Since the beginning of this year, the global economy has been recovering with difficulty and in a tortuous manner. International market demand has remained persistently weak, and global investment has entered a new phase characterized by increasing uncertainty—this, in turn, has brought uncertainty to mining investments.

At the 2016 (4th) International Mining Development Summit held on December 8, experts attending the summit stated that, under the dual pressures of meeting a peak in resource demand and facing industrial restructuring, the global situation of oversupply in mineral products will persist. As a result, prices are expected to remain relatively low over the next three to five years. At the same time, with the launch and advancement of the Belt and Road Initiative, China’s various industries will have greater room for development and adjustment, marking the best period yet for China’s mining sector to pursue overseas investment.

The “winter” in the mining industry will continue.

Regarding the current and future outlook for the mining industry, Chen Feng, President of the China National Materials Group Corporation’s Chamber of Commerce for Import and Export of Metals, Minerals and Chemicals, stated at the conference that this year, international commodity markets—including those for mineral products—have generally rebounded, with overall prices experiencing a transition from rapid increases to stabilization and moderation. Looking ahead to 2017, the global economic and trade situation remains complex and challenging, with growing uncertainties. As a result, commodity market prices are expected to continue their slow upward trend amid ongoing fluctuations.

Chen Feng pointed out that, according to estimates by the United Nations Conference on Trade and Development, global foreign direct investment flows in 2016 could decline by 10% to 15%, which will bring uncertainty to the outlook for global mining investments.

Wang Anjian, Director of the Global Mineral Resources Strategy Research Center and researcher at the Chinese Academy of Geological Sciences, stated that global mineral prices have entered a downward trend. Although some fluctuations still occur, there is little support for expectations that prices will return to high levels. “Over the next decade, demand for most bulk mineral resources will reach its peak. At the same time, China’s demand for mineral resources will shift from rapid, comprehensive growth to differentiated growth at a moderate-to-low pace. As we face a situation in which resource demand is peaking while industries undergo structural adjustments, global supply of major minerals will continue to exceed demand. Consequently, mineral prices are likely to remain relatively low over the next three to five years,” Wang Anjian predicted.

Li Xinchuang, director of the Metallurgical Industry Planning and Research Institute, believes that due to ongoing global economic uncertainties and severe overcapacity across the mining sector—including steel—global steel industry development has entered a new phase. Looking ahead, the era of rapid steel growth has passed, and the industry is now entering a long period of slower growth. Despite the overall downward trend remaining unchanged, although government investment is boosting steel demand and capacity reduction is creating a favorable environment for some established enterprises, these factors cannot alter the persistently weak demand for steel and mineral resources, nor can they significantly improve profitability in the short term.

“Go global” to seek breakthrough and transformation.

In the context of declining global mineral prices, operational difficulties faced by enterprises, and disruptions in the mining industry’s funding chains, the experts attending the meeting recommended that Chinese companies involved in mineral resources should seize the current favorable opportunity to actively “go global,” acquiring or merging with foreign companies that boast high-quality resources and large-scale operations, thereby enhancing their international competitiveness.

Li Xinchuang pointed out that, under the current circumstances, mineral resource-related enterprises—including steel companies—need to reshape their value chains, shifting from increasing output volume to reducing output while enhancing efficiency. “Chinese enterprises should direct more of their attention overseas—even devoting over 85% of their efforts overseas—and achieve coordinated development through cooperation and mergers with foreign companies,” Li Xinchuang said.

Wang Anjian also suggested that, over the next five to ten years, countries such as India, ASEAN, and Brazil will become important successors in demand for mineral resources. China’s mineral-resource-related industries should proactively “go global” and share the resource dividends generated by the industrialization of these emerging and ongoing industrialized nations.

Chen Feng believes that with the launch and advancement of the Belt and Road Initiative, China’s various industries have gained greater room for development and growth, and China’s mining sector is also ushering in new opportunities. “The construction of the Belt and Road will help break through the current constraints that mineral resources pose on China’s economic development, providing strong support for the country’s sustained and stable economic growth. In this cold winter of sluggish development in the mining economy, the chamber of commerce will assist mining enterprises in seizing development opportunities such as those presented by the Belt and Road initiative and achieving breakthroughs and transformations.”

Wang Anjian also stated that, in alignment with the Belt and Road national strategy, Chinese mining companies should strengthen cooperation on mineral production capacities—including oil, natural gas, copper, aluminum, lead, and zinc—to support regional infrastructure development and achieve mutually beneficial outcomes.

The experts attending the meeting also analyzed the problems currently encountered by mining companies as they “go global.” The experts believe that many failed mining investments can be traced, to a large extent, to a rather simplistic approach in assessing and judging the value of mining investments—as well as insufficient understanding of the host country’s national conditions and social environment. The experts recommended that when evaluating the worth of a mine, one should not only heed the opinions of geology and mining experts but also take into account perspectives from legal, policy, ecological, environmental, religious, and community domains, thereby achieving a harmonious integration of economic, environmental, and social benefits.