In 2014, the global mining industry experienced poor overall performance, influenced by factors such as economic downturn, structural adjustments, and shifts in the geopolitical landscape—continuing the downward trend that had been evident over the past three years. Prominent features included a sideways adjustment at higher levels in mining indices, sustained declines in prices for most mineral commodities, and increasing difficulties in securing mining financing. Meanwhile, driven by weak global demand, this trend is expected to persist into 2015, with the global mining industry continuing its deep adjustment and struggling to find footing for a recovery.

2014:

The mining industry remains sluggish, with overall performance falling short.

Since 2014, geopolitical tensions have intensified due to factors such as the Ukraine crisis, the rise of ISIS, and ongoing conflicts in the Middle East. Meanwhile, the Ebola virus has broken out on a large scale, and the global economic and political landscape has undergone turbulent adjustments. As a result, a multipolar pattern of divergence has emerged—both between advanced economies and developing economies, and within advanced economies themselves, particularly between the United States and the Eurozone, as well as between the U.S. and Japan. The fragility and uncertainty of economic recovery have profoundly impacted the global mining industry’s development trajectory.

1.1 The global mining index remains at a high level, with signs of bottoming out emerging.

As of October 2014, the HSBC Global Mining Index—reflecting changes in the market capitalization of 202 major mining companies worldwide—stood at approximately 360 points, more than halving from its recent high of nearly 800 points in 2011. However, from 2013 to 2014, the index remained largely stable, fluctuating consistently around the 400-point mark, hinting at a bottoming-out trend (Figure 1).

Figure 1: Changes in the HSBC Global Mining Index (January 2008 – October 2014)

In addition, according to the PAI index released by SNL Metals & Mining—a metric reflecting exploration and development conditions—although the index generally showed a downward trend in the first half of the year, it has rebounded from around 40 points since April 2014 to its current level of approximately 70 points, signaling signs of bottoming out and recovery (Figure 2). The PAI index is composed of four key indicators: significant drilling results, initial resource discoveries, financing for major exploration projects, and the status of mine development. Among these, the improvement in the significant drilling results indicator has been a crucial factor supporting the recent rebound in the index. Given the influence of seasonal fluctuations, further observation will be needed to determine the future trajectory of the index.

Figure 2: Changes in the PAI Index of SNL Company (September 2012 – October 2014)

1.2 The sharp decline in international crude oil prices could affect oil and gas exploration investments in 2015.

Since 2014, international oil prices have followed a trend of first rising and then falling, with the operating range continuously declining. In the first half of the year, international oil prices rose steadily; however, starting in July, they began to fall sharply and persistently. In October, international oil prices fell below the $90-per-barrel mark, and in November, they dropped below $80 per barrel. By December, they had further broken through the $70 and $60 levels, reaching new lows not seen since May 2009—repeatedly exceeding market expectations. Taking Brent crude oil prices as an example, they rose to $115.14 per barrel on June 18 but plummeted to $66.09 per barrel by December 9, representing a decline of 42.6% in just six months. Other benchmark oils, such as WTI and Dubai’s January futures prices, also experienced sharp declines in tandem (Figure 3).

Figure 3: Changes in International Crude Oil Prices in 2014

Affected by the high oil prices of previous years, global investment in oil and gas exploration has maintained a relatively rapid growth trend. In 2013, global investment in oil and gas exploration and production reached US$682 billion, an increase of 10% over 2012. It is estimated that in 2014, global investment in oil and gas exploration and production will reach a new record of US$723 billion, representing a year-on-year increase of 6.1%. Regionally, the growth rate of oil and gas exploration and production investment in North America will exceed 7%, significantly higher than the 2% recorded in 2013—largely driven by a substantial increase in U.S. investment. Outside North America, the growth rate will remain around 6%, with relatively larger increases observed in the Middle East, Latin America, and Russia.

However, influenced by the sharp drop in oil prices in the second half of 2014, international oil and gas exploration and development expenditures in 2015 are likely to experience negative growth—a trend that deserves close attention. At the same time, compared with the sustained upward trend in overseas oil and gas exploration investments, China’s oil and gas exploration efforts have already shown signs of weakening. In 2013, domestic oil and gas exploration expenditures totaled 76.4 billion yuan, a decrease of 3.9% year-on-year. It is expected that this downward trend may continue in 2014. The diverging pattern between domestic and overseas oil and gas exploration investments also warrants close attention.

