China key player in global energy plan

Source: www.chinamining.org   Citation: China Daily  Date: September 11, 2015

Clean-energy development action already underway to reduce carbon emissions  

To combat climate change, a global energy network is necessary and China will play an important role in it, says Liu Zhenya, chairman of State Grid Corp of China, the country`s biggest electricity power supplier.

"The final construction of a Global Energy Network will reduce total global carbon emissions from the current 32 billion metric tons to 11.5 billion tons in the future, only half the amount in the early 1990s", says Liu.

Liu Zhenya, chairman of State Grid Corp of China, says the final construction of a Global Energy
Network will reduce global carbon emissions. Tuo Yannan / China Daily

According to Liu, the Global Energy Network is based on a technology called ultra-high voltage. A UHV super grid would be able to transfer renewable energy from where it is abundant to where people live and work at a low cost.

This kind of electrical energy infrastructure would enable different types of energy such as solar, wind, hydro and geothermal generated electric power to reach the market.

In the past three decades, China has relied on coal-burning power plants to fulfill the demand of industrial and economic growth, but Liu says that in recent years China has already started plans and practices in technical innovation including UHV transmission, smart grids and new energy, to prepare for the construction of the Global Energy Network.

In 2011, Chinese media reported that the country`s first new-energy utilization project had been established in Hebei province in the north. This four-in-one project includes the collection of wind power, solar power, energy storage and smart electricity transmission. It is expected to solve electricity generating problems caused by large-scale development of new energy.

"Starting with the Kyoto Protocol, the idea of energy saving seems good. However, it is a little bit unrealistic," Liu says. He believes carbon pricing will certainly increase the cost of development. Methods such as carbon pricing, carbon trading and carbon capture cannot completely solve the problem of carbon emissions, as it is very difficult to enforce on an international level, he says.

"Industrialized countries, developing countries and underdeveloped countries all have their own interests. The cost of carbon capture is very high and this road will be a dead end."

Liu also says the establishment of a Global Energy Network can reduce global carbon emissions and resolve climate change issues, including temperature and sea level increases due to energy emissions.

The earth is rich with solar and wind energy and just a small amount of these is enough to satisfy human usage. In the last decade electricity generated from solar and wind experienced rapid development and the cost dropped more than 70 percent and 30 percent respectively.

Given the 12-percent annual growth in clean energy, clean energy can satisfy 80 percent of energy demands in 2050, says Liu.

China will play an important role in this plan, he says. While Europe is still engaged in protracted discussions about carbon capture and carbon pricing without introducing practical programs, China has already started its clean development plan.

SGCC has built seven major projects since January 2009, including three UHV alternating current power transmission lines and four UHV direct current lines. Liu says that by 2020 the Chinese government plans to finish work on a 70,000-kilometer UHV transmission line.

As a result, the power transmission capacity will reach 380 million kilowatts, to guarantee the transmission of 350 million kW of hydropower, 240 million kW of wind power and 100 million kW of photovoltaic power generation.

By then, the annual consumption of clean energy will reach 1.9 trillion kilowatt-hours, replacing 790 million tons of coal and reducing carbon emissions by 1.6 billion tons and sulfur dioxide by 4.4 million tons..

Tang Shuyue contributed to the story.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

Sudan announces new partnership with China in oil, gas fields

Source: www.chinamining.org   Citation: Xinhua   Date: September 09, 2015

Sudan on Tuesday announced a new partnership with China to enter into new oil exploration projects and natural gas production at fields in eastern, central and western Sudan, official SUNA news agency reported.

"China has agreed to enter into new oil exploration projects and expand its oil operations in the country," the agency quoted Sudan`s Petroleum and Gas Minister Mohamed Zayed Awad as saying.

The Sudanese minister further explained that China has also agreed to introduce the natural gas processing technology to increase the production.

Sudan began production of natural gas in 2009 from Tawakul well in Sinnar State within Block No (8) with production of 3.7 million cubic feet of condensate gas a day, announcing that the total gas reserve at the block amounted to 25 billion cubic feet.

