Vice President of Minmetals Nonferrous Metals: mine output is facing huge challenges Metal consumption prospects are still bright for a long time

SMM5, 30 March: Li Zhicong, deputy general manager of Minmetals Nonferrous Metals Co., Ltd., said in a keynote speech at the 16th Shanghai Derivatives Market Forum that the global metals mining industry is in a stage of gradual recovery. However, there are great challenges in the process of improving output in the future, such as limited supply, rising cost rigidity, increasing difficulty in exploration, increasing difficulty in development, decline in mine grade, conflict of community trade unions, demand of resource countries and so on.

He stressed that all future challenges are essentially increased costs:

Manpower costs: there is a shortage of skilled workers in mines, and the wages of mining workers are much higher than the level of inflation. Labor disputes occur from time to time.

Rigid cost: power cost, seawater desalination and other costs are rigid rise.

Community factors: the interference of communities and trade unions on the stability of mining production is gradually increasing, strikes, road jams and other incidents occur frequently, increasing the cost of mine supply.

Exploration cost: exploration is more difficult. Prior to this, geological explorers have conducted a large-scale survey of the global near-surface exploration areas, and the possibility of not finding large mines near the surface will be lower and lower. At the same time, the depth of newly discovered resources increased significantly.

Development cost: it is more difficult to develop. Some large mines have gradually entered deep mining, and many of them have changed from open pit to underground. The proportion of underground mining in newly built mines has increased. The overall technical difficulty of mine development has increased.

Nationalism: the tendency of resource nationalism. The governments of the resource countries wish to maximize benefits from the exploitation of their mineral resources or to ensure that their resources are exploited by their own mining companies. Many governments have raised taxes on mineral resources development and mining rights.

Environmental factors: the attention of various countries to environmental protection makes mining companies face stricter management, mine development and production costs rise.

The grade of mineral resources has declined obviously. since 1980, the reserve grade and treatment grade of copper ore in the world are in a downward trend, and it is expected that it will still show a downward trend in the future.

Prospect of metal consumption

Regarding the prospect of metal consumption, Mr. Li said that in the long run, it is still bright, and the emerging industries in the future will become a new engine for driving metal consumption:

India and ASEAN industrialisation are most likely to be the engines of consumption growth to succeed China:

Copper increased from 410000 tons to 5.79 million tons, accounting for 15 per cent of the world

Aluminium increased from 1.63 million tons to 8.91 million tons, accounting for 10 per cent of the world

Copper increased from 790000 tons to 3.3 million tons, accounting for 9 per cent of the world

Aluminium rose from 1.23 million tons to 6.5 million tons, accounting for 8 per cent of the world's total.

The implementation of the "Belt and Road Initiative" strategy will greatly promote infrastructure investment in economically underdeveloped countries and regions along the route, thus greatly increasing their demand for metal mineral resources.

The pulling effect on the economy after the improvement of infrastructure in these countries will further increase their demand for metals and form a substitute development conducive to metal consumption. In addition, China has cooperated with the "Belt and Road Initiative" strategy to establish various financial support systems, such as the AIIB and the Silk Road Fund, and has increased its support for the funds of countries along the Belt and Road. This has increased the ability of these relatively poor countries to pay for the manufacture of metals and equipment.

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