III. Increasing the Domestic Capability of Mineral Resources Supply

China relies mainly on the development of its own mineral resources and other natural resources to develop its economy. In the course of building a well-off society in an all-round way, China will first of all increase its domestic capability of mineral resources supply. China still has big potentials for mineral resources prospecting and exploitation. It has discovered more than 200,000 mineral deposits and mineralized formations throughout the country. So far, only some 20,000 of them have been explored and assessed. Since the 1980s, 72,000 mineralization abnormalities have been discovered, 25,000 of which have been checked, resulting in the discovery of 217 mineral deposits. The unchecked ones hold good prospects for mineral findings. The geological work is still at a low level in the vast western regions and the outlying zones in the eastern regions and the maritime areas under Chinese jurisdiction, and there are many unknown areas. All these show the directions for the work of prospecting for and exploiting domestic mineral resources in China in the future.

The Chinese government, in accordance with the requirement for the establishment of the socialist market economic system, has deepened the reform of the system for mineral resources exploration, and carried out the public and basic geological surveys and evaluation and the strategic exploration of mineral resources on the one hand and the commercial exploration of mineral resources on the other separately. In 1999, China set up the China Geological Survey, which organized a new round of large-scale survey of the land and resources, and initiated a basic exploration plan, a mineral resources prospecting and evaluation project and a resources survey and utilization technological development project, with the emphasis on the basic geological survey and the evaluation of the prospects for mineral resources in regions with a low level of geological work, especially the exploration and evaluation of the mineral resources potentials in the western regions and the exploration and evaluation of mineral resources in short supply, so as to provide a scientific basis for the planning work regarding mineral resources and administrative decisions by the government, and to furnish basic geological information regarding mineral resources for commercial prospecting. The strategic prospecting for mineral resources with government investment has attracted investment into commercial prospecting, and a number of areas with prospects of mineralization have become hot spots for commercial investment.

The Chinese government encourages and gives active guidance to the commercial prospecting that meets planning requirements, gears to market demands and focuses on economic results. It encourages commercial prospecting in central and western regions, remote and border regions and regions inhabited by ethnic minorities, as well as other economically less-developed regions with resources potentials. It encourages mining enterprises to carry out commercial geological prospecting in the outlying areas or the deeper formations of old mines with both market and resources potentials, and to find new substitute resources. It encourages investors to acquire exploration and mining rights, through fair competition, to sites of mineral deposits founded after prospecting with government investment. It encourages commercial prospecting for oil, natural gas, coal gas, coal with low ash and low sulfur contents, and fine-quality manganese, chromium, copper, aluminum, gold, silver, nickel, cobalt, metals of the platinum group, and sylvite. It also encourages the development of geothermal, mineral water and groundwater resources, in a scientific, economical and rational way, while encouraging the use of good-quality water for better purposes, and the prevention and control of pollution.

China will take the following measures to increase the domestic capability of mineral resources supply:

— Strengthen the exploration and exploitation of energy mineral resources. China has an abundance of coal resources, and there will be no major changes in the position of coal as China’s main energy source in the near future. However, the energy structure with coal as its main source causes serious air pollution, and some adjustments must be made to it. China will make full use of its coal and hydro power resources, and develop cleaning technologies for coal, including coal washing, dressing, liquefying and gasifying technologies. The scale of coal production in the eastern regions will be stabilized, stress will be laid on the development of the coal resources in Shanxi and Shaanxi provinces and the Inner Mongolia Autonomous Region, the coal resources in southwest China will be exploited in a rational way, and the coal resources in Xinjiang, Gansu, Ningxia and Qinghai will be exploited in an appropriate way. Greater efforts will be made to exploit coal bed methane. China boasts fairly rich oil resources, which, however, are insufficient to meet the demand. To solve the problem of insufficient oil and gas supply, China will first exploit and utilize its domestic oil and natural gas resources. Abundant petroleum resources have been discovered in the western regions. The Tarim and Junggar basins in Xinjiang, the Ordos Basin on the borders of Shaanxi, Gansu, Ningxia, Inner Mongolia and Shanxi, and the Qadam Basin in Qinghai all show great potentials for development. Important discoveries have also been made in the Bohai Sea area. In exploration and exploitation of oil resources, emphasis will be placed on prospecting work in the old oilfields on the basis of exploiting the deeper formations in the eastern regions, developing the oilfields in the western regions and accelerating the exploration of offshore oil and gas resources; at the same time, efforts will be exerted to make new discoveries in the new formations and regions to increase the verified oil reserves and maintain a rational rate of self-sufficiency in oil. In exploration and exploitation of natural gas resources, emphasis will be placed on the Tarim, Ordos and Qadam basins, and the Sichuan-Chongqing region along the west-east gas pipeline, as well as the East China Sea Basin, to increase the reserves, raise the output and gradually improve China’s energy structure.