China is considered the biggest foreign investor in Sudan with the biggest investments in the country and Africa.

During his recent visit to Beijing, Sudanese President Omar al-Bashir signed a strategic partnership agreement with Beijing that included an agreement for China to begin production of natural gas at a field in Sinnar State.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China, Venezuela sign energy, mining cooperation deals

Source: www.chinamining.org   Citation: Xinhua   Date: September 07, 2015

Chinese Vice Premier Zhang Gaoli (R) meets with visiting Venezuelan President Nicolas Maduro before the closing ceremony of the 14th meeting of the China-Venezuela High-Level Joint Commission, in Beijing, capital of China, Sept. 2, 2015. (Xinhua/Ding Lin)
Chinese Vice Premier Zhang Gaoli addresses the closing ceremony of the 14th meeting of the China-Venezuela High-Level Joint Commission, in Beijing, capital of China, Sept. 2, 2015. (Xinhua/Ding Lin)

BEIJING, Sept. 2  -- China and Venezuela signed a number of cooperation deals in the energy and mining sectors at the close of a meeting in Beijing on Wednesday.

The 14th meeting of the China-Venezuela High-Level Joint Commission gathered about 300 officials and entrepreneurs from the two countries in Beijing from Monday to Wednesday.

Chinese Vice Premier Zhang Gaoli and visiting Venezuelan President Nicolas Maduro attended the closing ceremony.

China and Venezuela are good friends and partners with mutual trust and win-win cooperation, said Zhang.

During President Xi Jinping`s visit to Venezuela in July last year, the two sides decided to upgrade bilateral relations to a comprehensive strategic partnership, opening a new chapter in bilateral ties and showing the direction for future development, said Zhang.

Both sides should make joint efforts to implement the strategic consensus of the two leaders, he added.

Zhang praised the high-level commission and hoped it will contribute more to stable and sound development of bilateral ties.

Maduro, one of many foreign leaders who will attend Thursday`s military parade marking the 70th anniversary of the end of World War II, said he hoped China and Venezuela could strengthen their ties.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China steps up investment in Russia`s oil and gas sector

Source: www.chinamining.org   Citation: PTI   Date: September 07, 2015

Stepping up its investments in Russia`s oil sector, China has bought 9.9 per cent stake in a liquefied natural gas project from Russian company Novatek as the two countries signed several agreements coinciding with President Vladimir Putin`s current visit to Beijing.

China`s Silk Road Fund Co. Ltd., an investment fund to finance Beijing`s proposed "Belt and Road" initiatives, bought 9.9 per cent of shares of the LNG project from Novatek.

State-run Xinhua news agency which reported the agreement has not mentioned the exact amount of money being invested.

This is part of growing Chinese investments in Russia`s oil and gas sector, which is struggling due to sanctions from EU and the US over the Ukraine issue.

The two sides also scaled up their strategic, economic and military cooperation as Moscow moved close to Beijing.

Novatek owned 60 per cent of the Yamal Peninsula-based project`s shares before the purchase, while French company Total and China National Petroleum Corporation held 20 per cent of its shares respectively.

In total, the three companies had invested over USD 10 billion in the project. The purchase is the Silk Road Fund`s first investment in Russia.

China has earmarked USD 40 billion for the Silk Road Fund to support infrastructure projects along both routes of "the Silk Road Economic Belt" and "the 21st Century Maritime Silk Road."

Last year Russia`s Gazprom and China`s CNPC signed a historic gas deal stated to be around USD 400 billion which will provide China with the natural gas for the next 30 years.

Also last night the two sides signed several agreements during the meeting of Chinese President Xi Jinping and Putin.

Gazprom and CNPC have signed a memorandum on a third project as part of their strategic cooperation over the next five years, Russia Today reported.

The resource base for gas supplies to China from the Russian Far East will be Sakhalin, Gazprom CEO Aleksey Miller said, adding that the volume and timing of the new route will be defined later.

