China Update
Published by MAC on 2007-10-22
China update
22nd October 2007
China is joining a slowly growing consensus that mining companies are getting away with daylight robbery.
A recent study suggests that the country's nickel demand will boost global production by just under 10% next year.
Another report concludes that no less than a quarter of China's emissions of climate warming gases are actually due to its trade of goods into Europe and the United States. It therefore calls for the country's emissions to be judged the responsibility of highly-industrialised nations, rather than laid at Chinese doors.
The Zinin Tonguuan joint venture (between Tongling Nonferrous Metals and Fujian Zijin) has acknowledged major problems - and heavy risks - associated with its highly controversial Monterrico/Rio Blanco mine in Peru
China to drive rise in global nickel consumption next year - INSG
19th October 2007
China's demand for nickel and nickel-containing products is set to boost global primary nickel consumption by 8.9 percent to 1.47 million tons next year from 1.35 million tons this year, according to a recent International Nickel Study Group (INSG) announcement.
The INSG also predicted that global refined nickel production has risen sharply from 1.36 million tons in 2006, to an estimated 1.47 million tons this year and 1.57 million tons in 2008. Moreover, estimates for global refined nickel production in 2007 and 2008 surpass predicted global consumption.
According to the INSG, global refined nickel consumption will fall to 1.35 million tons this year from 1.4 million tons last year, following a slump in high nickel-content stainless steel production in most parts of the world, and reduced demand for refined nickel and nickel-containing scrap in the second half of this year. European countries contributed significantly to falling global nickel consumption this year, despite growing consumption from China.
However, the recovery of stainless steel production around the world, particularly in China, will cause refined nickel consumption to rise in 2008.
China produced 81,176 tons of refined nickel in the first eight months of this year, up 27.3 percent from the same period last year, according to China's National Bureau of Statistics.
The country produced 107,700 tons of nickel last year, up 13.05 percent year-on-year, with production set to reach 210,000 tons by the end of this year, including 90,000 tons of nickel metal from nickel pig iron production, analysts from Beijing Antaike, a leading consultancy affiliated with the China Nonferrous Metals Industry Association (CNMIA), previously told Interfax.
Antaike also predicted that China's apparent nickel consumption will rise to 315,000 tons this year, up 22.2 percent from last year.
[source: Interfax China Metals, 19 October 2007]
Tongling to raise $400 mln through share issuance to acquire copper resources
Interfax China Metals
19th October 2997
Tongling Nonferrous Metals Co. Ltd. (previously named Tongdu Copper), the Shenzhen-listed subsidiary of Tongling Nonferrous Metals Group (Tongling Group), has announced plans to raise at least RMB 3.02 billion ($402.13 million) through a new share placement, in order to acquire copper resources and develop copper deep processing projects.
Shenzhen-listed Tongling intends to use the funds raised to finance the construction of a 10,000-ton high-precision electric copper foil line and a 40,000-ton electric copper strip line in Anhui Province's city of Tongling, as well as to acquire a 35 percent stake in the joint venture Zijin Tonguan and a 48 percent stake in Xianrenqiao Mining Company, both of which are currently subsidiaries of its parent company Tongling Group.
The joint venture Zijin Tongguan was established in August 2006 between Fujian Zijin Mining, which holds a 45 percent stake, and Tongling Group, with a 35 percent stake.
Zijin Tongguan recently acquired the Rio Blanco copper-molybdenum project in Peru, through it acquisition of Monterrico Metals.
The Rio Blanco project is designed to output copper concentrate containing 200,000 tons of copper metal, as well as molybdenum concentrate containing 3,000 tons of molybdenum metal per annum.
Xianrenqiao Mining owns reserves of 64,300 tons of copper metal, 5,958 tons of zinc metal, as well as 1.74 million tons of iron ore reserves at an average grade of 43 percent.
"Although Tongling expects to increase its copper reserves through this new share placement, the company faces a heavy risk in investing in the Peru copper project, which has run into difficulties over commencing construction. I don't think the company's new projects and copper mine acquisition will significantly boost profits in the next two years," a Shanghai Securities analyst, named Zhu Limin, told Interfax Friday. Zhu predicted that Tongling's earnings-per-share will be roughly the same as last year's, at RMB 0.68 ($0.09).
