The impact of the global financial crisis has now reached the mining sector, and the global oil, gas, coal, and metal mines are facing a severe downturn. International oil prices have plummeted from over $140 per barrel in July of this year to the current level of about $46 per barrel; coal prices have fallen from over $190 per ton in July to the current level of just over $110 per ton; copper prices have dropped from around $4 per pound in June to about $1.5 per pound today; aluminum prices have declined from roughly $1.5 per pound in June to about $0.8 per pound currently; and zinc prices have tumbled from $4,580 per ton in November 2006 to $2,400 per ton at the beginning of this year, and further down to the current level of $1,200 per ton. The negotiated import price for iron ore was around $140 per ton earlier this year, but since September, steel mills’ purchasing volumes have sharply declined. As a result, port inventories of imported iron ore have now piled up to over 90 million tons—equivalent to 23% of China’s total iron ore imports in 2007. Domestically, iron ore prices have also fallen rapidly since July of this year. Taking Liaoning’s refined iron ore powder as an example, its price has dropped from about 1,100 yuan per ton in July to roughly 500 yuan per ton today.
　　In the face of continuously declining prices for mineral products, mining enterprises are facing tremendous challenges. According to reports, Vale has decided to cut iron ore production by 20%; the company is also significantly reducing output of manganese, aluminum, and nickel ores. BHP Billiton and Vale have announced cuts in their pellet production—accounting for 65% of their Brazilian output. Mining powerhouses such as Australia, South Africa, Canada, and Russia have already seen a large number of mines shut down; recently, Russia’s largest mining group, Far Eastern Multi-Metal Company, announced an indefinite suspension of operations. Domestically, according to recent reports, half of the 2,000 mines in Hebei Province have already ceased production, and nearly all of the 3,000 iron ore beneficiation plants have come to a standstill—most of these being small and medium-sized enterprises. In Yunnan Province, major coal-producing counties including Fuyuan, Shizong, Lushi, Mile, and Qujing have seen their coal mines shut down one after another. China’s zinc mines have largely halted production under the impact of plummeting prices. Even the remote Ejin Banner in Inner Mongolia, home to the region’s only iron and molybdenum mines, has announced a production halt. However, China’s large-scale mining enterprises are still holding on amid these difficulties. The next wave of shocks will primarily target these big players, and all major mines now face the danger of running out of cash flow. Yet, this is only the beginning of the global financial crisis’s impact on China’s mining industry. Experts estimate that it will take between six months and a year before the full extent of the financial crisis’s impact on the mining sector becomes apparent.
　　China is a country with enormous demand for mineral products, and maintaining the stability of its mineral supply capacity is crucial for economic development. At present and over the next one to two years, China’s mining industry will face a severe downturn. It is an important responsibility of land and resource management to mitigate the pressure on mining enterprises through macroeconomic policy adjustments, help some enterprises weather the difficulties, and do everything possible to safeguard mining production capacity from being wiped out during this crisis. To this end, we recommend adopting the following measures:
　　First, conduct a situational study on the impact of the international financial crisis on China’s mining industry. Analyze China’s resource situation from various angles, including industrial decline, changes in demand, trends in mine losses and closures, capacity for mineral supply, as well as the cycles and conditions for the recovery of the mining sector—providing a solid foundation for formulating macroeconomic regulatory policies for mineral resources over the next one to two years. It is recommended that a research report titled “The Impact of the Global Financial Crisis on China’s Mining Development and Corresponding Countermeasures” be submitted within two months.
　　Second, research on rescue measures for mining enterprises. Analyze China’s current policies governing mineral resource planning, approval, regulation, and fee collection, and make adjustments to align with the current situation in the mining industry, thereby enabling resource management authorities to play their role in safeguarding production capacity and helping the industry weather the crisis. The rescue of mining enterprises requires the involvement of various government departments, especially those responsible for finance and taxation; however, the land and resources authorities bear an inescapable responsibility in this regard.
　　Third, closely monitor the structural adjustments and asset downsizing occurring in the international mining industry during the crisis, and provide informational, policy-related, and technical support to Chinese enterprises seeking to acquire high-quality overseas mining assets through mergers and acquisitions.
　　Fourth, conduct forward-looking research on the post-crisis mineral resource situation and policies, clearly defining the monitoring system, key policy points, and policy coordination mechanisms for the crisis period, recovery period, and development period, thereby establishing a continuous macroeconomic regulation mechanism within the Ministry of Natural Resources to address such crises.