The eastern and western (aka Power of Siberia and Power of Siberia-2) routes are in progress.

Russian oil major Rosneft has advanced its deal to acquire a 30 per cent stake in China`s ChemChina Petrochemical (CCPC).

"The document signed in Beijing defines a pre-agreed price, transaction structure and corporate governance issues," said Rosneft.

Rosneft also agreed to increase oil supplies to Chinese petrochemical plants to four million tons a year, CEO Igor Sechin said.

Overall, Rosneft has signed agreements with China worth a potential USD 30 billion, thus strengthening the established cooperation even further, he said.

The Russian truck producer KAMAZ and Chinese Hawtai Motor Group have signed an agreement to establish a joint venture.

It is reported that Hawtai production in Russia will be organized on the premises of KAMAZ, while China will build a new plant for the production of KAMAZ trucks.

During his talks with Putin, Xi said China firmly sticks to the policy of developing its comprehensive strategic cooperative partnership and broadening all-round pragmatic cooperation with Russia.

Putin attended a massive military parade held here to commemorate China`s victory over Japan in the WW-II.

Most the Western countries, including the US, stayed away from the event.

Xi expressed appreciation for Russia`s support to the commemorations and a Russian guard of honour`s participation in the military parade.

He said the two sides should expand cooperation in the fields of finance, investment, energy and regional affairs, work out a long-term outline to combine the China-proposed Silk Road Economic Belt initiative and the Russia-led Eurasian Economic Union project, and implement their cooperation projects.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

Chinese jack-up gas platform to export to Mexico

Source: www.chinamining.org   Citation: Xinhua   Date: August 31, 2015

A Chinese firm will export a domestically developed gas compression jack-up platform to Mexico in early September.

With a daily gas compression capacity of 200 million cubic feet, the "Agosto 12" gas rig will go to the Cantarrel oilfield in the Gulf of Mexico, where it will be operated by a consortium of Mexican enterprises, said its developer Yantai CIMC Raffles Offshore Limited on Sunday.

Employing cutting-edge reinjection technology, the platform offers better performance in keeping the field`s pressure stable and cutting emission of toxic gases, the company said.

It is scheduled to start operation before the end of this year and remain in service for at least 25 years.

Liu Yanjia, vice president of the company, said the export of the gas rig would not only cater to the urgent demand of Mexican companies, but also benefit Chinese companies` future participation in the region`s oil and gas extraction.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

Chinese companies meet resistance when investing in Australia

Source: www.chinamining.org   Citation: Global Times  Date: August 31, 2015

Australia is China`s second largest target country for foreign investment. It is also the country where Chinese companies encounter the most "troublesome projects" when they invest abroad. Although challenges exist, Chinese companies have learned some valuable lessons that have helped them come up with new ways to succeed overseas.

The Rio Tinto Iron Ore Parker Point export loading facility in Dampier, Western
Australia`s Pilbara region. The facility is part of the mining operation of
British-Australian mining and resources company Rio Tinto. File photo: CFP

When Hu Yaobang, former general secretary of the Communist Party of China Central Committee, paid a visit to Australia in 1985, he was invited by former Australian Prime Minister Bob Hawke to visit the Pilbara region of Western Australia, the largest iron ore producing area in the world.

Years later, Hawke still remembered the details of that day when he picked up a piece of red iron ore and handed it to Hu, who then carefully put it into a pocket of his suit.

In 1987, China Metallurgical Import and Export Co purchased a 40 percent stake in Channar, a company under British-Australian mining giant Rio Tinto.

The deal marked China`s first important overseas investment project since the reform and opening-up in late 1970s.

China Metallurgical Import and Export Co merged into the State-owned steel company Sinosteel Corp in 1993.

In recent years, thanks to a A$27 billion surge in investment, China has overtaken the US (A$17.5 billion) as the largest foreign investor in Australia, according to a report released in 2014 by the Australian Foreign Investment Review Board (FIRB).

Australia has also become China`s second largest target country for overseas investment, according to the report.

