This article is a collaboration between the author of this book and Bao Ronghua. Originally published in "China Mining", Volume 13, Issue 1, 2004
Abstract Economic globalization has promoted the globalization of mining. In recent years, world trade in mineral products has generally increased significantly, and mining investment has flowed within the scope of globalization. , waves of mergers and acquisitions by multinational mining companies have emerged one after another. Developed countries encourage their companies to explore and develop mineral resources overseas. Developing countries have improved the mining investment environment and attracted foreign investment to explore and develop their own mineral resources.
Keywords world mining; globalization; trend
1 Economic globalization promotes the globalization of mining
Economic globalization is the mainstream of the contemporary world economy. Economic globalization promotes the globalization of mining. Since mineral resources are unevenly distributed geographically, only internationalization can achieve the optimal allocation of mineral resources. At the same time, because mineral resources are the main source of factors for production, mining globalization plays an important role in economic globalization. Mining production factors will flow to high-quality and low-priced mineral areas.
The globalization of mining is manifested in: transnational exploration and development of mineral resources, transnational processing and sales of mineral products, transnational mergers and acquisitions and listings of mining companies, transnational flows of mining funds, and large-scale mineral exploration and development projects jointly organized by multiple companies from multiple countries. International sharing of investment and mining information.
(1) Globalization of mineral trade.
In recent years, the world's mineral product import and export trade has generally shown a substantial upward trend. For example: from 1997 to 1993, the world's major exports of iron ore, coal, and sulfur increased by nearly 18%, 37%, and 28% respectively. From 1999 to 1993, the world's exports of aluminum, copper, lead, zinc, tin, and potassium increased by 29%, 68%, 83%, 51%, 53%, and 15% respectively. Phosphate rock exports increased by 17% in 1998 compared with 1993.
At the same time, the growth rate of world mineral trade is much greater than the growth rate of production. In 2000, the world's mineral trade volume increased by 42% compared with the previous year, and in 1999 it increased by 15% compared with the previous year. However, the growth rate of mineral product output during the same period was only 3.5% and 2.0%. It can be seen that the proportion of mineral products used in international trade in output Enlarging. For example, the proportion of world trade volume in iron ore production increased from 43% in 1998 to 45% in 1999.
(2) Globalization of mining investment.
The main trend of globalization of mining investment is the flow of mining capital from developed market economy countries to resource-rich developing countries, that is, from Canada, Australia, the United States, South Africa, the United Kingdom, etc. to dozens of developments around the world. Chinese home mobility.
In recent years, in some developed countries in the West, due to the increasing difficulty and cost of mineral prospecting in their countries, mining has become increasingly restricted by environmental protection restrictions and land access regulations. Therefore, they have significantly increased their mineral exploration activities in certain developing countries with good exploration and development investment environments. In the past 10 years, billions of dollars are expected to be spent on mining development in the Asia-Pacific region.
(3) Globalization of mining services.
Most developing countries with resource potential are in line with international practices in the fields of standards, specifications, mineral rights assessment, resource evaluation, independent exploration geologists, mining brokers, labor contract companies, etc., and strive to achieve mining Globalization of services.
2 The concentration of the world’s mining industry is increasing
(1) Waves of mergers and acquisitions by multinational mining companies are coming one after another.
The development of mining globalization has intensified competition among mining companies. In order to optimize resource allocation, reduce operating costs, strengthen core business, and improve international competitiveness, a wave of mergers and acquisitions by mining companies is sweeping the world.
After large-scale mergers of metal mining companies from 1992 to 1997, the amount of mergers and acquisitions since 1995 has exceeded US$100 billion. In 1998, the world's metal mining and smelting industry spent more than 25 billion US dollars on mergers and acquisitions, a record high. The largest metal acquisition transaction by an aluminum company was Alcor's $4.6 billion acquisition of its American counterpart, aluminum producer Reynolds. The other two major mergers and acquisitions occurred in the copper sector. According to statistics, from 1990 to 1999, there were a total of 135 mergers and acquisitions of global basic metal companies with a transaction volume of more than US$25 million, and a total transaction volume of US$27.82 billion; there were 146 mergers and acquisitions of gold industry companies, with a transaction volume of US$27.82 billion. ***Total US$28.315 billion.
The largest mining companies BHP and Billiton completed their merger on March 9, 2001, involving a case value of US$28 billion.
(2) The concentration of the mining industry has increased.
The concentration of mining production has increased. According to the Swedish RMG's 1997 ranking of the world's mining companies, the total mineral output value of 32 mining companies accounted for 50.38% of the global total mineral output value. Among these 32 companies, 6 are multinational mining companies in developing countries.
According to 2000 statistics from the Stockholm-based Raw Materials Group (RMG), there are currently about 8,000 companies involved in mining operations around the world, but most of the mining output is controlled by only a few companies. . In the ranking of the world's top 50 mining companies, among the 25 largest companies, 19 are from developed countries such as the United States, Canada, Australia, the United Kingdom and South Africa, and their controlled output accounts for 78% of the total output of the 25 companies.
Metal minerals have a higher degree of control. 4 companies control 75% of the total production in the West; 10 companies control 58% and 51% of the total production of lead and zinc in Western countries respectively; 10 companies control 70% of bauxite, copper ore and chromite production, and 60% of iron ore production and nickel production.
The concentration of coal production is also increasing. For example, in the United States, from 1976 to 1993, coal production increased from 621 million tons to 856 million tons, an increase of 37.8%; while the number of coal mines decreased from 6533 to 2475. , a decrease of 62.1%; the average output of each mine increased from 95,000 tons to 346,000 tons, and the total output of 12 companies with an annual output of 18 million tons accounted for 41% of the country's total output.
