Mr. Song Xin: China becomes the leader of the world’s gold market
Source: www.mlr.gov.cn Citation: www.agkyb.com Date: October 27, 2015
Despite the impact on the gold industry exerted by the continued downturn in the global economy had exceeded expectation, the reporter got the latest information from the Mining Development Summit Forum of CHINA MINING 2015 that the performance of China`s gold industry in the economic winter did not show any weaknesses.
Mr. Song Xin, general manager of China National Gold Group Corp and the president of China Gold Association expressed his opinion in his speech on Oct 22nd. He said, in recent years, with the fact that the global economic slowdown, gold prices downturn, resource constraints and increasingly fierce situation of market competition, China`s gold industry has achieved leap development of a whole industrial chain including exploration, mining, smelting, trading, design, processing, consumption and investment.
"In 2014, China`s gold output reached 451.80 tons and became the world`s largest gold producing country for 8 consecutive years. With annual gold consumption of 886.09 tons, China once again became the world`s largest gold consumer. " Song Xin said. At the end of 2014, the country had found gold reserves of 9816.03 tons, ranking second in the world.
At the same time, the integrated technique of complex ploy metallic refractory gold concentrate developed by China independently had reached the top level in the world. In the field of geological exploration, deep mining, gold purification, Jewel crafting we also made new breakthroughs. With the improvement of market function, a variety of trade category, expansion of the trade scale and increase of participants，the international influence of China’s gold industry continued to expand.
Song Xin was proud to say that, instead of a follower, China had grown into a leader in the world`s gold industry. We had already possessed the basis and conditions to move to a higher level. However, he also expressed his own concern on the future development of China`s gold industry. And to the current situation of China`s gold industry and gold companies, he put forward his own views on how to adapt to the new normal, seize new opportunities and promote new development.
Challenges and opportunities
"To figure out the challenges and opportunities in the development of the gold industry is the foundation of better formulating measures to promote scientific development." Song Xin said the current situation of the development of gold industry was still grim.
First, the world economic environment was still relatively complicated. The world economy was still in a deep adjustment period, with low growth, low inflation, low demand and high unemployment, high debt, high foam and other risk intertwined, the main economic trends and policy orientation continued to differentiated. And the uncertainty of economic environment was still significant. With prominent geopolitical factors, the global economic environment was still relatively complex. Under this kind of international circumstances, opportunities and challenges were intertwined.
Second, with downward pressure on China’s economy building and deep-seated problems in development surfacing, the health foundation of our economy was still same as usual. On the other hand, China was still in an important period of strategic opportunity during which great progress could be made in development. Our country’s development had enormous potential and huge resiliency, and we had ample room for growth. In the face of mounting downward economic pressure, we exercised targeted regulation to keep the economy growing steadily. In the past three quarters, the economic growth had met the expectations of the target, the main economic indicators had been picked up and structural adjustment had continually advanced. With the improvement of agricultural situation, the development of energy had increased. At the same time, the economic downward pressure on China’s economy had continued to mount, andsome enterprises faced a lot of difficulties in their business operation, such as the structural contradictions of the shortage of new power in economic growth and the pullback of old power.
Third, the road to gold industry growth was full of difficulties. With the dollar strength, a new normal of gold prices running low would be very common in the next few years. Since the beginning of this year, the price of gold had fallen 4.23% year-on-year; copper products prices had fell 15.31% year-on-year. Some newly built projects faced double squeeze of rising costs and declining benefits. With increasing financial, cost and benefit pressure in the gold industry was huge. Some leading gold companies had to face the difficulties, such as tight cash flow and rising debt rate.
"In the face of difficulty, we should be clearly aware of the opportunity for the development of the gold industry at the same time." Song Xin said, especially for the current economic downward pressure, the state introduced a series of new strategies and policies, so that China`s economic development presented a new trend and features.