However, Chinese companies that seek to make large-scale foreign investments are likely to encounter the most "troublesome projects" in Australia.

"Australia relies deeply on Chinese markets as China`s investment has soared year by year," a person close to FIBR was quoted as saying by the Hong Kong-based Phoenix Weekly magazine on Wednesday, noting that this situation has mingled hope and fear.

Although Chinese companies have had their share of difficulties while investing in Australia, some successful cases have lessons worth learning.

The secret of soccer teams

In March 30, 2012, Chinese telecom equipment maker Huawei Technologies Co invested $1.7 million to sponsor the Canberra Raiders soccer team.

The Raiders weren`t a great team, and the investment did not attract much attention, though one of its council members was Dennis Richardson, former director-general of the Australian Security Intelligence Organization.

Australian media interpreted the sponsorship as "Huawei`s attempt to pave road for future bids by sponsoring the soccer team owned by an influential Australian politician."

At that time, the US government had accused Huawei of posing a risk to its national security.

Under this influence, the Australian government disqualified Huawei from bidding for a National Broadband Network (NBN) project worth A$38 billion.

Still, its soccer strategy gained recognition within the company. Apart from renewing the contract with Raiders, Huawei announced in April this year its partnership with Gold Coast Suns, another team in the Australian Football League.

The Australian`s report cast the public spotlight on Huawei for the first time. It was Huawei`s first credibility crisis in Australia.

The company then began a bold trial. It created a board of directors in Australia to raise the company`s prestige and deal with the doubts and questions posed by the Australian government and media.

The board of directors was considered something of "dream team" because it included several Australian political heavyweights, including the former foreign minister Alexander Downer and former Victoria state premier John Brumby.

John Lauder, the former commander of the Royal Australian Navy, chaired the board.

Huawei continued to provide services to Australian telecom companies, and won orders for Australia`s network construction from Singapore Telecom and the British mobile phone giant Vodafone.

To clear up the doubts concerning the potential security threats that Huawei might pose to the country, Lauder suggested publicly that the Australian government should establish a security evaluation center to reduce the potential risks.

Government pressure makes up only a small part of the difficulties that Huawei encountered in Australia, Lauder said. The company`s bigger problem was that so few people had heard of it.

"In Australia, the company has to face politicians, business groups, the communications industry and the public; thus, various strategies are required," Lauder said.

Huawei tried hard to win public recognition in Australia through sports marketing, and the outcome seems sound.

`Australian mentality`

Australian newspapers paid close attention to news about China, especially concerning its stock markets, manufacturing, luxury market and investment policies for the retail sector.

Every move that China makes can impact Australia`s economy, the person close to FIRB told Phoenix Weekly.

For example, the price of iron ore has taken an unprecedented fall since 2014, leading the Australian media to declare that the country`s commodities boom was coming to an end.

According to its annual report on August 6, Rio Tinto`s net profit for the first half of 2015 fell 82 percent year-on-year to $806 million.

Analysts attributed the company`s plunging profits to the slowdown of China`s economy and its diminished demand for bulk commodities.

China`s investment in the mining industry and energy industry has undergone a major decline since 2013, according to a report released by KPMG and Sydney University in early 2014.

"Australia needs to make more effort to attract investment from China, given the increasingly intensified global market," said Doug Ferguson, head of KPMG`s Asia Business Group.

It was said so because there has been a type of mentality among the locals in recent years that Australia hopes to develop its economy with China`s abundant capital while worrying that these investments would run counter to the country`s interests because its resources will be sent to China.

Based on a public opinion poll conducted in 2014 by Lowy Institute, an independent international policy think tank, more than 31 percent of respondents regarded China as Australia`s best friend, overtaking Australia`s traditional ally Japan (28 percent). At the same time, 56 percent of respondents said that China had invested too much in Australia.

The results illustrates the dilemma faced by Australia`s Department of Finance, which is making adjustments to a series of policies, such as raising the threshold for investigations into foreign enterprises.

