(China Powder Technology Network/Ban Jianwei) From July 28 to 30, 2015, the 16th National Conference and Exhibition on Non-Metallic Mineral Processing and Utilization Technologies—hosted by the Technical Committee for Mineral Processing and Utilization of the China Non-Metallic Minerals Industry Association—was grandly held at the Wulan Hotel in Hohhot, Inner Mongolia! As a specially invited guest at this conference, Wang Wenli, Vice President of the China Non-Metallic Minerals Industry Association, delivered a keynote report titled “The Economic Performance and Development Recommendations for China’s Non-Metallic Mineral Industry.”

I. Analysis of the Economic Performance of China’s Non-Metallic Mineral Industry
After 10 years of rapid development, China’s mining market has entered a period of deep downward adjustment (starting in 2011), during which the profits of coal, metallurgical, and non-ferrous minerals have declined to the point of industry-wide losses (in 2014 and 2015).
In recent years, the output value of China’s non-metallic mines (mining and beneficiation) has slightly increased, but profits have declined significantly—falling from 14.37% in 2011 to 10.14% in 2014.

1.1   2015 First-half key economic indicators:
Fixed-asset investment: In the first half of the year, the mining industry saw investment totaling 526.1 billion yuan, a year-on-year decrease of -7.71%. Among this, the non-metallic mineral products industry recorded 92.6 billion yuan in investment, representing a year-on-year increase of 5.4%.
Industrial value-added: The nationwide value-added of industrial enterprises above designated size (calculated at comparable prices) increased by 6.3% year-on-year, with the non-metallic mineral products industry recording a year-on-year increase of 6.4%.

Profits: In the first half of 2015, the mining industry achieved total profits of 139.61 billion yuan, a year-on-year decrease of 58.8%. Among these, coal mining and washing declined by 67%, oil and gas extraction fell by 68.4%, non-metallic mineral products manufacturing decreased by 6.7%, and ferrous metal smelting and rolling processing dropped by 22.4%.

1.2  2015 Market conditions for non-metallic mineral products in China during the first half of the year:

In the first half of 2015, market demand for non-metallic mineral products varied across different application sectors, with some experiencing increases and others declines. Overall, production and sales volumes as well as profit margins for these mineral products showed a downward trend.
Graphite production reached 250,000 tons, a 25% increase year-on-year, while prices fell by 2,800 to 3,000 yuan per ton. Fluorite 1.82 million tons, down 10% year-on-year; prices ranging from 1,450 to 1,500 yuan per ton. Magnesium-based material production reached 6.6 million tons, a year-on-year decrease of 13.16%. Talc production was 950,000 tons, down 20% year-on-year, with prices falling by 5%. Asbestos production stood at 135,000 tons, while refined kaolin concentrate remained flat at 2 million tons.
Demand and prices for some traditional industrial raw and auxiliary materials have declined. Enterprises face heavy tax and fee burdens, while production costs and labor costs continue to rise. Competition among enterprises has intensified due to the increasing homogeneity of their products, and emerging sectors still require a development phase. Therefore, the overall trend in 2015 is not optimistic.

1.3  2015 Import and Export Situation of Non-Metallic Minerals in China for the First Half of the Year
Export:
From January to June, the export volumes and export prices of several major non-metallic mineral products in China all showed varying degrees of decline. Specifically, exports of graphite, talc, fluorite, kaolin, and magnesia sand plummeted, falling by around 20% year-on-year. Export prices declined by anywhere from 3% to 10%. Among these, kaolin exports dropped by 29.74%, while its price rose by 31%.
The primary reasons for the decline in export volume and export prices of certain major non-metallic mineral products in China are that, influenced by factors such as domestic production costs, labor costs, and export tariffs, these Chinese non-metallic mineral products are facing continuously declining international competitiveness compared to minerals from emerging countries like Mongolia, India, Pakistan, and Egypt.
Import:
From January to June 2015, China’s imports of non-metallic minerals remained roughly stable compared to the same period last year. However, the import prices of spherical graphite and flake graphite were four to five times higher than their export prices, while the import price of ultrafine talc powder was three times higher than the domestic export price. The phenomenon of high imports and low exports of China’s non-metallic mineral products persists, and there is still a certain gap between China’s finely processed non-metallic mineral products and their foreign counterparts.
 
II. Major Issues Currently Facing the Economic Performance of the Non-Metallic Minerals Industry
2.1 Overcapacity in non-metallic mineral products and weak market demand in traditional industrial application sectors.
Currently, China’s major non-metallic mineral resources all suffer from overcapacity. In the past two years, the actual utilization rate for some mineral types has been around 50% to 60%. The non-metallic mining industry generally exhibits excessive mining beyond licensed capacities: although mining licenses specify relatively small extraction capacities and scales, actual production capacity often far exceeds these licensed levels—indeed, in some cases, actual capacity can be three to five times greater than the licensed capacity.
Traditional industries such as building materials, construction, steel, chemicals, light industry, and machinery are the primary application sectors for non-metallic mineral products. In recent years, the downturn in these traditional industries has led to weak demand in the market for non-metallic mineral products. Outstanding debts have become extremely severe, accounts receivable are enormous, and there is a serious shortage of working capital.

2.2  The government is stepping up efforts to rectify and standardize the use of safety, environmental protection, and resources, as well as labor practices, leading to continuously rising production costs for enterprises.
Currently, the national government and relevant local governments are stepping up their efforts to strengthen safety and environmental protection regulations, and enterprises are continuously increasing their investments in safety and environmental protection. Employment practices for production workers are becoming increasingly standardized, and enterprises’ contributions to employees’ social insurance costs are on the rise. Meanwhile, there is a growing shortage of labor in the mining sector, and wages are rising. As a result, enterprises’ production costs continue to climb.