Firstly, the development strategy of the “Belt and Road” Initiativehad built an important stage for the development of gold industry. Most countries along the“Belt and Road” Initiative were mostly emerging economies and developing countries, with a total population of about 4.4 billion people and about 21 trillion dollars of the total economy, accounting for about 63% and 29% of the world’s population and economy respectively. With the total gold reserves of 21000 tons, accounting for 41.5% of the world`s total reserves, these countries possessed abundant gold mineral resources and consumer demands. In 2014, the total national gold production of these countries was about 1116 tons, accounting for 35.6% of the world`s total output. There were six of the world`s 20 largest gold mine in this region. In the same year, the jewelry consumption amounted to 2025 tons, accounting for 82.4% of the world’s total number; the physical gold investment demand about 778 tons, accounting for 77% of the world’s total amount.
Our country owned advantages of gold exploration and mining metallurgical technology and talents that make highly complementary with the countries along the “The Belt and Road Initiative”. At the same time, the requirements of infrastructure for the development of gold resources were not high, especially in the initial period of implementation of the "Belt and Road” Initiative strategy. Under the circumstance of no electricity and transport, relying on diesel generator and a simple mining road, we had already achieved infrastructure construction and production to show a leading role. The implementation of the "Belt and Road”Initiative strategy would bring new historical opportunities for China’s gold industry.
Secondly, a series of national policies such as transformation of the mode and the adjustment of the structure had brought a broad space for the development of gold industry. Our country is still in an important period of strategic opportunity, which has a brilliant future. The implementation of effective national policies such as Internet Plus strategy, "Made in China 2025" plan, urbanization and promotion of equipment going global and international production cooperation etc. will release a huge dividends of reform. In particular, the Internet Plus strategy and Intelligent Manufacturing strategy for the gold industry would break the traditional technology and innovative marketing model to promote the industry transformation and upgrading, and create a new space.
Thirdly, the national policy supported for the gold industry continues to increase the national policy support for the gold industry continues to increase, which had created favorable conditions for the rapid development of the gold industry. The State Council continued to implement the policy of streamlining administration and delegating more powers to lower-level governments. The relevant departments and local governments had accelerated the approval rate of gold mining project, simplified the relevant procedures, and provided convenience for the construction and development of gold mines. The implementation of " Measures for the administration of the import and export of gold and gold products " had explicit declared and relaxed the eligibility restrictions of the import and export qualification of gold and gold products. All of these provided a good external environment and favorable conditions for the development of gold enterprises.
Seven measures to overcome the difficulties
"Gold is a special product with double attributes of both commodity function and currency function. Gold is not only material wealth, but also the means to store wealth. It is the material basis of modern credit money and the most faithful assets." Song Xin said that in a special state, the gold even equaled to strategic resources to resolve the crisis and keep the security.
"In the new era, with a more important mission, gold is responsible for enhancing credibility for internationalization of the RMB." Song Xin revealed that China recently released the latest data of national gold reserves for four times. Figures showed that, with an increase of 654.4 tons, China`s gold reserves reached 1708.5 tons at the end of September this year, compared with the total amount of 1054.1 tons released at the end of April 2009.
" All of these strategic layout and major initiatives are our country’s proactive steps to strengthen the credit basis of the RMB internationalization, which can be seen, the state attaches great importance to the gold reserves." Song Xin said that under the new circumstance, we should take effective measures and actively respond to international and domestic changes in the macroeconomic environment. For the purpose of promoting the sustained and healthy development of China`s gold industry, we should take the whole picture into consideration but do the job bit by bit.
Firstly, we had to take the early advantage of gold industry in the strategy of the “Belt and Road” Initiative to strengthen the joint with other countries and accelerate the pace of industry’s “going global”. Under the strategic framework of “the Belt and Road”Initiative, gold industry as the leading industry was given priority for in-depth bilateral cooperation in the field of gold exploration, mining, processing, consumption and investment. All of measures and policies had important significance to promote the healthy development of China`s gold industry, enhanced national gold control and built bulwark for national financial security. In the process of gold industry’s “going global”, gold enterprises, especially large group, should learn from each other and work together , summarize and derive the previous experience of “going global” for further development of China’s gold industry. To increase cooperation with the gold resources rich countries, we should promote the project of joint exploration and development of offshore gold resources to build a new pattern of global allocation, development and utilization of gold resources. Meanwhile, we also had to expand the development space of the gold industry from inside China to outside, the national gold control force from the domestic to the world.
