Chapter 6.8: Mining

Li Yong, Deputy Secretary General, China Association of International Trade

An overview

China's mining industry plays an important role in social and economic development, providing 95 per cent of the country's energy needs, 80 per cent of its industrial raw materials and 70 per cent of production materials needed by agriculture.

A total of 171 different kinds of minerals have been discovered and reserves of 157 kinds have been proven in over 200,000 locations. Over 10,000 state-owned enterprises operate in the mining industry. In 2000, the total production of solid minerals reached 4.77 billion tons, crude oil 163 million tons, natural gas 27.7 billion cubic metres and coal 998 million tons. China is now the second largest mining economy in the world. Although China ranks third in total proven reserves of minerals, the per capita possession of minerals is only 58 per cent of the world average, ranking 53rd in the world and there are still shortages of key mineral resources. Although China exports about US$25 billion worth of mineral products per annum, it imports about US$30 billion worth, making the country the third largest importer of minerals in the world.

For a long time, the mining industry has been in a chaotic situation. Duplication of mining projects, uneconomical and poorly managed operations, slip- shod mining decisions, rampantly increasing numbers of small mines, excessive mining, runaway exports, competitive price-cutting and low value-added exports are the high profile problems in the industry. In addition, the distribution of resources does not match the distribution of industries. A large number of the mining sites are operating on medium- to small- sized mineral beds and producing low-grade minerals.