1.3 Price trends for key mineral products are diverging, while exploration investment continues to decline sharply.

In 2014, the prices of precious metals such as gold and silver experienced volatile downward trends, essentially continuing the pattern observed over the previous two years (Figure 4). The spot price of LME gold initially rose from US$1,182 per ounce at the beginning of the year to US$1,392 per ounce, but thereafter fluctuated repeatedly between gains and losses. By early November, the price had fallen to its lowest level in nearly four years, reaching US$1,142 per ounce. In contrast to the sharp fluctuations in gold prices, silver spot prices remained relatively stable, hovering around US$20 per ounce for most of 2014 with only minor fluctuations. However, since October, silver spot prices have once again begun to decline, falling to US$15 per ounce by early November.

Figure 4: Price Trends of Gold and Silver (February 2010 – November 2014)

The price trends of non-ferrous metal mineral products have diverged: copper, lead, and tin prices have been fluctuating downward, while aluminum and zinc prices have been fluctuating upward. Nickel prices, meanwhile, initially rose before eventually falling (Figure 5). In terms of inventories, aluminum, copper, and zinc stocks have shown significant destocking, whereas nickel and lead inventories have risen substantially.

Copper: In 2014, despite copper inventories falling to historic lows, influenced by the release of capacity from global copper mines, the LME spot price of copper remained largely stable, fluctuating around USD 7,000 per ton. The lowest price for the year occurred in mid-to-late March (USD 6,441 per ton), while the highest point was reached in early July (USD 7,186 per ton). By November, the price had essentially stabilized at around USD 6,800 per ton.

Lead: The spot price of LME lead has remained roughly stable around USD 2,100 per ton, but since late August, it has once again entered a downward trend and, as of November, has fallen below the USD 2,000 per ton mark.

Tin: Tin prices remained relatively stable for most of the year, fluctuating around $22,500 per ton. Since late August, however, they have once again entered a downward trend and, as of November, have fallen below $20,000 per ton.

Aluminum: Over the past two years, aluminum inventory reduction has yielded significant results, and the spot price of LME aluminum has shown a trend of bottoming out and rebounding—since March 2014, it has risen steadily from a low of $1,680 per ton to over $2,000 per ton by November.

Zinc: Since November 2013, zinc prices have shown a volatile upward trend due to the closure of several major zinc deposits worldwide. By November 2014, prices had rebounded from $1,875 per ton in the same period last year to over $2,100 per ton.

Nickel: Affected by Indonesia’s ban on the export of raw nickel ore, nickel prices entered an upward trend in November 2013 and reached their highest level in nearly three years—US$21,000 per ton—in May 2014. Subsequently, due to factors such as slowing demand and increased nickel ore exports from the Philippines, nickel prices began to fluctuate downward, falling sharply to US$15,000 per ton by November.

Figure 5: Price Trends of Copper, Aluminum, Lead, Zinc, Tin, and Nickel (February 2010 – November 2014). In this figure, A represents the price fluctuations of copper, nickel, and tin, while B represents the price fluctuations of aluminum, lead, and zinc.

According to statistics from SNL Metals and Mining, global exploration spending on non-fuel solid minerals has declined sharply for two consecutive years: in 2013, spending totaled $15.2 billion, a year-on-year decrease of approximately 29%; in 2014, this figure dropped to $11.4 billion, representing a year-on-year decline of 25% (Figure 6). Domestic mineral exploration spending has followed a similar trend, continuing the downward trajectory observed in 2013 throughout 2014. According to statistics from the Development Research Center of the China Geological Survey, nationwide geological exploration spending in 2014 fell by about 10% compared to the previous year, and the overall situation for geological exploration work across the country continued to deteriorate.

