China Policies and Impact on Industrial Minerals

Albert Li

Industrial Minerals

2016 Industrial Minerals Congress

China Policies and Impact on Industrial Minerals

Albert Li +86-21-58770857-34, Industrial Minerals – [email protected] www.indmin.com


ContentA, Figures for industrial minerals market

B, Domestic policiesB‐1 SteelB‐2 Real estateB‐3 InfrastructureB‐4 Environmental protectionB‐5 Industrial mineral industryB‐6 Rare earth industryB‐7 Refractory industry

C, Export related policiesC‐1 One Belt One RoadC‐2 International Capacity Cooperation


• China Economy


2016 production price profit

Steel Crude steel 804 m.tdown 2.33% Index Down 25.54

‐64.5 b CNY ($10 b) (22.6 b CNY in 2014)

Main steel business:>‐$15.44 b.

Bank loans $205 b

Cement 2.348 billion tons,down 4.9% Down 17.4% $5.1 b, down 58%

Glass739 million weight casesDown 8.6%

Down 0.5% $0.19 b, down 12.4%

Nonferrous 50.90 m.tUp 5.8%

$28 b down 13.2%

SOE profit down96.5%

Conversions made April 2016


1,Production 6.51%/10.58%(key companies); 26.15 m tons.2,Turnover 4.87%3,Profit 18.98% (9/57 in deficit) income margin 2.87%4,Export quantity 8.77%5,Value 12.85%6,Average price 4.47%

7,Accounts receivable 9.54% to $2.2 b

Cold Winter Continues for Ref Industry

Conversions made April 2016


Calcium Carbonate

Capacity: 30 million tons (including 20 million tons for GCC)Export: 120,000‐130,000 tons, <1%.Average capacity utilization rate: 78‐80%

Soda Ash

Capacity: 29.07 million tons, down 8.6%Production: 26.13 million tons, up 0.9%Export: 2.2 million tons, up 22.7%Profit: 370 million RMB ($57.04 m)


TiO2

42 producers, capacity utilization rate 83.2%, export 23.2%

Year 1998 1999 2000 2001 2002 2003 2004Capacity 19.4 26 34 39 47 60 72Production 14 18.1 28.9 33 39 48 60Apparent demand

24.7 37.6 40 50 63 75.7

Year 2005 2006 2007 2008 2009 2010 2011Capacity 75 100 130 138 180 243 250Production 70.2 85 100 78.7 104.7 147.2 175.5Apparent demand

77.1 91.3 113.9 96.3 118.8 147.5 158.6

Year 2012 2013 2014 2015Capacity 260 280 306 306Production 189 215.5 243.5 232.3

Apparent demand

166.8 194.6 209.8 198.8 Unit: 10,000 tpa


Steel policies

• Cut capacity (not production): top of 5 priority missions in 2016 economic work.

• Current capacity: 1.2 b tons. 2015 production: 800 m tons.• Target: cut 100‐150 million tons (crude steel) but production still up.• Capacity utilization rate 67%. • Supply side reform.• Kill zombie companies. • Restructuring or bankruptcy liquidation. Target: top 10 production >60%

by 2025. • Government attitude (subsidy?) • Result: production stable, profit low. • Impact on IM: demand stable, payment delay.


Real Estate: China Residential Sales (Data from Jones Lang LaSalle)


• Infrastructure• Transportation infrastructure investment 2016‐2018: $0.71 trillion• 118 key transportation projects approved in 2015 with total investment $

2,440 billion. • Roads: 2016‐2018 6,000 km• Railways: 2016‐2018 20,000 km, fixed asset investment each year $127 b. • Subways: now 39 cities have subway construction or plans, 2016‐2018

2,000 km. Total investment in 2015: $46 b. • Aviation infrastructure 2016: $11.8 b.• Bridges, tunnels, airports, and related, etc.

• Impact on IM: pull up demand


• Environmental Protection• The strictest environmental law: punishment based on days, without

upper limit. • Air Ten & Water Ten• National standard for SO2 emission from steel companies since 2015: 200

mg/m3. (Shandong 100 mg)• Different provinces have different situations• Dust prevention

• Impact on IM: small companies eliminated. Production may reduce.


