On the morning of October 19th, the senior corporate executives forum hosted by China Minmetals Group was held in Tianjin. The executives from world-class mining companies and financial institutions –Johan Van Jaarsveld, Group Portfolio Strategy and Development Officer,
BHP; Zhang Chengzhong, Vice President, Aluminum Corporation of China; John Kilroe, Exploration Director–Australasia, Growth & Innovation, Rio Tinto; and Ms. Li Tong, Chief Executive Officer and Executive President of BOC International Holding Limited, gave speeches on "China Mining Congress
——Portfolio Strategy and Management", "New drivers for a new mining dream in the new era", “Innovation drives the future of the mining industry” and “Mining Industry in the New Global Economic Landscape” respectively , and shared their views on the current mining situation, industry and business ideas as well as future trend of mining, etc., which brought inspirations for all people.
Picture from the site scene (Photographed by Yang Zheng)
Competitions among international mining companies would become increasingly fierce for the rising medium-term risks of the global economy and new uncertainties in mining industry
“There are different opinions on how to catch on the changing environment of the mining industry and how does the mining industry adapt to changes, but one certainty is that the connotation and extension of the mining industry have undergone major changes.” With the opening remarks of the forum chair Wang Jionghui, Vice General Manager of China Minmetals Corporation and General Manager of Minmetals Exploration & Development Co., Ltd, the senior corporate executives forum began.
So, what was the situation facing the mining industry under the new international economic circumstance? Ms. Li Tong, Chief Executive Officer and Executive President of BOC International put forward her own judgment in the speech “Mining Industry in the New Global Economic Landscape” that she believed that competitions among international mining companies would become increasingly fierce for the rising medium-term risks of the global economy and new uncertainties in mining industry.
She pointed out that mining, as a basic industry, was in the upper reaches of the industrial chain, and possessed supply and demand pattern closely related to the global economic cycle, monetary policy and geopolitics. Although the global economy has continued to recover since 2018, the medium-term risks were rising. The United States has gradually tightened its global monetary policy. She further analyzed that: First, global trade and investment protectionism were rising. Otherwise, the regions and industries involved in trade frictions were expanding, posing a serious challenge to the global economy. The escalation of trade tensions could undermine business and financial market sentiment, undermine investment and trade, disrupt global supply chains, slow the spread of new technologies, and thereby reduce productivity.
Second, emerging markets were in a new round of turmoil. They were all in the middle and lower reaches of the global asset chain and the industrial chain, and owned weak ability to resist external risks. As the global mobility got lower and cross-border capital flowed back to developed markets, emerging markets generally faced currency depreciation and rising capital outflow pressures; some emerging economies with weak fundamentals have already experienced partial crises.
Third, the volatility of the commodity market has risen, and new variables have emerged in the global supply and demand pattern. On the one hand, the volatility and vulnerability of current global financial market have increased significantly. On the other hand, the variables affecting the supply and demand of current global commodities have increased.
According to Li Tong, obstacles for global economic growth were amassing, which might dramatically influence mining development. In the process, competition among international mining companies would become increasingly fierce, and international commodity price fluctuations more frequent. In the face of new environments and challenges, the whole industry should join hands and embark on co-operations more closely and smoothly to adapt to new changes and seek new strategic opportunities.
Mining was by no means an extensive industry, a sunset industry or a low-end industry
How to understand the positioning of the mining industry in the current environment?
Zhang Chengzhong, Vice General Manager of Aluminum Corporation of China Ltd. advanced new understanding for mining industry: Mining was by no means an extensive industry, a sunset industry or a low-end industry.
He said that the mining industry in the past made itself being branded as an incarnation of extensive development and environmental damage by pursuing profits, sacrificing the environment, and wasting resources, which was caused by wrong concepts of development and irresponsible development philosophies. Mining could achieve the harmonious development of man and nature while creating wealth and benefiting people.
Mining was by no means a sunset industry: the existence of Chinese market determined that mining was unlikely to become a sunset industry for a long time. China's industrialization and urbanization have determined that the total consumption of mineral products would maintain high level for a period. Moreover, “the Belt and Road” initiative would boost the prosperity and high-quality development, and the new round of industrial revolution would increase demand for emerging strategic mineral resources.