Tongling's stock resumed trading on Friday after a 5-day suspension since Oct. 12, and surged to a high of RMB 38.82 ($5.17) during Friday’s morning session.
China to further increase mining resource tax - official
Interfax China
19th October 2007
China intends to further increase the mining resource tax in near future to better reflect high profits and promote sustainable development in the mineral resource sector, a senior Ministry of Finance (MOF) official told Interfax on Thursday at the Asia Ferrous Metal Development Dialogue 2007, held in Beijing.
"The Ministry of Finance will further reform and improve the existing resource tax system. The current level of the resource tax is still too low compared to the high profits earned by domestic mining companies. During the next step of reform, we will increase the resource tax," Su Ming, executive director of Fiscal Science Institute under Ministry of Finance, said.
Su further commented that the MOF is looking into reforming the resource tax to more accurately reflect the market price of mineral ores, and will replace the current system that only taxes ore output. High returns on investment in the mineral resource mining sector have led to excessive investment growth and resource waste problems.
China's central government is also considering expanding the paid utilization system to cover the metal mining industry. The policy is currently being trialed for the coal mining industry, Su said.
The paid utilization system requires companies to pay a non-refundable fee for mining rights, regardless of whether mining rights have already been obtained, or are still under application. The system is currently being trialed in eight regions of China, including Shanxi, Inner Mongolia and Heilongjiang.
China increased the mining resource tax on lead, zinc, copper and tungsten mines on Aug. 1 this year, in response to high profits from soaring domestic metals prices. The tax consists of five tax brackets for lead and zinc mines, ranging from RMB 10 ($1.33) per ton of ore to RMB 20 ($2.66) per ton of ore, with copper mines levied at between RMB 5 ($0.67) per ton of ore to RMB 7 ($0.93) per ton.
Quarter of China's Carbon Emissions Due to Exports
PlanetArk UK
22nd October 2007
LONDON - One quarter of China's booming emissions of climate warming gases are from its export trade to Europe and the United States, a report said on Friday, calling for a new way of calculating national carbon emissions.
The report for the widely-respected government-funded Tyndall Centre for Climate Change Research by Tao Wang and Jim Watson said the current method of assessing national emissions was unfair to rapidly developing countries.
"A focus on emissions within national borders may miss the point," the report said. "Whilst the nation state is at the heart of most international negotiations and treaties, global trade means that a country's carbon footprint is international."
It said that not only were industrialised countries responsible for most carbon emissions to date, but they also had significant responsibility for driving the rapid growth in emissions from industrialising countries like China.
"Without this demand, China would not have developed so rapidly and its emissions would not have risen so sharply," the report said, proposing that so-called imported carbon be included in national emission calculations.
BALI MEETING
The issue is likely to feature heavily when environment ministers meet in December on the Indonesian island of Bali to try to kickstart negotiations on a successor to the Kyoto Protocol on curbing carbon emissions which only runs to 2012.
The findings echo those of the New Economics Foundation which earlier this month in its "Chinadependence" report accused the developed nations of "carbon laundering" their economies.
It said Britain among others was understating its carbon emissions because it in effect exported its smokestack industries to China in the 1990s and was now importing products it would have been making itself.
"Because of the way that data on carbon emissions gets collected at the international level, this has the effect of 'carbon laundering' economies like those of Britain and the US," said NEF director Andrew Simms.
China has plentiful supplies of coal but precious little other fuel for electricity generation, and is building on average a coal-fired power station every five days to feed its booming economy.
China is poised to overtake the United States as the world's biggest carbon emitter, and Washington insists that Beijing take urgent steps to curb its rising carbon emissions. The United States has not ratified the Kyoto Protocol on global warming.
The Tyndall report noted that the United States is the top destination for Chinese made goods.
It said net Chinese exports -- that is exports minus imports -- accounted for 1.1 billion tonnes of carbon dioxide or 23 percent of Chinese emissions in 2004.
That was equal to Japan's total CO2 emissions as currently calculated and more than double Britain's, and the figure was surging annually.
Story by Jeremy Lovell
REUTERS NEWS SERVICE