Investigation report of Zijin Mining Group Co., Ltd.

In April 2007, I visited Fujian Zijin Mining Group Co., Ltd. The development of this company reflected the development course of China mining enterprises in the process of economic system transformation, and provided experience for institutional innovation to promote mining development.

(1) Basic information

Fujian Zijin Mining Co., Ltd., formerly known as Shanghang County Mining Company, was established in June 1986. After a series of changes, in May 2004, it was reviewed and approved by the company's 2003 annual general meeting of shareholders and renamed as "Zijin Mining Group Co., Ltd.".

Zijin Mining Group Co., Ltd. (hereinafter referred to as Zijin Mining) is a large-scale comprehensive mining group engaged in the exploration, mining, beneficiation, smelting and sales of gold and other mineral resources, and mainly focuses on gold production. It has the largest mining scale and the largest single gold mine in China, and has more than 20 gold mines in Xinjiang, Guizhou, Tibet, Jilin, Inner Mongolia, Qinghai, Heilongjiang and Henan. See Table 4-7 for the main production and operation results from 200/KLOC-0 to 2006.

Table 4-7 Main Production and Operation Achievements of Zijin Mining

As can be seen from Table 4-7, the sales revenue of Zijin Mining has increased by 35 times and the total profit has increased by 34 times in seven years. Although these two sharp increases are all due to the rising prices of mineral products, it is an indisputable fact that the gold output has increased by 1 times, with an average annual growth rate of 70%, which is rare in the development of mining industry at home and abroad and is a miracle.

So, how did its miracle come from? What is its main experience? On the basis of investigation and study, I tried to give some answers.

(2) Institutional innovation is a powerful driving force for the company's development.

The company started from a small coal mine. 1985, Southwest Fujian Geological Brigade discovered a copper-gold deposit in Zijinshan, Shanghang County, and submitted a detailed exploration report. 1993 Shanghang County Finance Bureau invested 5.24 million yuan to develop and establish Fujian Zijin Mining Corporation. 1994 was renamed Fujian Minxi Zijin Mining Group Co., Ltd. ... but the real enterprise restructuring was after 1998, and the total * * * took three major steps:

The first step, 1998, is to increase employee stock ownership on the basis of the original limited company and establish the state-controlled Minxi Zijin Mining Group Co., Ltd.

Second, in 2000, through further restructuring, Fujian Zijin Mining Co., Ltd. was established by eight legal entities to absorb private shareholders.

Third, in 2003, it was listed on the Hong Kong H-share market and issued 400,544,000 H-shares, thus officially becoming a listed company.

See Table 4-8 for the ownership structure in 2006.

Table 4-8 Ownership Structure of Zijin Mining

This system is called innovation because it played a decisive role in the development of Zijin Mining as far as the original system is concerned, because it not only has the name of shares, but also has the reality of shares. Its outstanding features are:

(1) really got rid of the situation that government and enterprises do not distinguish and interfere in many ways. Under the premise of operating according to law, the board of directors can truly act according to market rules, create social wealth and pursue profit maximization, and be active in the field of market competition. Zijin implements joint-stock system. Although Shanghang county government is in a relative holding position, the leadership of Wuren county has never conducted direct administrative intervention. At the same time, even if you want to get involved, it is difficult to achieve it in front of a truly independent board of directors. This is the role of the system.

(2) Really formed elite governance. The two-level leading bodies of the group company, its wholly-owned enterprises and holding enterprises are composed of elites who know both economy and technology, production and management, and are familiar with their counterparts at home and abroad. The shrewdness of this team is highlighted in major business decisions and employment. They started from Zijin copper and gold mine, and in less than ten years, they successively controlled 88 domestic enterprises and 7 foreign companies. By implementing the "national talent strategy", they absorbed a large number of elites and provided necessary talents for the development of Zijin Mining. They are far-sighted and put forward the development strategy of "three firsts" (that is, the three-step strategy of leading domestic gold industry, leading domestic mining industry and advanced international mining industry), which embodies a high sense of responsibility and mission.

