Study On The Operating Mode Of Mining Capital

Capital management is aiming at optimizing the allocation of resources and thus preserving and increasing the value of capital, which is achieved by assets and capital transactions in the factor market. Asset restructuring, share acquisition, merger and division are main forms of capital management. Mining Capital oeprating focuses on two levels. At the micro level, mining companies raise funds in the capital market to manage mining rights assets, make effective butt joint of resources, develop capital and technology and consequently improve the efficiency of mineral resources. At the macro level, in accordance with the principle of making up for shortages with surpluses, the government implements macro-control in the development and utilization of mineral resources by timely withdrawing or releasing mining right.The purpose of the research is to find out how many mineral resources China needs to maintain the economic development in the future and how to take advantage of the capital market to drive breakthrough in domestic prospecting, obtain oversea resources with Capital oeprating, control mineral resource reserves to maintain a continuous supply of mineral resources and finally build a secure mineral resource supply system. In order to achieve the goals above, a combination of qualitative and quantitative research methods is applied in this study to predict the turning point and the peak demand of mineral resources; the comparative method is applied to analyze the gap between China’s mining capital market and foreign capital markets; the use of field surveys and expert consultation methods is aimed at identifying the outstanding issues existing in China’s mining rights market; finally, take the example of three enterprises to sum up the commercial Capital oeprating model and the reserve Capital oeprating model. The conclusions of the research are as follows: Firstly, China’s potential need of mineral resource is enormous in the near future and along with industrialization completed in about 10 to 15 years, turning point and the peak demand of bulk minerals and energy minerals will start to appear. Secondly, China has an enormous potential of mineral exploration in that the rate of mineral resources found is less than 50%. However, due to the lack of risk exploration market and the fragment of downstream mineral industry, it is difficult to raise funds in geological venture exploration activities, which indicates the failure of the capital market to effectively promote the development of mining industry. Thirdly, the mining right transfer mechanism in China needs to be further improved not only because the mineral market fails to fulfill its market allocation function and the trading system is unable to achieve interoperability, but also because mining right valuation is lack of credibility and the standard of mineral reserves is not internationally recognized. Fourthly, mining companies should select different Capital oeprating models according to their own characteristics of projects. To be specific, projects with less geological work had better use their own funds or government funds as their capital, while projects with more geological work should adopt private equity. Moreover, it is suitable for companies at the stage of production development to raise funds in the share market. Fifth, China should consider coordinating reserve operation with the mining cycle. To specify, when the mining economy is in recession, mineral reserve management should store domestic mineral resources and turn to make use of foreign resources because the exploitation of mineral resources can not fully achieve its economic value. While in a boom, it is suggested that mineral reserve management should release mineral reserve adequately and increase domestic mineral supply ratio since the exploitation of mineral resources can achieve excess profits.Finally, this study suggests that China should start from two resource market to build a secure supply system of mineral resource. On one hand, related government should make more efforts to explore new resources and alternative resources, adopt new technologies to overcome the difficulty in smelting techniques of the paragenic ore and associated ore and increase the recoverable reserves. On the other hand, China should consider obtaining offshore mineral resources in capital management market, such as mineral trade, mining rights trading, share acquisition, corporate mergers and acquisitions, etc. Besides, macro-control of mining reserves can help a lot if it is used properly. It is suggested to relieve the resource constraints for insufficient resources and prompt transformation from mineral resource advantage to economic advantages for preponderant mineral resources.