2.3 The non-metallic mineral industry faces a wide variety of taxes and fees, placing an excessive tax burden on enterprises.
The types of taxes and fees borne by the non-metallic mineral industry include: resource tax, resource compensation fee, value-added tax, income tax, export tariffs, quota licensing fees (for talc exports), stamp duty; property tax, land use tax, vehicle and vessel use tax, local water conservancy construction fund, urban construction tax, and education surcharge, among others.
Non-metallic mining enterprises pay a 17% value-added tax, but the deductible portion is relatively small. The actual tax rate is above 12%; The resource tax, which is levied based on quantity, is not conducive to resource conservation and comprehensive utilization, and implementation methods vary from region to region. Non-metallic mineral enterprises face a wide variety of taxes and fees, resulting in an excessively heavy tax burden—for example, the taxes and fees borne by talc export products account for more than 30% of the sales price.

  2.4 Compared with the same period last year, prices of non-metallic mineral products in China’s emerging countries are higher, and China’s international competitiveness continues to decline.
Currently, the export prices of China’s non-metallic mineral products are significantly higher than those of similar products from emerging countries such as India, Mongolia, Pakistan, Egypt, and North Korea. For instance, the export prices of certain fluorite, graphite, and talc products are about 30% higher than those of products from emerging countries, forcing foreign buyers to procure mineral products from these emerging nations. As a result, China’s non-metallic mineral products are experiencing a continuous decline in international competitiveness.

III. Recommendations for the Development of the Non-Metallic Mineral Industry
Currently, the non-metallic mineral industry continues to face a sluggish situation, and it has become imperative to accelerate the industry’s transformation and upgrading, foster innovative development, and stabilize industry growth. The direction for the development of the non-metallic mineral industry is— First, intensive and efficient utilization and comprehensive utilization of mineral resources; second, sophisticated processing of non-metallic minerals and development of non-metallic mineral materials. Transformation and upgrading, as well as innovative development, will revolve around these two aspects:
    1. Promoting the integration of resources and enterprises and accelerating the adjustment of industrial and product structures are key to the industry’s transformation and upgrading.
Enterprises in the non-metallic mineral industry are small in scale, numerous in number, have low resource development efficiency, and feature an unreasonable industrial and product structure—factors that have already constrained the industry’s healthy development. Therefore, promoting resource integration, enhancing resource utilization efficiency and benefits, supporting leading enterprises in mergers and reorganizations, increasing industry concentration, accelerating industrial structural adjustments, and speeding up the serialization and standardization of non-metallic mineral products—all aimed at facilitating product结构调整—are crucial for the current transformation and upgrading of the non-metallic mineral industry.
  2. Developing deep-processing products for non-metallic minerals and expanding into new application areas represent new growth drivers for the industry.
Non-metallic mineral products serve as raw and auxiliary materials for traditional industries such as construction materials, metallurgy, chemical engineering, light industry, and machinery. They also provide the foundational support for high-tech industries including electronic information, biomedicine, new energy, new materials, and aerospace. Moreover, they function as materials that contribute to environmental protection and ecological health.
Currently, the downturn in traditional industries and weak demand for non-metallic mineral products have led to a slowdown in the growth of the non-metallic minerals sector. However, the rapid development of emerging fields such as electronic information, new energy, new materials, environmental protection, and ecological health will open up new avenues for growth in the non-metallic minerals industry. Graphite, quartz, clay minerals (bentonite, kaolin, attapulgite, sepiolite), wollastonite, diatomaceous earth The continuous application of these products in emerging industries also represents a new growth engine for the industry’s stable expansion.
    3 The key to developing new products and expanding into new application areas for non-metallic minerals lies in the integrated development across industries.
The transformation and upgrading of traditional industries, product renewal and replacement, as well as energy conservation, consumption reduction, cost reduction, and performance enhancement, are placing higher demands on non-metallic mineral products.
The rapid development of high-tech industries such as electronic information, biomedicine, new energy, new materials, and aerospace is driving an ever-growing demand for non-metallic mineral products, while simultaneously placing higher requirements on non-metallic mineral materials.
Collaborative innovation driven by demand: Continuously accelerate the integrated development among upstream and downstream industries, expedite the collaborative development of new products as well as advanced processing and application technologies, foster greater exchange and cooperation between upstream and downstream sectors, and boost the development of the non-metallic mineral industry.
   4 Strengthen research on industry standards and industrial policies.
   5 Strengthen enterprise production management, continuously carry out technological upgrades and process improvements, accelerate the scaling up of production equipment and the automation of production processes, reduce the number of workers, lower production costs, and enhance product stability.
   6 Strengthen self-discipline among industry enterprises and actively participate in the construction of an integrity system for the industry. Enterprises should conscientiously comply with industry entry requirements and thresholds, eliminate outdated production capacity, and proactively avoid malicious competition among enterprises in the same industry.
   7 Cultivate and develop industrial clusters in the non-metallic mineral sector, optimize industrial layout, and innovate industry development models.
China’s distribution of important non-metallic mineral resources is relatively concentrated, giving the industry an inherent advantage for developing industrial clusters. In recent years, the non-metallic minerals industry has shown a very clear trend of concentrating in resource-rich areas, while processing and application industries have increasingly clustered in specialized industrial parks, thereby promoting and leading the development of the entire sector.
In recent years, the association has been engaged in the development of industrial clusters such as the China Diatomaceous Earth Industrial City, the China Graphite Capital, the China Wollastonite Hometown, and the China Attapulgite Capital. This year, the association also signed a strategic agreement with the Baotou Municipal Government on the development of the non-metallic mineral industry. The cultivation and construction of these industrial clusters have been among the association’s most important efforts in recent years to optimize industrial layouts and promote industry development.