(3) Its corporate governance structure has really played a balancing role. In particular, the company's board of supervisors has formed a complete supervision system to comprehensively supervise the company's decision-making and executive levels. The board of directors and managers also take the initiative to accept supervision. This ensures that there are few mistakes in the implementation of major decisions and important matters of the company; Even if there are mistakes, they will be corrected quickly.

(4) Its ownership structure has a mechanism to stimulate the enthusiasm of operators. Among the shares of Zijin Mining, except for the state, legal persons and the public, the chairman personally holds less than 1%. Although the proportion of each part of this operator is not large, the absolute amount of assets and profits is very large, and the gains and losses of his income far exceed his annual salary, so it is of great significance to the operator. It is this important interest mechanism that integrates the personal interests of operators with the overall interests of Zijin Mining.

(C) management innovation, the formation of efficient and low-cost operation mechanism

Over the years, Zijin Mining has achieved market-oriented operation as much as possible, instead of "big and complete, small and complete", and the company has formed a management system centered on financial management. Through scientific and technological progress, the grade of selected ore has been reduced, on the one hand, the gold reserves have been increased, on the other hand, the ore quantity has been increased. In the face of a large increase in ore quantity, if there is no large-scale operation, it will inevitably lead to an increase in development costs, which in turn will lead to a decrease in the grade of selected ore and weaken the role of scientific and technological progress. In this case, they get economies of scale through management innovation, that is, they contract out all mine infrastructure and mining projects, introduce competition mechanism, conduct bidding and optimize construction units. This measure not only greatly saves the capital investment in mine construction and mining, but also greatly reduces the cost of mining and transportation and reduces the burden on enterprises. In terms of labor and employment, the full-time employment system is implemented, and competition and elimination mechanisms are introduced to transform employees from "masters" to "migrant workers", reduce the number of employees directly managed by the company, and get rid of many worries.

(4) Scientific and technological progress has made important contributions.

Zijin Mining spends more than 5% of its sales revenue on science and technology every year, which provides an inexhaustible motive force for enterprise development. This enterprise-oriented scientific and technological progress is highly targeted, and all of them seek breakthroughs in key links. Taking Zijinshan copper-gold mine as an example, the combined process of gravity separation+heap leaching+carbon slurry was creatively developed, which created a model of heap leaching for gold extraction in humid and rainy environment in the south. Its main economic and technical indicators have reached the international advanced level, and the average beneficiation grade of gold ore has dropped from 3g/ton in 1995 to 0.679g/ton in 2006. This scientific and technological achievement alone has increased the gold reserves of the mine from 5.45 tons to 200 tons, creating five national firsts in one fell swoop: the largest mineral processing scale; The selected grade is the lowest; Unit infrastructure investment is the least; The cost per ton of ore is the least; The economic effect is the best.

They also used this technology to revive the Shuiyindong gold mine in Guizhou, which was abandoned by a Canadian mining company with an investment of US$ 2 million. The deposit is a typical fine disseminated refractory deposit. The company adopted the self-developed heating atmospheric chemical pre-oxidation technology, which was successfully developed, with an investment of 30 million yuan and a profit of 200 million yuan.

(5) The premise of development is a solid foundation of mineral resources.

A prominent feature of mining industry is that its labor object (mineral resources are equivalent to raw materials for processing industry) is a one-time supply, which has been used for many years. On the one hand, this feature shows the extreme importance of mineral resources (reserves) to mining production, on the other hand, it also shows that once an enterprise obtains mineral resources, the demand for subsequent resources is not so urgent for a considerable period of time. This is not the case with Zijin Mining. From the beginning, enterprises attached great importance to the rights and interests of mineral resources and regarded them as the basis for the company's survival and development. Enterprises put forward to make mineral resources bigger and bigger, make enterprises stronger and stronger, and make shareholders and employees richer and richer. In this "big, strong and rich" relationship, mineral resources are the basis of strength and wealth. Therefore, Zijin Mining has continuously increased its possession of mineral resources through two major channels. First, through connotative expansion, that is, improving the resource utilization rate of existing mineral rights, changing small and medium-sized mines into large mines and large mines into extra-large mines, greatly increasing the recoverable resources; Second, through extension expansion, that is, by buying out mining rights, acquiring shares of mining enterprises, merging mining enterprises, cooperative exploration and development, bidding for mining rights, application for registration of mining rights, cooperative exploration of multiple mining rights industries, etc., the amount of resources will be increased. By 2006, Zijin Mining had 179 exploration rights and 27 mining rights. The main mineral resources occupied are as follows: 455 tons of gold; Platinum and palladium 15 1 ton; 6.7 million tons of copper; 2.38 million tons of zinc; 540,000 tons of nickel; 400,000 tons of lead; 260,000 tons of molybdenum; 65438+ ten thousand tons of tin; 654.38+800 million tons of iron ore; 300 million tons of coal.