Secondly, we had to continue to increase investment in scientific and technological innovation, and further expand the industrial space, focusing on further strengthening the main role of enterprise technology innovation and key role of large-scale enterprises’ innovation. Through the gold industry technology innovation strategic alliance, we would strengthen development and research on common problems encountered in the gold industry, such as new technology application for resource exploration, deep exploration technology and equipment, technology of ultra deep mining’s cooling, ventilation and rock burst, low grade refractory metallurgical resources utilization, containing cyanide tailings filling, tail slag in the comprehensive recovery of valuable elements, for the transformation of gold enterprises from single business mode to multi metal type and multiplicity operation pattern. At the same time, we also should provide technical support to extended field, including gold deep processing and jewelry processing.
Thirdly, we needed to increase the intensity of high-quality resources reservation, scientific and rational development and utilization of resources. Resources were the lifeblood of the mining enterprises, the basic prerequisite and guarantee for the development of mining enterprises. Under the circumstance of gold prices low consolidation, lower appraisals on gold resources and mining, new opportunities would be brought to transformation and upgrading of gold industry and to low cost expansion of resource and capacity integration. All of this might lead to a new round of integration and waves of mergers and acquisitions of gold industry. At the same time, we should make use of our advantages to make intra-industry development more sustainable.
Fourthly, we focused on strengthening the safety and environmental protection work to improve the performance of social responsibility. To fulfill corporate social responsibility and develop green economy was a strategic issue to gold enterprise`s own future and destiny. In the future development, the gold industry must strictly implement the New Safety and Environmental Protection Act and further improve the safety and environmental protection work to achieve the healthy and sustainable development of gold industry. We must firmly implement the instruction made by President Xi Jinping "development must not be at the expense of human life" and always insist on putting workers’ safety in the first place. We had to take strong steps to ensure the implementation of “Three Basic Principles of Safety and Environmental Protection”, increase the major risk management efforts, improve the management system of special rectification education, training, environmental protection, occupational health, emergency rescue and accountability system etc. and build long-term mechanism of safety production and environmental protection.
Fifthly, we took measures on optimizing “five rates”, cost cut and efficiency promotion and cost control, reducing the "five charges" and enhancing the core competitiveness of enterprises in mines. Faced with the challenge of the current and future period of market, the gold industry should make solid progress in self-construction, strengthen management and increase efficiency. We should take into consideration the promotion of organizational management and core competitiveness, firmly grasp the key node in the production process, dig down the efficiency index, establish and improve the system and technical standard of optimizing “five rates” and reducing the "five charges". We would ensure the implementation of fine management to each step of the mining process to constantly improve the cost control of whole industry chain and cost competitiveness of enterprise life cycle. Work had done to implement the investment philosophy of “Never give up optimizing until the last moment.” According to work thinking of “The most effective way to cut the cost to increase the profit is the saving from design” and “The biggest waste is the waste of design.” We channeled great energy into making adjustment in the structure of industry. Our goal is that “Win at the starting line with the smallest input to maximize the output and efficiency.”
Sixthly, we gave attention to talents reserve building to cultivate capable teams of managers and technicians and provide key support for the development of the industry. Enterprise competitiveness not only depended on the objective conditions, such as capital, resources, but also mainly depended on the human factor. Therefore, the training work and the mine geological prospecting had the same significance to enterprises. Gold industry should follow the principles by improving the quality of workers as the core, take various forms to strengthen the staffs’ professional ethics education, business skills, and servicequality toenhance competitiveness. We should also strengthen the training of international talents, in order to meet the needs of the “going global” strategy.
Seventhly, we took timely action to accelerate the integration of gold jewelry industry and high-tech, the transformation and upgrading of gold industry. We seized the opportunity of smart manufacturing, “Internet Plus” action, actively explored the practice of gold e-commerce to drive the innovation in product, marketing, and service mode. We also needed to associate with the companies, which possessed advanced result of technical research and application to build effective mechanism of unifying research and sharing result. We would deepen industrial reform and strengthen the integration of technology to achieve smart manufacturing of gold jewelry, promote industrial and consumption upgrading and enhance the international competitiveness of China`s gold jewelry industry. (Li Ping)
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