---- by Lilian Luca, The Beijing Axis ----

China's mining and mineral processing sector has for years been one of the most significant markets for the world's technology leaders. Increasingly, however, the tables are turning. Innovations within China compel more exports of its mining and processing technology globally. In the process, China is regaining its lost position as the world's technology leader, to include in mining and minerals processing.

Over the past ten years, companies from emerging markets such as China, India, and Brazil have begun contributing much more to their respective industries globally by introducing innovations developed domestically. Emerging market innovators bring cost-savings and feature innovations that market leaders in the West frequently ignore.

Examples of such innovators include China's CIMC (containers), ZMPC (port cranes), Lenovo (PCs) and Galanz (microwaves); India's Tata Motors (small, efficient cars) and Infosys (IT outsourcing); as well as Brazil's Embraer (aerospace) and Mexico's Cemex (cement). These companies have attacked entrenched worldwide leaders in their respective industries by focusing their creative efforts on mid- and lower-priced segments around the globe, cutting costs dramatically across value chains and introducing features that are market- and segment-specific.

The Chinese mining industry is not as world-renowned as Chinese manufacturers of computers, electronics and white goods. Yet the pace of change is as frenetic in China's mining industry as it is in the nation's other industries; as progress unfolds, international miners will hear more frequently about Chinese mining companies and their operational and technological methods. This article will attempt to give a general overview of the current state of technology in the Chinese mining and minerals processing industry, and will outline the trends to watch in the near future.

China's economic stagnation and relative isolation up until 1978 -- when the 'open door' policy was introduced by the Chinese government -- meant that local mining and mineral processing firms have only recently had the chance to converge with international firms in terms of technology, efficiency and pace of innovation. Worldwide leaders in mining technology (Atlas Copco, Caterpillar, Terex, etc.) and processing technology (Outotec, Bateman Engineering, Siemens VAI, Metso Minerals, etc.) have been very successful in selling technological solutions to Chinese companies over the past 20-30 years. More recent introductions include copper smelters for Jiangxi Copper Corporation and Tongling Nonferrous Metals Group by Outotec, which utilise Flash Smelting and Flash Converting technologies; titanium oxide slag smelting technology for Chinese Yunnan Metallurgical Group by Bateman Engineering; Sino Gold's introduction of BIOX bioleach processes for gold from Gold Fields.

Specific to copper processing are the issues of extraction from poor quality ores, cost and scale efficiency, and environmental considerations that increasingly draw the attention of Chinese companies to advanced processing technologies. Solutions have been proffered in the form of Outotec's Flash Smelting and Hydrocopper, UBC/Bateman Engineering's Galvanox copper sulphides mixture leaching technology, and Teck Cominco's CESL Copper Process for copper sulphide oxidization.

During the booming past decade, Chinese mining and processing leaders massively expanded in scale and amassed significant cash reserves. In a quest to climb the technology ladder and to advance with the latest, most efficient, scalable processes -- and in a financial position to afford many of the best worldwide solutions -- China has transformed into one of the most attractive markets for mining technology and engineering companies. Additionally, they are becoming increasingly active in the global acquisition of mineral assets, a process that will further push Chinese mining and processing technology abroad via partnerships between Chinese resource and engineering firms.

Not all technologies are equal from the perspective of the Chinese market. The priorities have shifted in accordance with market trends, geological conditions, the state of the economy and the country's development priorities. Until recently, high demand was placed on the lowest-cost production techniques, emphasising maximum extraction from poor-quality ores through the utilisation of massive scale processing facilities. The Chinese market for mining and ore processing technologies has since shifted toward diversification. The new focus is on managing environmental damage, medium-scale production, and the advancement of safety measures. Partially contributing to this shift are medium-sized players with increased access to financing, the Chinese government and society's stricter views on protecting the environment.

Chinese companies are already world leaders in select, niche markets such as rare-earth metals production. Pioneers of Chinese mining and minerals processing, rapidly advancing technologically and gaining an increased share of the world market, include CITIC Heavy Industries (cost-effective large grinding mills), Lianyungang Huanghai Machinery (drilling equipment), LONGi Magnet (separation equipment), BGRIMM and Huabao Industry (lead flash smelting), ENFI Engineering and Shandong Dongying Fangyuan (oxygen bottom-blow smelting and copper-nickel flash smelting).

Currently, Chinese mining and processing technology companies have three main avenues for gaining market share worldwide, each driven by different factors: installations in China (local cost and marketing advantages); projects for Chinese mining companies abroad (long-standing relationships and technological familiarity) and developing country mining and processing companies (cost concerns and inexperienced local players).

Yet as Chinese companies are becoming more assertive abroad -- and as their technological advances become more prominent globally -- there is a strong case that even global majors will outsource the technology and engineering requirements of their new projects to Chinese companies. After all, China is the 'workshop of the world'. The nation's expansion in the mining industry and its knack for development may soon make it the world's workshop for mining technology as well. China is regaining its lost position as world technology leader to include mining and minerals processing.

Lilian Luca, Director
luca@batemanbeijingaxis.com

First published: June 8, 2010

Last updated: June 8, 2010

LL/AH 06/10