Figure 6: Global Exploration Budget for Non-Fuel Solid Minerals, 1996–2014

1.4 Large mining companies are improving quality and efficiency while accelerating the divestiture of non-core assets.

Affected by the global mining downturn, major international mining giants are cutting expenditures, continuing to optimize their operational structures, and accelerating strategic adjustments to respond to industry shifts. By speeding up diversification of production and sales, curtailing low-end capacity, and expanding premiums for high-quality minerals, these mining giants are striving to maintain their monopoly over premium resources and secure greater influence over pricing in the market. For example, BHP’s exploration budget has dropped from US$390 million in 2013 to US$185 million, a reduction of 47%, and is expected to decline further in 2015. The company is scaling back its assets in coal, aluminum, manganese, and silver while shifting its focus toward securing its positions in iron ore, copper, oil, and potash. Rio Tinto has launched an alumina development project in Queensland, Australia, and signed an agreement with Guinea to jointly develop the world’s largest iron ore project—Simandou—with an estimated value of US$20 billion, thereby safeguarding its position as the world’s leading supplier. AngloGold Ashanti has reduced its exploration budget by US$152 million and withdrawn projects from 13 countries that no longer align with its strategic priorities.

2015:

Global mining remains weak, with insufficient momentum for recovery.

According to the International Monetary Fund’s October 2014 forecast, the global economy was expected to grow by 3.3% in 2014 and by 3.8% in 2015, signaling a slow recovery—but the growth rate was revised downward from earlier projections. Weak global demand will continue to weigh heavily on the current downturn in the mining sector. Looking ahead to 2015, as the global economic recovery becomes increasingly multifaceted and complex, the global mining industry is unlikely to see significant improvement. Under the combined pressures of a strengthening U.S. dollar and slowing growth in emerging economies, international prices for bulk mineral commodities are unlikely to find any sustained upward momentum, and the global mining landscape will continue to undergo profound adjustments.

2.1 Multiple factors are driving international oil prices sharply lower, and a short-term rebound is unlikely.

Since the second half of 2014, international oil prices have fallen rapidly and sharply. One view holds that this is a conspiracy orchestrated by the United States in collusion with Saudi Arabia to put pressure on oil-export-dependent countries such as Russia, Venezuela, and Iran. Another view attributes the decline to a slowdown in the global economy, which has weakened demand for crude oil and triggered a cyclical drop in international oil prices. In reality, the rapid and substantial fall in international oil prices stems from a variety of factors, including shifts in the geopolitical landscape, changes in supply-and-demand dynamics, the dramatic increase in unconventional oil and gas production brought about by the U.S. energy revolution, which has diminished OPEC’s influence; the strengthening of the U.S. dollar; and tighter financial market regulations, all of which have reduced the disruptive impact of speculators on the market. Against this backdrop, it is unlikely that international oil prices will see any significant rebound in the short term.

Since 2014, global economic growth has significantly fallen short of expectations, prompting international institutions to continuously lower their forecasts for global economic growth. At the same time, the International Energy Agency has also repeatedly revised downward its projection for the 2014 increase in oil demand—from an initial estimate of 1.1 million barrels per day all the way down to 700,000 barrels per day, the lowest level in nearly five years. On the supply side, driven by the recovery of Libyan oil production, increased output from countries such as Canada and Brazil, and especially the substantial rise in U.S. production, the increase in global oil supply in 2014 reached approximately 1.8 million barrels per day—far exceeding the initially forecasted 1.2 million barrels per day. Therefore, the primary reason behind this recent drop in international oil prices should be the shift in the balance between supply and demand: the oil market has moved from a state of relative tightness to one of significant looseness—especially a degree of looseness that far exceeded earlier expectations.

On the other hand, the development of unconventional oil and gas resources is reshaping the global energy supply landscape. Shale oil—long-termly invested in and developed by the United States—is now entering a period of rapid production growth. Coupled with the development of offshore oilfields, in 2014, U.S. crude oil production rose sharply by 12.6% year-on-year, accounting for roughly 87% of the global increase in oil production. Faced with shifting supply-and-demand dynamics, OPEC countries not only find it impossible to stabilize prices through production cuts but are instead hoping to maintain their market share by expanding production. Clearly, this major shift in the unconventional energy supply landscape, driven by the U.S. energy revolution, has led OPEC to gradually lose its influence over the international oil market, serving as another key factor behind the sharp decline in global oil prices.

