SteelOrbis Shanghai
Many problems have been observed in the current development process of
China's mining industry. Some of them have seriously threatened the industry's healthy economic development and even the lives of people working in the industry. Recently,
China's State Council organized several nationwide networking
conferences in order to notify all the interested levels of government and official departments of the content of the reforms. As a result, the relevant governmental departments, including the Ministry of Finance and the State Administration for Work Safety, in succession issued detailed policies and measures. The goal of the series of reforms is to improve the current illogical and ineffective mining industry structure and also to regulate the disordered market system so as to lead the industry onto a path of healthy and sustained development.
The major reforms may be considered under two headings - the mineral resources compensation system, and mining industry management. These may be summarized as follows:
Mineral resources compensation system
Currently, the resource cost in mining in most regions of
China is close to zero. For example, the resource tax on coal was just RMB 0.3- 0.6 per ton from 1984 through 2005. This is an incredibly low level, and it led to excessive exploration and mining of natural resources on the part of local owners, thus resulting in serious waste and environmental pollution.
Now, however, according to the new mineral resources compensation system – whether developed or new mines are in question - mining operators will have to pay compensation for the exploitation of mineral resources. While 20 percent of payments will go to the central government, the other 80 percent will be redistributed by local governments with a view to guaranteeing the healthy development of the local mining industry. In addition, both exploration and mining rights of mineral resources are to be auctioned publicly, and a resource tax will be imposed by means of progressive taxation on the basis of the resource reserves rather than on the basis of output.
Strict management on mining
There are many deficiencies in
China's material resources structure. “Big number, small scale and scattered locations” defines the true current situation of
China's mines. Driven by profits, over-exploration and over-mining under ineffective management systems may be found across the whole country. The most serious charge is that mine owners force miners to work in illegal mines under very poor safety conditions. In recent years, there have been numerous safety accidents which have resulted in many fatalities. In November 2006, another sharp rise was seen in wok accidents increased sharply again. Evidence of the extreme seriousness of the problem; from Nov. 25 alone, three accidents in three separate mines resulted in the deaths of 78 miners, six others went missing, while another 28 were injured.
In order to resolve the above problems, the State Administration for Work Safety is to draft more strict managerial and punitive regulations and is to enhance its powers of implementation. In addition, the total number of mines in
China is to be reduced by 50-70 percent by the end of 2007 in order to achieve economy of scale in the mining industry and to reduce environmental pollution.
As a result of the above measures, the increase in resource costs will cause the price of mineral products such as
iron ore, coal and oil to tend upwards. However, if economy of scale and
production safety are guaranteed as expected,
China's mineral resources will have greater protection and will follow a path of more effective development.