chinese Government is
also extending the scope for foreign investment. Resources mining is to be included
as areas to attract foreign investment.
Potential projects attracting direct foreign
There are in fact a series of
major projects that have been put forth by the
western region for attracting direct foreign
investments. Examples of projects concerning
or related to the industry with total investment
exceeding US$100 million include the following:
Hong抏n coal mine
gas prospecting in Yunnan;
Coal mining at
Zhongling in Guizhou;
pipe-laying project at Dahong Mountain,
Natural gas project
project at Jinhong, Sichuan