2.2 The continued strengthening of the U.S. dollar will restrain the upward pressure on prices of key mineral products.

In the normal commodity market, mineral prices are primarily influenced by supply-demand dynamics, the U.S. dollar index, and inventory levels. These three factors collectively drive the trends in global major mineral prices. For example, copper, lead, and tin prices—where supply exceeds demand—have been experiencing volatile downward trends; aluminum prices, which have seen significant inventory reduction, have stopped falling and begun to rebound; and a decline in zinc supply has spurred a rise in zinc prices. Meanwhile, the U.S. dollar index exhibits a strong negative correlation with gold prices as well as the prices of other bulk commodities.

As the U.S. economy embarks on a path of recovery, the Federal Reserve completely ended its quantitative easing monetary policy in October 2014, and expectations of interest-rate hikes are growing stronger. Meanwhile, the prolonged and complex nature of Europe’s economic challenges is placing significant downward pressure on the euro, while the European Central Bank’s increasingly accommodative monetary policy is also prompting investors to adopt a bearish stance toward the euro. These factors provide strong support for the U.S. dollar’s upward trend, reversing its weak performance of recent years. Since April 2011, the U.S. dollar index has gradually risen from 73 to 89 by December 2014. During the same period, gold prices fell from around $1,900 per ounce to $1,200 per ounce, and the LMEX index—a composite measure of prices for six nonferrous metals (copper, aluminum, lead, zinc, tin, and nickel) traded on the London Metal Exchange)—dropped from roughly 4,500 to around 3,000. Clearly, the strengthening of the U.S. dollar has exerted considerable downward pressure on crude oil and bulk commodity minerals priced in U.S. dollars. Given the continued improvement of the U.S. economy and the weaker-than-expected performance of other economies, the U.S. dollar index is expected to keep appreciating, putting downward pressure on the prices of major commodities in 2015 and making substantial rebounds highly unlikely.

2.3 China’s demand for mineral products has明显 slowed down, and there are few economies globally that can effectively step in to fill the gap.

After more than 30 years of rapid development, China’s economic growth has gradually slowed down since the third quarter of 2010. GDP growth has declined for 18 consecutive quarters, a period lasting over four years, and the trend has yet to stabilize. Since 2012, China’s GDP growth has been fluctuating around 7.5%. In 2014, the economy grew by 7.4% for the entire year—significantly lower than the average annual growth rate of 9.3% from 2008 to 2012. As a result, China’s economy has entered a “new normal.” Although some new and positive growth momentum has emerged in the economy following the comprehensive deepening of reform, this momentum is far from sufficient to fully replace the previous drivers of growth. The release of reform dividends is a gradual process. Currently, demand for steel, cement, and other such products has clearly slowed down; overcapacity in heavy and chemical industries is severe; automobile production and consumption have entered a phase of relatively low growth; and manufacturing investment growth has fallen from around 30% in the past to about 15%. Based on the spirit and implementation of the Central Economic Work Conference held in December 2014, the economic community generally believes that a GDP growth forecast of 7% for China in 2015 would be appropriate, and that in 2016, the growth rate might be adjusted to a range between 6% and 6.5%.

The slowdown in China’s economic growth has led to a severe oversupply of international bulk mineral commodities. Even more serious is the fact that other emerging economies are also experiencing a slowdown in their economic growth, with increasingly pronounced divergence among them. Among Asian emerging countries, Indonesia stands out with relatively strong economic performance: its real economic growth rate is projected at 6.5% in 2014 and is expected to reach 6.6% in 2015. However, given the risks posed by anticipated U.S. interest-rate hikes, rapid capital flows in global venture investments, and rising inflation, Indonesia’s economic vulnerability cannot be overlooked. According to the latest official economic report from India, its economic growth rate in 2014 is forecast to range between 5.4% and 5.9%, with potential growth reaching around 6% in 2015. Africa’s economic performance has been impressive, second only to that of emerging markets in the Asia-Pacific region; yet, its GDP remains relatively small, totaling just $2.3 trillion in 2014, making it difficult for Africa to take over China’s demand for resources as China’s economy slows down. The “reindustrialization” strategy pursued by the U.S. economy to fuel recovery will not significantly alter demand for traditional bulk minerals. Instead, the focus on high-end, clean, and smart modern manufacturing will drive growth in emerging high-tech minerals such as lithium, cobalt, and rare earth elements. Overall, it is unlikely in the short term that any major global economy can effectively step in to replace China’s demand, meaning global demand for mineral commodities will remain weak. This trend is expected to persist for some time—ranging from two to three years at the shortest, to five to six years at the longest.