In order to possess resources, they invested a lot of manpower, material resources and financial resources in geological exploration, from area survey to mine inspection, and dared to take risks in prospecting. In 2006 alone, the investment in geological prospecting was1.1.80 million yuan, and 7 exploration projects were implemented, with 87,000 meters of drilling and 0/.3 million meters of pit exploration completed.

(VI) Corporate culture is the spiritual driving force for the sustainable development of mining enterprises.

Corporate culture is the ideology, style, values and code of conduct formed by the enterprise itself in its operation. It is also a belief and behavior with corporate personality. The corporate culture of Zijin Mining is outstanding in dealing with social related issues.

(1) In dealing with the relationship with local residents and the government, the enterprise insists on supporting the practice, mining benefits one party, benefiting the people and facilitating the people, and has never clashed with the local area because of mining, road construction and walking, so it is very popular wherever it goes, and always has a good environment for mineral development.

(2) Ensure safe production, adhere to the unity of speed, scale, benefit and safe production, fully implement the responsibility system for safe production, and adhere to the principle that "whoever is in charge is responsible". Therefore, it has maintained a good record of safe production for many years in a row. Among them, the safety production of Zijinshan copper and gold mine passed the provincial review and was rated as A-class mine.

(7) Enlightenment and suggestions

Through the investigation of Zijin Mining Group Company, I felt a lot and was deeply impressed. For the construction of mining system under the socialist market economy system, it gives us enlightenment from the perspective of government management of mineral exploration and development.

1. Vigorously developing joint-stock mining groups is the basis for strengthening mining management.

The management system of mining enterprises plays a key role in the protection and rational utilization of mineral resources in China. To some extent, what kind of mining enterprise system there is, what kind of resource view there is. The shareholding system of Zijin Mining has created brilliant achievements in the possession and utilization of mineral resources: the gold reserves have increased from 5.5 tons to 305 tons; Turn abandoned gold mines that are difficult to choose and smelt into exploitable and profitable mines. All this is done by the enterprise's own mechanism, without any government intervention. It shows the importance of correctly selecting the mining enterprise system for the government to effectively manage mines. Zijin mining system has such a role, mainly because it has the following characteristics:

(1) Its shareholding structure is reasonable, and it can form a mechanism of mutual restraint and mutual encouragement, which can effectively resist external interference;

(2) Its internal governance structure truly checks and balances each other, which can effectively avoid major mistakes;

(three) large scale, strong strength, can comprehensively coordinate exploration, production and scientific research, and provide inexhaustible power for the sustainable development of enterprises;

(4) Its corporate goals are far-sighted, its management is guided by long-term strategies, and it has its own corporate culture, which can effectively avoid quick success and instant benefit.

