China Mining Report Q3 2008 - Companies and Markets adds new report

China¡¯s metals and mining production was impacted by the devastating earthquake of May 2008, which destroyed great swathes of the Sichuan province. State news agency Xinhua reported in early June 2008 that industrial and mining firms suffered some CNY206.53bn (US$29.5bn) in losses as a result of the earthquake. The impact on minerals prices was mixed.

The National Development and Reform Commission (NDRC) stated to the local media that the production capacity shut down due to the earthquake only accounted for some 0.2% of total Chinese output. However, zinc prices were expected to rise more sharply, as the Sichuan province contained several zinc plants and accounts for some 10-15% of total Chinese zinc output.

Endowed with abundant mineral wealth, the country leads in the production of copper, coal and aluminium. Further, its 1200 gold mines position it fourth in production of gold worldwide ¨C a metal of which it is also the world¡¯s third-largest consumer. The national government is taking active steps to make the mining industry more competitive.

However, China¡¯s mining industry possesses its share of downsides. Primary among these is the scourge of illegal mining that has resulted in a high accident rate in the country. To tackle this issue, a US$14.42mn project has been launched by the UN to educate and train coal miners in five Chinese provinces, while the government is looking at revamping the country¡¯s mining policies and regulations.

The value of the Chinese mining industry is forecast to reach US$630bn in 2012, accounting for a significant portion of total GDP. Although the earthquake of May 2008 in Sichuan may well have a negative impact on the short-term performance of the industry, we believe the country will prove capable of bouncing back from this setback and make up any lost ground over the totality of the

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