2.4 Governments of various countries will continue to adopt a variety of measures to strongly support and promote the recovery of mineral exploration in their respective countries.

Against the backdrop of a sluggish global mineral exploration market, governments around the world have stepped up their support for the development of the mining industry. The most obvious manifestation of this trend is the steady increase in government budgets allocated to mineral exploration. According to statistics from SNL Metals & Mining, since the 2008 financial crisis, exploration budget allocations by governments and other institutions have shown a rapid growth trajectory, rising from US$163 million in 2008 to US$873 million in 2014—a remarkable increase of 435%. As a share of the total exploration budget, the proportion allocated to government and other institutional exploration has risen from 1.2% in 2008 to 8.1% in 2014.

Another market-rescue strategy involves fiscal and tax incentives as well as revisions to mining legislation. For example, in response to the decline in mineral exploration expenditures, the Australian government introduced a new exploration and development promotion program on May 13, 2014. This program aims to mitigate the adverse effects of the Minerals Resource Rent Tax (MRRT) policy—introduced during the Rudd-Gillard administration—on Australia’s mining industry. The program primarily supports small- and medium-sized exploration companies in carrying out mineral exploration activities, with the goal of increasing the discovery of new mineral deposits in Australia. Under this program, local Australian investors who allocate a certain amount of funds to grassroots exploration activities conducted by junior exploration companies within Australia can receive an equivalent personal income tax credit. The program runs for three years, with a total budget of AUD 100 million. The available tax credit amounts are capped at AUD 25 million for the 2014–2015 fiscal year, AUD 35 million for the 2015–2016 fiscal year, and AUD 40 million for the 2016–2017 fiscal year. Meanwhile, Australian states have adopted subsidy measures, providing financial assistance to junior exploration companies—especially those undertaking drilling activities.

In addition, Kazakhstan has announced amendments to its current mining law in an effort to boost international investment. Meanwhile, Canada has extended its flow-through stock program—the Mineral Exploration Tax Credit (METC), which offers a 15% tax credit for mineral exploration expenditures—as its latest iteration of the flow-through stock mechanism. The program was first introduced in 2000 for a five-year term and has been renewed annually ever since. In 2014, the federal government extended the program again, taking into account the need for infrastructure development in northern and remote regions as well as issues related to education for Indigenous peoples.

New Characteristics and Policy Recommendations for Global Mining Development

Overall, the global mining industry remains in a phase of profound adjustment, characterized by the overlapping of “four distinct phases.” First is the incubation period for mining recovery. Although a short-term rebound in the mining sector appears unlikely, industry insiders generally remain optimistic about medium- and long-term demand for energy resources and are actively seeking opportunities to prepare for the next upswing. Second is the incubation period for mining technology innovation. Faced with a challenging market environment and intense competition, mining companies are stepping up their efforts in developing exploration technologies for deep and covered areas, as well as advancing smart mining, efficient extraction techniques, and management innovations—aiming to turn innovation into a new engine for corporate growth. Third is the period of strategic maneuvering around mining policy adjustments. Many resource-rich countries are revising their policies and measures to promote domestic mining development: lowering entry barriers to attract investment, strengthening oversight of operations, and at the same time striving to reap greater benefits from resource exploitation or to better protect local environments and employment. Fourth is the period of reform in the governance structure of energy and resource management. Over the past few decades, the global energy and resource landscape has undergone dramatic changes. Emerging economies, led by China, have become major players in energy and resource trade; consumption patterns have shifted from west to east, and supply centers have become increasingly multipolar. Yet the existing governance framework for energy and resources was established four decades ago and can no longer keep pace with today’s structural shifts. Reform has thus become an international consensus.