Mining exploration investment is also relatively concentrated. In 1999, the exploration investment budgets of the United States, Canada and Australia accounted for 39.5% of the total global budget. In 1998, Canadian mining companies' exploration investment accounted for 37% of the total exploration investment of global mining companies, the United States accounted for 17%, Australia accounted for 9.5%, South Africa accounted for 3%, the United Kingdom accounted for 1.3%, and several other developing countries (including Peru, Chile, Indonesia, Zimbabwe, etc.) accounted for 15.2%.
3 Developed countries encourage their companies to explore and develop mineral resources overseas. Developing countries have improved their mining investment environment and attracted foreign investment to explore and develop their own mineral resources.
For a long time, the United States and Canada Western developed countries such as China and Japan have been working hard to implement global resource strategies and encourage their companies to explore and develop mineral resources overseas. The intention is to obtain cheap, high-quality mineral resources, expand the ability to control global resources, ensure the supply of domestic resources, and ensure national economic security.
(1) Establish specialized institutions to support foreign mining investment.
Some resource-poor developed countries have established specialized agencies to vigorously promote "technical assistance, economic assistance and cooperation plans" to provide all-round support for the multinational operations of mining companies, and through "cooperation for development" "Strategy, strengthen cooperation with international investment institutions, and multinational mining companies and resource companies with European and American backgrounds, and vigorously promote multinational mining companies to participate extensively in global mineral resource exploration and development in different ways.
For example: the former West German Federal Geological Survey (BGR) carried out technical cooperation with developing countries and has now become the center of Germany's exploration activities abroad. Japan has established a metal mining business group to carry out necessary loan work for the exploration industry. France's Geological and Mineral Survey Institute (BRGM) is the main executive agency for metal and non-metal resource policies. The institute has more than 30 offices at home and abroad, with more than 2,000 employees, including about 900 domestic researchers. The institute's expenses mainly come from government commission fees. In addition, funds are obtained from exploration activities commissioned by private companies.
(2) Encourage the multinational operations of mining enterprises in an all-round way through fiscal, financial, taxation, insurance and other means. Support and promote the establishment of overseas mineral resource supply bases from different perspectives such as politics and diplomacy.
For example, West Germany previously allocated 40 million marks to the Federal Geological Survey for overseas surveys. In addition, it also allocated about 30 million marks for technical cooperation expenses to support the Federal Geological Survey in carrying out resource exploration in developing countries. Investigations and technical cooperation. The Canadian government provides low-interest loans to the mining industry and invests in building railways and highways.
(3) Implement an investment insurance system for foreign exploration.
Due to the possible changes in the political situation and economic policies of the countries that produce mineral resources, there are certain risks for companies to develop foreign mineral resources. In addition, the mine construction cycle is long, and the development prospects of the world economic situation are difficult to estimate. This makes it difficult to estimate the development prospects of the world economy. It will affect the enthusiasm of private enterprises to develop foreign mines. To this end, some governments have adopted investment insurance systems.
For example: The former West Germany signed protection agreements between the two countries with 49 countries in the 1970s, ensuring that foreign companies can operate freely even if they are nationalized. This policy has become the backbone of German companies' active development activities abroad.
(4) Implement a mining subsidy system for some mineral types.
Japan, France and the United Kingdom have all implemented prospecting subsidy systems for some minerals. Among them, Japan subsidizes 19 types of minerals, the Federal Republic of Germany subsidizes minerals other than petroleum and coal, France only subsidizes copper and uranium, and the United Kingdom subsidizes non-ferrous metal mines.
(5) Mining financing.
It is a common practice for foreign mining companies to obtain mining exploration and development funds through financing. In the grassroots exploration stage, private equity can be carried out, that is, relying on the own funds of individuals or foundations to raise a small amount of funds for exploration, and all parties share rights according to prior agreements; when there is a certain prospect for prospecting, securities financing can be carried out; Based on the mineral rights of the mineral prospect, after the consulting company determines its prospecting value, it can finance through the securities market in accordance with the requirements of venture capital listing; it can also transfer part of the mineral rights in exchange for exploration and development funds.
(6) Improve the investment environment.
Individual regions in developing and developed countries have implemented effective policies to attract and encourage foreign investment. Since 1975, with the development of the entire political and economic situation, macroeconomic management policies in developing countries have undergone significant changes. Faced with many difficulties such as lack of funds for domestic mining development, chaotic management, and backward technology, they have taken various measures to attract private capital and foreign funds and technology to develop their own mineral resources.
The main methods to improve the mining investment environment include: amending the mining law, reducing mining taxes, simplifying the administrative approval procedures for exploration and development, strengthening public welfare geological surveys and information services, and expanding the scope of resources that can be explored and developed by foreign investors. For example: Argentina combines investment incentives and mineral rights management to form a new mining regulation. It goes far beyond the scope of traditional mining laws and includes tax incentives, foreign exchange management, investment guarantees, dispute settlement, customs regulations, priority in hiring host country citizens and training employees, priority in the supply of materials, labor, transportation and power by the host country, and prevention of mining Public nuisance and other content; this is a more effective and appropriate method to promote mining investment and develop the domestic mining industry. Through these measures, Latin America, Asia and Africa attracted 51% of Western mining companies' investment in solid mineral exploration in 1999, an increase of 25 percentage points from the 1980s. Developing countries have attracted nearly two-thirds of the world's investment in large-scale mineral development (mining and dressing) projects, of which Latin America accounts for more than half, followed by Asia, Africa, etc.