"The concerns are mainly about China`s large State-owned enterprises, which will be investigated in light of their relationship with the government, asset background and investment purpose," the person close to FIRB told Phoenix Weekly.

According to the current policies, China`s State-owned enterprises must get permission for investment from FIRB, regardless of the scale.

Under the "One Belt and One Road" initiatives, China`s overseas investment will continue to surge as more and more companies go global.

It seems that Chinese companies that plan to expand overseas should try hard to figure out how to deal with this "Australian mentality."

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China tests deep-sea mining exploration vehicle

Source: www.chinamining.org   Citation: Xinhua   Date: August 28, 2015

The first phase of trials on China`s independently-developed autonomous underwater vehicle (AUV) in the South China Sea has finished, the ocean resource authority announced Friday.

The deep-sea mining exploration vehicle, which is designed to reach depths of up to 4,500 meters, recorded a maximum depth of 4,446 meters over 15 dives spanning 35 days, according to a statement released by the general office of the China Ocean Mineral Resources R&D Association.

Under the supervision of the State Oceanic Administration, the association was set up in 1990 to explore deep-sea development and exploration.

With the ability to detect hydrothermal fluids, as well as photograph and survey terrain and relief, the vehicle will explore sea areas rich in sulfide deposits that contain various metals.

"The trial allowed us to verify certain functions," the statement said. The functionality tested included deployment and retrieval, deep-sea navigation, and optical and acoustic detection.

The vehicle will undergo its second- and third-phase trials in the southwest Indian Ocean in November.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

 CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

China, US seek `clean coal` agreement as industry struggles

 Source: www.chinamining.org   Citation: Associated Press   Date: August 26, 2015

China National Energy Vice Administrator Shi Yubo, left, and U.S Assistant Energy Secretary
Christopher Smith initial an agreement to increase collaboration between the two countries to develop technologies that capture greenhouse gases produced from burning coal during a Tuesday ceremony in Billings, Mont. China is the  world`s top consumer of coal. (AP Photo/Matthew Brown)

U.S. and China officials took a major step Tuesday toward an agreement to advance "clean coal" technologies that purport to reduce the fuel`s contribution to climate change - and could offer a potential lifeline for an industry that`s seen its fortunes fade.

The agreement between the U.S. Department of Energy and China`s National Energy Administration would allow the two nations to share their results as they refine technologies to capture the greenhouse gases produced from burning coal, said Christopher Smith, the Energy Department`s assistant secretary for fossil energy.

Terms of the deal were finalized late Tuesday. Officials said it would be signed at a later date.

Smith spoke after he and other senior officials from President Barack Obama`s administration met with representatives of China`s National Energy Administration during an industry forum in Billings. The discussions took place near one of the largest coal reserves in the world - the Powder River Basin of Montana and Wyoming, where massive strip mines produce roughly 40 percent of the coal burned in the U.S.

But clean-coal technologies are expensive, and efforts to develop them for commercial use have struggled to gain traction in the U.S. Some critics describe clean coal as an impossibility and say money being spent on it should instead go toward renewable energy.

China leads the world in coal use. It produces and consumes about 4 billion tons annually, four times as much as in the U.S.

Shi Yubo, vice administrator of China`s energy agency, told delegates to the forum that coal will continue to play a role in China`s developing economy. "But we need to pay special attention to developing clean coal technology," he added through an interpreter.

Shi said China was seeking to develop more demonstration projects that capture carbon to prevent it from escaping into the atmosphere. He acknowledged that efforts to put the greenhouse gas to beneficial use "are still far behind."

Meanwhile, the U.S. coal industry has suffered a beating in recent months, with major mining companies going bankrupt.

The Interior Department is proposing hikes on coal royalties and possibly lease payments for publicly owned reserves of the fuel in areas such as the Powder River Basin. Also, cheap natural gas is squeezing out demand for coal, and Obama has made reductions in carbon dioxide emissions from coal-fired power plants a key component of his climate policy.

