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China to further open its mining industry

Updated: 2013-11-03 23:55
By DU JUAN in Tianjin (

China will further open its mining sector to overseas investors and encourage them to participate in resource exploration and utilization and the development of shale gas, said a senior official on Sunday.

“The Chinese government has attached great importance to the mining industry's contribution to the country's economic growth,” said Jiang Daming, minister for land and resources, at the 2013 China Mining Expo in Tianjin.

He said the establishment of the China (Shanghai) Pilot Free Trade Zone signifies that China has stepped into a new stage of openness.

The government will simplify the approval process and management of mining resources, with the aim of improving the convenience and efficiency of investment in the sector, according to Jiang.

At present, social capital accounts for up to 70 percent of mining exploration investments in China, as investors have grown increasingly diversified.

Many foreign companies have shown an interest in China's mining industry, but they were put off by restrictive policies, said Greg McNab, who heads the mining group for Canada at Baker & Mckenzie LLP, a global law firm.

He told China Daily that many Canadian banks and steel companies want to invest in China's mining sector, providing technologies, expertise and capital, an opportunity from which Chinese companies could benefit.

“However, we need to see the policy really happens,” he said. “I have confidence in these policies being carried out soon, because when the Chinese government says they are going to do something, it can be done really quickly.”

At present, about 50 companies are registered members of the Global Mining Association of China, according to Peter Arkell, chairman of the association.

He said most of these companies are providing services in the industry, while around five or six are involved in mining exploration and development.

China opened its mining sector to foreign investors in 2000, when it announced a policy to allow foreign companies to apply for mining exploration rights in China.

Between 2002 and 2008, there was a boom in foreign companies coming to China for mining exploration. At its peak, more than 200 foreign companies were conducting mining operations in China.

The number has fallen since then, partly because of the global financial crisis.

But industrial insiders believe that another important factor is that foreign companies lack faith in China's mineral exploration business.

“If the Chinese government can be more open and fair in its approval process and be more transparent on the country's geological data, a lot of foreign capital will come back to China,” said one head of a foreign company who declined to be named.

“Introducing more foreign companies to China can help Chinese companies when they go overseas by introducing policies, cultures and legal regulations relevant to doing mining business in foreign countries. This can shorten the adaptive phase for Chinese companies when they go overseas ” said Arkell.

According to McNab, China's openness will lead to a win-win outcome for both the domestic companies and foreign investors, and it is good that China recognizes this.

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