In light of the new characteristics of today’s global mining industry, we offer the following recommendations.

3.1 Stabilize public-interest geological survey funding and promote structural adjustments in geological survey work.

Geological work is a precursor to national economic development and requires planning ahead by one to two five-year periods. If investment in geological exploration continues to decline, it will adversely affect the supply of mineral resources over the next five-year period and beyond. Under the combined influence of the current downturn in both domestic and international mining industries, the dual decline in domestic exploration investments for oil & gas and non-oil & gas resources, and the potential withdrawal of domestic geological exploration funds, we should fully take into account the characteristics of the current nascent recovery phase in the mining sector. We must leverage the “small effort yielding great results” effect of public-interest geological work, stimulate enthusiasm for social capital investment, and build up strength for the next round of mining prosperity.

First, we must strengthen geological surveys for oil and gas to stimulate commercial exploration investments. In contrast to the continued growth in overseas oil and gas exploration investments, China’s oil and gas exploration has shown signs of decline. In 2013, domestic oil and gas exploration investment totaled 76.4 billion yuan, a year-on-year decrease of 3.9%. This downward trend is expected to persist in 2014. To address this situation, there is an urgent need to leverage public-interest oil and gas geological surveys to support and boost commercial exploration investments, thereby maintaining the stability of the oil and gas exploration and development industry, ensuring energy resource security, and facilitating reforms in the energy management system.

Second, we need to strengthen geological surveys and evaluations of unconventional oil and gas resources. Unconventional oil and gas resources are characterized by lower carbon emissions and greater cleanliness, making them crucial for supplementing and replacing conventional oil and gas resources. It is essential to step up surveys and evaluations of shale gas, coalbed methane, natural gas hydrates, and uranium resources, thereby supporting the nation’s drive toward a green, low-carbon economy.

Third, we must strengthen the investigation and evaluation of key mineral resources and coordinate efforts to address both scarce minerals and strategic emerging minerals. Currently, the focus of China’s economic and social development on mineral resource demand has undergone significant changes. This calls for enhanced coordination and prioritization of key mineral resources—especially those that are scarce or strategically important and emerging, such as copper, aluminum, nickel, chromium, lithium, cobalt, and the three rare earth elements.

3.2 Strengthen investment in geological science and technology innovation as well as R&D in exploration technologies, with a focus on addressing major theoretical and technical challenges.

Currently, we are in a nascent phase of global innovation in mining technology. Modern Earth observation and exploration techniques are rapidly advancing, giving rise to a three-dimensional exploration system that spans from the air to the ground and from the surface to deep underground. This system has significantly improved exploration depth, precision, efficiency, and coverage, thereby enhancing the capabilities and reach of geological surveying efforts.

First, improving the efficiency of exploration coverage and deep-mining operations is a global technical challenge. Based on existing foreign data, after nearly two decades of development, this type of technology is nearing the threshold of breakthrough. Therefore, we must step up our investment and provide sustained support. Second, with the widespread adoption of new technologies such as digital technology and cloud computing, profound impacts are bound to be felt in modern geological surveys as well as mine construction and operation. Relevant departments should start studying these trends early on to enhance production efficiency. Third, the fundamental solution to rising labor costs and declining discovery rates in mineral exploration lies in intensifying technological innovation and accelerating the discovery of new types of ore deposits as well as large- and extra-large-scale deposits. Thus, it is essential to significantly strengthen R&D investments in geological science and technology innovation and exploration techniques, focus on major geological theories and critical scientific and technological challenges, and drive innovation and development in global mining technologies.

3.3 Seize opportunities to advance reforms in the mineral resource management system and introduce policies that promote mineral exploration.