"You`ve got to develop wind and solar and develop nuclear, but you also have to deal with the challenge of reducing the greenhouse gas impacts of coal-fired power plants," Smith told The Associated Press. "It`s positive if those projects (to capture carbon) get built here. It`s positive if those get built in China and India and Europe and around the world."

Almost one-third of energy-related carbon dioxide emissions in the U.S. come from burning coal, equivalent to 1.6 billion tons of the gas in 2014. By comparison, two clean coal projects that Smith described as closest to completion ¡ª the Petro Nova project in Texas and the Kemper project in Mississippi ¡ª would capture less than 5 million tons of carbon dioxide annually. He said the interactions between his agency and its Chinese counterpart created opportunities for companies from both countries to come together on ways to meet ambitious plans to cut emissions.

Montana Gov. Steve Bullock opened Tuesday`s forum by telling delegates from the two countries that "climate change is real." The Democrat pointed to the smoky skies outside the meeting hall ¡ª caused by record-setting forest fires to the west ¡ª as an indication of how its effects are manifest.

Bullock later was joined by Wyoming Gov. Matt Mead, a Republican, who said that regardless of his personal belief on whether climate change is real, economies around the world already are reacting to it. He rejected the notion that clean coal is a pipe dream.

"In the climate change debate, we have gotten sort of stuck in the mud, calling each other names. We need to move beyond that," he said.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

Getting the global price right

Source: www.chinamining.org   Citation: China Daily   Date: August 18, 2015

Chinese companies are increasingly trading in global commodities to secure long-term supplies and exert more influence over pricing mechanisms.

As one of the world`s largest consumers of commodities such as agricultural products, metals, minerals, oil and gas, China has historically purchased these commodities from international markets at unfavorable prices due to lack of participation in international commodity exchanges, which set commodity prices.

But that is now changing as increasingly, Chinese banks, securities firms and commodity trading firms are joining international commodity exchanges, mainly to buy and sell commodities on behalf of their clients in China. This in turn helps them hedge against future price fluctuations.

For example, if a Chinese oil refinery knows the quantity of crude it requires in a year`s time to meet production targets, it can purchase Brent Crude on the US-listed Intercontinental Exchange, or ICE, at a price determined by the futures market. By receiving a locked-in price, the firm is able to accurately determine its business model and be certain of profit margins.

Before such trading activity became possible, the same company would have needed to either buy crude oil in bulk for storage, or wait a year until the oil is required, facing the risk of increased prices.

"It is natural for Chinese companies to take a more dominant position in the global commodity trading space, both physically and financially, because China is one of the biggest commodity consumers in the world," said Bjarne Schieldrop, chief analyst of commodities at SEB, a Nordic bank.

He said that in the commodity markets, the fundamentals of supply and demand determine the long-term price, but in the short-term, on the day when a trade is made, the price is set by financial markets because sentiment can move prices up and down.

"At the moment I think China is huge on the physical side while the rest of the world has dominance in the financial markets," Schieldrop said.

One of the reasons that China has historically not engaged in commodity trading on financial markets was because it was highly focused on securing actual supplies.

In addition, China`s capital account restrictions, which limit the amount and type of financial flows into and out of China, also has been a factor behind its limited involvement in international commodity trading. The liberalization of the capital account in recent years is allowing more Chinese banks to trade on international exchanges, Schieldrop said.

Chinese companies` increased trade in commodities in foreign exchange is also a natural continuation of rising Chinese investment and financing activities in the international commodity markets, said Josh Clarke, counsel in the Perth office of the law firm Squire Patton Boggs.

For example, in Australia, as Chinese companies have bought shares in natural resources firms, more of those Australian companies` activities are financed by Chinese banks that already have a working relationship with their shareholders.

This trend has led Chinese banks into the commodity financing sector, and as a result of such involvement, participation in the commodity trading and hedging space became a natural progression, Clarke said.

This increasing commodity trading by Chinese banks will benefit the global commodity trading markets by increasing liquidity. It will benefit the clients of the Chinese banks, for example, through making available to those clients the means to hedge their forward price risks.