• Industrial Minerals Industry policies• 13th five year plan by 2020.• Innovation & de‐capacity.• Limit source material export and encourage value added products.


• Rare Earth Industry policies• Consolidation by the six companies.• Fight against illegal rare earth activities.• Subsidy policies.• Production control.• Perfect rare earth industrial management policies.• Promote intelligent manufacturing and clean production.

• Result and impact: prevent the situation getting worse.


• Refractory policies• Central: Opinions, Regulated Conditions, Methods, 13th five year

plan by 2020 (production from 28‐29 m to 20 m tons including 2 m tpa for export)

• Local: Changxing: 291‐129 companies. Yangquan: making plan. Xinmi: 345‐280 coal generators, 171(total 390) natural gas. Zibo: innovation alliance.

• Liaoning magnesia has a stagnant development.

• Result and impact: production reduced, profit remains low.


• One Belt One Road


• Railway Diplomacy• Railway in Africa: 5,756 km.• Railway from Addis Ababa in Ethiopia to Djibouti Port in Djibouti, 770 km, near completion. • Railway in Benguela, Angola, finished. • Railway Abuja‐Kaduna in Nigeria finished and signed coastal railway project of 1,400 km and 12 billion USD.• Railway Ankara‐Istanbul phase two completed in Turkey.• Kashgar(China)‐Gwadar Port(Pakistan), 2,000km covering railway, highway, oil& gas and cable transmission,

has initiated. 46 billion USD.• Yuxi(China)‐Mohan(Laos) in China‐Singapore railway part has begun, 418 km, 40 b CNY. Dali(China)‐

Ruili(Myanmar border) part approved, 325 km. • China‐Thailand railway cooperation: four lines, 867 km, 9.7 b USD.• China‐Indonesia railway cooperation: 150km, 5.5 b USD. • Mexico railway: cancelled. • Already planned: China‐Moscow‐Kiev‐Warszawa‐Berlin‐Paris‐London;

China‐Kazakhstan‐Uzbekistan‐Turkmenistan‐Iran‐Turkey; China‐Vietnam‐Cambodia‐Thailand‐Malaysia‐Singapore.

• Future planned: China‐Siberia‐Bering Strait‐Alaska‐Canada‐USA.

Railway and port related infrastructure: oil & gas pipe, bridges, power & cable transmission system.

• 2014, Asian Infrastructure Investment Bank established, open officially on January 16, 2016. 100 billion USD, 57 countries. First project: Malaysia‐Singapore railway, Russia (3rd biggest shareholder), or India (2ndbiggest).

• 2014, Silk Road Fund established, 40 billion USD investment by China. 1st project started on January 10, 2016 in Pakistan.


• China International Capacity Cooperation in 12 Industries.• Africa: 4,335 km roads, 5,756 km railway, 9 ports, 12 airports. • May 2014, Kenya: 2,700 km railway in East African Railway Network, 25 billion USD. • March 2015, Asia, 33 agreements with Kazakhstan worth 23.6 billion USD; agreement

with Indonesia. • May 2015, Russia. Railway Moscow‐Kazan from 11.5 to 3.5 hours, a part of railway from

Moscow to Beijing with 7,000 km, 15 b CNY and only two days ride.• May 2015, Latin America, 70 agreements, with Brazil, Chile, Columbia and Peru.

Railway from Pacific to Atlantic Ocean covering Chile‐Argentina‐Paraguay‐Brazil with 3,000 km. Railway in Honduras.

• June 2015, Europe, 70 agreements of 70 billion USD, with France and Belgium.• Sep 2015, America, joined in Las Vegas‐LA high speed rail project, 370 km, 12.7 b USD.• 2014, China‐Kyrgyzstan‐Uzbekistan road renovation project signed, and railway planned.• Gwadar Port in Pakistan• China‐Belarus industrial park, China‐Indonesia industrial park, China‐Kazakhstan Horgos

International Cooperation Center


Thank you

China Policies and Impact on Industrial Minerals

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