— Strive for a rational distribution of regional geological exploration and exploitation of mineral resources. The comparative advantages of the mineral resources in the western regions are conspicuous, and their distribution is concentrated, thus providing the resources foundation for the formation of dominant pillar industries. Of the country’s 158 minerals with proved reserves, 138 are found in the western regions. The more than 30 minerals found in the western regions, including coal, oil and gas, sylvite, chromite, rare earths, phosphorus, nickel, vanadium, manganese, copper, aluminum and zinc, have comparative resources advantages in the country. With the implementation of the western development strategy, the accelerated construction of infrastructure facilities and ecological protection will help to connect quickly the resources and the resource-related products of the western regions with the domestic and international markets, thereby greatly improving the conditions for the exploitation of mineral resources and the entry of mineral commodities into the market. The Chinese government encourages the commercial exploration of mineral resources, including oil, natural gas, coal gas, high-grade coal, copper, gold, high-grade manganese, sylvite and groundwater in the western regions, with emphasis on the resource-rich areas, to promote the rational exploitation and deep processing of oil, natural gas, non-ferrous metals, sylvite, phosphorus and other mineral resources in the western regions and accelerate the change from resources advantage to economic advantage. In the central and eastern regions, emphasis will be placed on tapping the potentials of the mineral resources, strengthening their multipurpose use and expanding their processing industrial chain. Exploration of tungsten, tin, antimony, lead, zinc and rare earth resources will be started in accordance with the targets of the adjustment of the national industrial structure. Full play will be given to the advantages of the central and eastern regions in regional position and technologies in the exploitation of non-metallic minerals, so as to raise the level of deep processing and the degree of intensive utilization of non-metallic minerals, open new fields for their application and increase the market competitiveness of the products. At the same time, we will start the work of looking for substitute resources in existing mines in the central and eastern regions. Maritime areas under Chinese jurisdiction abound in mineral resources. The Chinese government will continue to strengthen the prospecting and exploitation of oil and gas resources in these areas and conduct research into other mineral resources, and take an active part in the international activities of seabed mineral resources research, prospecting and exploitation.

— Accelerate the structural adjustment of mineral resources exploitation and utilization. The degree of intensiveness and modernization of mineral resources exploitation in China is still somewhat low, and it is necessary to optimize the structure, innovate technologies and improve management in this regard. China will speed up the structural adjustment of mineral resources exploitation and utilization, increase productive capacity and raise efficiency. Through technological transformation of mining enterprises and improvement of their management mechanism, the Chinese government encourages the active introduction of clean production, and the application of mature and high and new technologies in mineral resources prospecting and exploitation, so as to raise the level of prospecting and exploitation. We shall introduce scale exploitation, raise the level of intensiveness and eliminate backward and scattered mining capacity. Mining enterprises which operate without licenses, cause environmental pollution, waste resources or do not have the proper conditions for safe operation shall be closed down in accordance with the law. Through market and policy guidance, we shall develop mining enterprise groups with international competitiveness. We shall continue to support and assist non-state-owned mining enterprises in their development.

— Raise the level of multipurpose utilization of mineral resources. Of China’s proved mineral resources, there are fairly large quantities of low-grade resources which are still difficult of utilization under the present technological and economic conditions. The exploitation and utilization of these resources is an important way to solve the shortage of mineral resources supply. The Chinese government encourages the accelerated conversion of resources with poor economic workability into resources of economic workability by strengthening the construction of the necessary infrastructure facilities in the resource-rich regions, improving the external conditions for the construction of mines, using high and new technologies, and reducing the cost of exploitation. To achieve multipurpose utilization of the country’s resources is one of China’s important technological and economic policies on mineral resources prospecting and exploitation. China carries out comprehensive prospecting, overall evaluation, comprehensive exploitation and multipurpose utilization of mineral resources. It encourages and supports mining enterprises to exploit and utilize low-grade refractory resources, and encourages and supports them to develop and use substitute or secondary resources to increase the sources of resources supply and reduce production costs. It encourages mining enterprises to pool efforts to tackle difficult sci-tech problems and pursue technological transformation for the multipurpose utilization of the “three wastes” (waste slag, waste gas and waste liquid). It also encourages the recycling of scrap metals and secondary resources, as well as the active exploitation of non-traditional mineral resources. China issued the “Interim Provisions Concerning Certain Questions on the Multipurpose Utilization of Resources” in 1985, promulgated the “Opinions on Making Further Multipurpose Utilization of Resources,” and published the “Catalogue of Resources for Multipurpose Utilization” in 1996. It has adopted preferential policies for the multipurpose utilization of mineral resources in the fields of enterprise income tax and value-added tax, and it encourages mining enterprises to raise the level of the multipurpose resources utilization by reliance on scientific and technological progress and innovations.

— Save energy and reduce consumption. China encourages the development of technologies for deep-processing of mineral products, new energy sources and new material technologies as well as technologies and technical processes that save energy, materials and water, reduce consumption and raise the efficiency of resources utilization. We shall develop renewable sources of energy and nuclear power, increase the use of clean coal and CBM, and reduce the proportion of coal directly burned. We shall develop new metals, new non-metals and substitutes for conventional mineral materials and reduce the dependence of an economic society on conventional mineral materials.

— Establish a system for the reserves of strategic mineral resources. China will put the major strategic resources in the reserves order by stages and in groups, on the basis of the present situation concerning the supply and demand of mineral resources, as well as its national strength.

— Solve step by step the problem of substitute resources in old mines. Some of the large and medium-sized state-owned mines in China have entered their middle or late stages, and have insufficient substitute resources. Some old mining enterprises can no longer continue their operations because their resources are exhausted. The Chinese government will increase its policy support for them by formulating rational financial and tax policies in line with the characteristics of mineral resources prospecting and exploitation, to create good external conditions for their survival and development. We shall encourage large old mines to look for substitute resources so as to prolong their service life.