Where lies the way forward for China’s geological exploration sector?
Release time:
2017-02-10
Source:
After gaining a systematic understanding of the current situation and existing problems in China’s geological exploration industry, it becomes clear that finding a path forward that aligns with national policies is not particularly difficult. “ Integration ” These two words encapsulate the essence of the exploration industry’s path forward. Vertically, we must break down barriers between geological exploration, downstream resource industries, and capital operations, thereby achieving integration across the entire industrial chain. Horizontally, we need to establish a community of technical professionals spanning the entire industry, transcending individual exploration units and realizing integration within the sector itself.
(1) Vertical Industrial Chain Integration: Integrated Reform of Resource, Asset, and Capital Systems
There are four key benefits to vertically integrating the industrial chain. First, through capital operations, we can address the long-standing issue of insufficient capital accumulation in geological exploration units, achieving integrated exploration, development, and deep processing—and thereby capturing the lion’s share of value in the resource industry. Second, we can completely move away from a “wage-earning” economic model and establish a self-sustaining, value-creating capability. Third, within enterprises, we can consolidate resources and enable different departments to focus on their core competencies, thus resolving the current situation where individual units and departments are small yet comprehensive—and comprehensive yet weak. Fourth, large enterprises have broader perspectives, higher-level trend analysis capabilities, greater scale, and stronger risk resistance.
The primary advantage of geological exploration units lies in their technological expertise. In addition to fixed assets such as vehicles, equipment, and office buildings, these units also hold mineral rights. Geological exploration units possess a substantial number of prospecting rights and, to some extent, mining rights—these constitute their most valuable assets. After consolidating geological exploration units across an entire province into a large-scale mining enterprise, the resulting company will have a large pool of skilled technical personnel, numerous proprietary prospecting rights, and partial mining rights. By leveraging capital operations to attract significant social capital, the company can then deploy its own technical staff to explore its proprietary prospecting rights, thereby uncovering a batch of high-value mineral deposits. Finally, by utilizing the attracted social capital for mining development and smelting processing, the company will secure a foothold in the high-end value chain. In this way, resource integration, asset management, and capital operation are seamlessly combined into a unified, synergistic model.
Since the vast majority of provinces in our country that have already completed the classification reform of public institutions have not adopted the path of integrating resources, assets, and capital, most institutions—by opting for the public-benefit category—have managed to sidestep industry cycles. As a result, a paradoxical situation may eventually emerge: social projects will find themselves unable to identify any institution willing to take them on. Those provinces that have yet to complete the classification... 8 If provinces and cities proceed with integrated reforms that combine resources, assets, and capital in the coming period, they will gain a significant advantage in this round of reform. This downturn will present them with their best opportunity for growth; after accumulating strength during this phase, they can expect to evolve into industry giants in the next upswing cycle.
(2) Horizontal intra-industry integration: Building a community of technical professionals.
In China, technical personnel in geological exploration units account for only a small portion of the total number of employees on staff. 1/3 This severely restricts the efficiency and effectiveness of geological exploration units. Establishing a community of technical personnel spanning multiple regions and industries can quickly address this issue.
In this community, technical personnel share project information, engage in mutual technical assistance and collaboration, implement rigorous quality monitoring, and mitigate unexpected risks. This community organization should meet several basic requirements.
First, it must be independent and not subordinate to mining companies, geological survey institutions, or government agencies. When members of the community issue exploration reports on behalf of their employers, the community can only strengthen and oversee their independence—not undermine it. The community’s funding sources must ensure alignment with the independence and service quality of its members, rather than the opposite.
Second, it represents the interests of ordinary technical personnel. It should not become a new type of geological exploration entity that dominates the return on services provided by technical staff. Technical personnel should receive the majority share of compensation. The founders and members should primarily consist of ordinary geologists holding senior, intermediate, and junior technical titles.
Third, it should be characterized by sharedness. The community provides its members with a source of technical service needs. Community members can also share information on project opportunities and exploration experiences.
Fourth, it should have a rigorous and neutral quality-monitoring mechanism. The technical services provided by community members should be subject to quality monitoring, and the level and quality of these technical services should be publicly disclosed, establishing a comprehensive system of exploration integrity.
Fifth, it can provide community members with certain professional insurance coverage, helping them avoid having their entire careers ruined by exploration accidents caused by non-subjective factors.
Finally, the community of geological exploration and technical personnel must have scale advantages. Once it reaches a certain size, most exploration investors will consider selecting the technical personnel they need through this community.
The internet is the optimal spatial platform for communities, as it minimizes time and space costs through online channels, greatly enhancing connectivity efficiency. Within this network, project information and a database of community members can be infinitely expanded, allowing both sides to mutually select each other. A robust integrity system can also be established in parallel. This will finally address the long-standing challenge of establishing a truly effective integrity system that has hindered the full implementation of China’s independent geological surveyor system.
The community of geological exploration technicians is, in fact, a manifestation of the independent geologist system. Its establishment may well herald the arrival of China’s independent geologist system!
Conclusion
The severity of the situation in the geological exploration industry has already affected every professional working in this field, and the industry’s strong cyclicality is being increasingly recognized by more and more people. Currently, many inherent problems within China’s geological exploration institutions prevent them from adequately coping with the industry’s pronounced cyclical nature; thus, finding new avenues for development has become inevitable. Reform is the only viable path forward for this industry. A vertically integrated reform that unites resources, assets, and capital represents a promising approach—a path endowed with self-sustaining and self-renewing capabilities. Meanwhile, horizontally establishing a community of geological exploration technicians would fundamentally transform the entire industry’s landscape, marking a truly groundbreaking change. These two paths are not mutually exclusive and can—and should—advance in parallel. Regardless of which path we choose, we must first transform our mindset and proactively prepare ourselves mentally to embrace this era of profound transformation. As we do so, our personal life journeys will only become broader and more fulfilling!