China’s Mining Industry Follows the International Tendency

AUTHOR: admin DATE: 22 Aug 2014 06:57:42

China is learning how to play on the free mining machinery market where price, not policy, largely dictates company activity. Another challenge for China is to undo the preconception that trading partners need to be cautious when doing business in the mining machinery industry.

There are significant inconsistencies in the way the sector is regulated in China's catalogue system. This divides each region's projects into those which are encouraged, prohibited, restricted or permitted. However, firms that obtain permission to build an exploration site to look for one raw material may discover another and find that their license does not apply. The problem is that you are often exploring multiple commodities, so while looking for gold you might well find copper.

Joint ventures are required to disclose the capital that firms are planning on investing in the project. But whether miners find their treasure will greatly affect this and so specifying a figure at the start becomes impossible.

Even when a firm is granted an exploration license it only becomes a priority firm to obtain a mining permit for that site. Not having a guarantee that the company that finds the resource will be the one given permission to extract it, does not give potential investors the reassurance they need.

There will always be some sort of government influence on these top resource companies but the structure of the companies will change; it will be in China's interest to privatize or commercialize some of these resources for their own flexibility. With a number of its mining workforce gaining international expertise, its attempts to internationalize are well on the way.