The adjustment period in the mining sector is the optimal time to carry out reforms in mineral resource management, as stakeholder demands and interests are relatively low, making the process comparatively less challenging. Countries around the world are now adjusting their mineral resource management policies and entering a phase of policy bargaining. In response, we recommend advancing market-oriented reforms in the mineral resource sector in accordance with the central government’s requirements for comprehensively deepening reform and governing the country according to law, thereby enabling the market to play its pivotal role in resource allocation. First, we should accelerate the second revision of the “Mineral Resources Law,” clarify property rights related to energy resources, speed up the reform of geological exploration rights, and foster independent market players. Second, we need to clarify the relationship among the government, enterprises, and the market, ensuring that the government fulfills its duties appropriately and gradually transforms into a service-oriented government, allowing enterprises to become the main actors in the operation of mineral resources, assets, and capital, and enabling market mechanisms to function effectively. Third, drawing on international best practices, we should establish a scientific and rational system of taxes, fees, profits, and revenues that accurately reflects the state’s ownership of mineral resources.

Meanwhile, we can also draw on the tax and fiscal subsidy systems for mineral exploration used in Canada and Australia. For mineral resources that are critically needed by the country, we can provide appropriate subsidies or tax credits to risk exploration investors who have undertaken preliminary and general surveys and have carried out drilling activities. This will help share and reduce their exploration risks, stimulate market vitality, and promote the continuous improvement of the mineral exploration market.

3.4 Conduct in-depth research on trends in energy resource development and actively participate in global energy resource governance.

Since the beginning of the new century, driven by a combination of various factors, global energy resource prices have significantly deviated from market supply-and-demand dynamics, exhibiting sharp fluctuations that have impacted global economic development. Take oil and iron ore as examples: From 2006 to 2010, the maximum fluctuation in global oil demand was 2.3%, while the corresponding maximum price fluctuation for crude oil reached 247%. For global iron ore demand, the maximum fluctuation was 15%, whereas during the same period, the maximum fluctuation in China’s landed price of iron ore reached 160%. These figures clearly demonstrate that the global energy resource governance framework, established four decades ago, suffers from numerous functional shortcomings. It fails to adequately represent the voices of emerging and developing countries, cannot truly facilitate effective dialogue between energy-producing and consuming nations, and is ill-equipped to address the new risks arising from the multipolarization of energy resource supplies. As a result, reforming the global energy resource governance structure has become an international consensus.

Currently, China has become the world’s largest consumer and producer of energy, as well as the world’s second-largest importer of crude oil. It is also a major consumer and producer of bulk non-fuel mineral resources, playing an increasingly important role in the global energy resource arena—every move it makes draws intense global attention. Against this backdrop, China should seize the opportunities presented by the ongoing restructuring of its energy resource mix. Under international cooperation frameworks such as the G20, APEC, the Shanghai Cooperation Organization, and the BRICS countries, China should establish a governance platform for new energy resources, actively participate in the reform of traditional energy resource governance institutions, and thereby safeguard both China’s and the world’s energy resource security.

3.5 Accelerate the implementation of “Going Global” and build a responsible image for Chinese mining enterprises.

Currently, the global mining industry is in a downturn, and mining assets have significantly shrunk compared to their peak levels. As a result, the obstacles facing mining mergers and acquisitions are expected to ease, presenting enterprises with better opportunities to go global. However, we must recognize that over the past decade or so, Chinese companies “going global” have taken many detours and acquired numerous large-scale, high-grade resource assets. Yet, because they neglected environmental protection issues and community relations, these assets have either been left idle for long periods or remain mired in disputes, leading to suboptimal operational performance. Therefore, we need to learn from these experiences: in addition to seeking high-quality resources, we must also strive to enhance our corporate management capabilities and build a responsible corporate image.

Recently, the Canadian government issued a new Corporate Social Responsibility (CSR) Strategy targeting Canada’s mining and oil-and-gas industries, clearly outlining the consequences that companies failing to comply with widely recognized CSR best practices will face, as well as the dispute-resolution procedures to be followed. This strategy demonstrates the Canadian government’s firm commitment to ensuring that Canadian mining companies place great importance on and adhere to CSR advisory practices and international best practices. It also reflects Canada’s leading role as a global mining powerhouse in spearheading a new era of mining transparency. As the global mining industry is currently undergoing a major period of transformation, it is recommended that our government actively study and introduce similar regulations to standardize the mining activities of Chinese mining enterprises both domestically and internationally, urging them to shoulder greater social responsibility and actively participate in shaping the new global order for mining governance.