Nor was it a low-end industry: Even at the forefront of the industrial chain, it was not synonymous with inefficiency and low end. The scarcity and non-renewability of mineral resources determined their special strategic positioning and high economic value. Mining was also at the high end of the value chain. Mining projects with large-scale, quality and extensibility could also generate high returns. As a technology-intensive industry, mining could drive and lead technological innovation.
Value and return on investment were the core
How did mining adapt to industry changes in a changing world?
BHP Billiton, a world-famous mining company and one of Fortune Global 500 companies, introduced its philosophy, values and practices in mining development.
In recent years, BHP Billiton has focused on operating large-scale, long-life, low-cost and high-quality mining assets which at the high end of the value chain. Johan Van Jaarsveld, Group Portfolio Strategy and Development Officer, BHP emphasized in his speech that value and return on investment were the core of their work.
He expressed that the key to good portfolio strategy and management consisted in choosing the right investment strategy, selecting good mineral resources assets, and carrying out reasonable portfolio management. In the first place, before investing and managing assets, a clear strategic framework should be determined. Their strategy was to achieve long-term value and maximize asset value since value and return on investment were at the heart of their work.
According to him, the BHP strategic framework consisted of three competing advantages: the first one was high-quality resources. The huge economic potential it possessed enabled enterprises to fully utilize their professional strengths and thus create value. Then the high-quality assets. Through top-ranking operations, even assets with mediocre economic potential could achieve high economic value. BHP persisted in building excellent operational capabilities to fully exploit the competitive value of the company's resource products and assets. The third was corporate culture, which enabled employees to give full play to their strengths and strive to achieve company’s business goals and strategies.
How could mining better adapt to industry changes? John Kilroe, Exploration Director–Australasia, Growth & Innovation, Rio Tinto, shared some information on in his speech “Innovation drives the future of the mining industry”. As an international mining Group that integrated exploration, exploitation and processing of mineral resources, they have made a series of discoveries on mineral exploration since 1947.
John Kilroe mentioned in his speech that Rio Tinto, one of the pioneers in the mining industry, possessed leading technologies, also endeavored to contribute to social and human progress in the field of materials. On the road to innovation, it pursued new research and development of products and was committed to technological innovation, such as the development of low-carbon aluminum products and the use of automation technology in the mining industry to establish the world's first automated driving line.
Rio Tinto had a strong demand and desire for new technologies, with which they hoped to turn raw materials into better products.
Boasting eye-catching, world-class discoveries of mineral resources, its most important role was to explore new mineral resources, which would become more and more difficult and thus require the assistance of new technologies.
Mining should achieve development more green, sustainable, innovative, open and cooperative
Where should mining industry go?
Li Tong suggested that global，especially Chinese mining companies, should accelerate reform and transformation, continue to improve production efficiency and quality from the supply side, adhere to environmental protection and technical innovation, and seize the historical opportunity of “the Belt and Road” construction, upgrade resource allocation globally, optimize business structure and layout as well as enhance overall competitive strength. Zhang Chengzhong emphasized that mining industry should unswervingly follow the path of green development and firmly adhere to the road of sustainable development. It should not only combine the accurate exploration and development with thorough utilization of resources, put a premium on the comprehensive utilization of resources and improve economic returns through elevating resource utilization rate, but also reduce the discharge of solid waste, benefit people and bring them green mountains and clear waters The mining industry must stand firm to follow the path of innovation and development, and persevere in cooperative development. It was an inevitable trend to integrate mining into the global economy. Also, the high-quality development of mining required enterprises to resist trade protectionism and resource nationalism, and break investment barriers.
In the view of John Kilroe, technology was all-important. Rio Tinto developed and applied automatic-controlled trucks more than 10 years ago. Its Perth Automation Control Center could manipulate automatic trucks 1,500 kilometers away. It also achieved new Progress in automatic train project. Rio Tinto has now worked on the project of the world's longest automated train, which would be reran in western Australia and be completed by the end of the year as planned. These new technologies changed the processes of exploration and mining while increasing efficiency. Here were more examples: data analysis technology processing petabytes of graphics could facilitate future discoveries; visualized spectral features being used for exploration visualization could provide geologists with reliable reference and valid data in this respect. In short, technologies in mining must be upgraded to drive innovation. “Innovation can help us achieve a more bright and sustainable future,” said him. (Ding Quanli Wang Shanshan) (Translated by TLRHVC)