In 2012, Bank of China`s commodities trading arm, BOCI Global Commodities (UK) Ltd, became a member of the world`s biggest metals bourse, the London Metal Exchange, giving it the right to trade by phone and electronically. This was followed by China Merchants Securities, one of China`s largest securities companies, and GF Financial Markets, a Chinese derivatives broker, which also started trading on the LME.

Earlier this year, Bank of China became the first Chinese bank to join the auction process that sets gold prices in the London market, run by ICE Benchmark Administration.

These initiatives by Chinese banks are happening at a time when Western banks are retreating from the commodity trading sector due to declining profitability in the sector and increasingly stringent financial regulations following the 2008 financial crisis.

Most of these financial regulations demand stricter capital requirements for banks, such as Dodd-Frank, EMIR, and Basel III, and limits on proprietary trading by banks, such as the Volcker Rule.

Last year, Barclays said it would give up most of its metals trading, and JPMorgan agreed to sell its physical commodities business to Mercuria, a Swiss commodities trading firm.

Chinese banks` bigger balance sheets mean on average they have more capacity for commodity trading while still meeting the requirements, Clarke said.

"Chinese banks trading in this space have bigger balance sheets to start with than other banks, so the overall risk from such activities may be lower. Potentially, the returns for Chinese banks may be higher, or pricing keener, if the cost of capital used for such trading activities is lower than other banks," Clarke said.

Meanwhile, China is also setting up its own commodity exchanges to allow Chinese buyers and sellers to trade on a platform in their own time zone, and in a market which they are more familiar with.

Because commodity exchanges in China have trades denominated in yuan, Chinese participants are not subject to exchange risks or capital controls that they would face by participating in overseas exchanges.

China has three key commodity exchanges, the Shanghai Futures Exchange, established in 1999; the Dalian Commodity Exchange, established in 1993; and the Zhengzhou Commodity Exchange, established in 1990. None allows foreign participation because of China`s capital controls.

Fang Jian, a partner at the London-based law firm Linklaters, said that China`s three biggest domestic exchanges are all exploring how they can best open up to foreign trading. It is possible that the government will eventually allow foreign traders, who meet certain criteria, to take part.

"What the Chinese regulators are doing is realistic. The process of liberalization for commodity trading in China may be quite similar to the process of gradually allowing qualified foreign institutional investors to participate in China`s stock market," Fang said.

Despite the Chinese commodity exchanges being relatively young, they have already gained significant influence in the commodity industry because of the massive volume of trade in the country.

They are also increasingly providing benchmark prices for commodities in their respective sectors, according to Daniel Morgan, global commodity analyst at UBS.

For example, iron ore traders now look to the Dalian Commodity Exchange for iron ore prices as a reference point, due to the large volume of trade on the exchange, Morgan said.

"As many iron ore buyers use the Dalian Commodity Exchange to hedge their risks, the exchange quickly received significant liquidity. When it first started trading, we and other people in the market were surprised by how quickly this liquidity came. Given its status now, it`s hard for anyone else to try to wrest it away," he said.

About CHINA MINING

Since first held in 1999, the scope and influence of CHINA MINING has grown rapidly year by year. As a global mining summit forum and exhibition, CHINA MINING Congress and Expo has become one of the world’s top mining events, and one of the world’s largest mining exploration, development and trading platforms, covering all aspects of the whole mining industry chain, including geological survey, exploration and development, mining rights trading, mining investment and financing, smelting and processing, mining techniques and equipment, mining services, etc. playing an active promotion role in creating exchange opportunities and enhancing mutual cooperation between domestic and foreign mining enterprises.

CHINA MINING Congress and Expo 2015 will be held at Meijiang Convention and Exhibition Center in Tianjin on November 20th-23rd, 2015. We invite you to join the event and to celebrate the 17th anniversary of CHINA MINING with us.  For more information about CHINA MINING 2015, please visit: www.chinaminingtj.org.

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