2. Mining enterprises are the main body of mineral exploration and the inevitable requirement of the new mining system.

Regardless of the production process or cost compensation, mineral exploration has always been a part of the mining industry, and the long-term separation of solid mineral exploration and development in China is the product of the planned economic system. In the planned economy period, institutions explored and enterprises exploited, while in the market economy, exploration and development were organically combined. At present, the trend has changed to the initial investigation of local governments and detailed investigation of enterprises, which runs counter to the operation of market economy and deserves attention. The experience of Zijin Mining is that mineral exploration should be carried out by enterprises from the beginning of prospecting. These enterprises can be independent of mining enterprises, and it is enough to link them through the market. In other words, the market subject of mineral exploration must be enterprises, which is exactly what the decision to strengthen geological work requires. The enterprises mentioned here include both exploration enterprises and mining enterprises, collectively referred to as mining enterprises. However, whether it is exploration or mining, their investment will eventually be compensated from the sales income of mineral products. Therefore, if the investment in mineral exploration wants to form a long-term mechanism, it must be returned to enterprises, so that enterprises can implement a virtuous circle. Zijin Mining regards mineral resources as the foundation of survival and development, and the whole Zijin is like a building. The higher the building, the stronger the foundation is needed. It is this relationship that under the market economy system, it is foolproof to return mineral exploration to mining enterprises. It doesn't matter whether you buy mining rights or explore for yourself.

3. We must establish a fair and just mining right market.

Mining right market is an essential factor market of mining industry and an important part of the whole mining market. At present, the mining market is relatively developed, and most mineral products are allocated by the market. However, the development of domestic solid mineral mining rights market is far from in place, mainly due to the lack of a fair and just environment. Taking the exploration right market as an example, some provinces (autonomous regions) stipulate that anyone who wants to enter this market must purchase the mining right (exploration block) with the price through "bidding, auction and hanging". The government invests in mineral exploration with geological prospecting funds, but it does not need to buy mining rights first. In this market, from the beginning, the government as the main body of investment took advantage. Compared with social capital investors, there is no need to use capital to purchase exploration rights, which forms unfair competition. If such a market continues to develop, it will not only occupy all social funds for risk exploration, but also affect the basic role of the market in the allocation of mineral resources. Because the choice of government funds is ultimately a government decision, it is impossible to fully reflect the market demand. The market allocation of mineral resources should start with mineral investigation. Once the census project cannot meet the market demand, it will inevitably affect the whole mining industry. At the same time, the fund engaged in mineral exploration, because there is no set of enterprise mechanism constraints, will inevitably lead to low efficiency. Therefore, we must cultivate and develop a fair and just mining rights market. Under the market conditions of fair competition, if the local government thinks that the risk income of geological prospecting is greater than the risk loss, it can completely convert the fund into equity and operate it through enterprises.

4. There must be policies to reflect the advantages and disadvantages of mineral resources utilization.

The protection and rational utilization of mineral resources is the main responsibility of the administrative department of land and resources, and its importance far exceeds the management of geological exploration. However, in the actual mining administration, the two are reversed, and the geological prospecting is refined management, while the protection and rational utilization of mineral resources are only requirements, lacking specific policy incentives. On the one hand, there are no severe punishment measures for those who exploit the rich and abandon the poor, resulting in resource loss and waste; On the other hand, there is a lack of effective incentives for the use of mineral resources beyond industrial indicators, and even "whipping fast cattle". For example, the current mining tax is levied on the basis of the sales of mineral products. The better the resources are used, the more taxes and fees will be paid. Zijinshan copper-gold mine can only pay 5 tons of gold resource tax according to the original national approved reserves, but now it has to pay more than 100 tons of resource tax. This situation is obviously not conducive to the rational use of resources. The government must study how to link the over-limit utilization of resources with tax reduction and exemption, and stimulate the rational utilization and effective protection of mineral resources with policies.

5. Suggestions on maintaining the state ownership of mineral resources

The rights and interests of state ownership of mineral resources can be transformed into state equity investment in joint-stock mining enterprises. Judging from the high profits made by Zijin Mining, it is of course the result of their excellent management, but it is also an indisputable fact that the price increase of mineral products brings profits. For example, in seven years, gold rose from 150 yuan per gram of 70 yuan and copper rose from 15000 yuan per ton to 600 yuan. However, in the face of the excessive profits brought by the sharp price increase of minerals, the country, as the owner of mineral resources, has not received its due share. Reform the current shareholding system of mining enterprises, change the resource compensation fee representing the ownership of mineral resources into equity investment, and share risks and benefits with mining enterprises. This is completely in line with the inherent characteristics of mining industry, that is, there is a large differential income in different mining areas horizontally and at different development stages vertically, and the ownership right of mineral resources is realized through equity, which can effectively, fairly and reasonably safeguard this right.