The Research About China Mineral Resources Venture Exploration Financing And Investment Mechanism

China is rapidly advancing in its urbanization and industrialization. With the resulting rapid development of the national economy, natural and mineral resources are in huge demand. However, supplies mineral resources from China’s domestic production are inadequate to meet the demand. The demand for resources such as oil, iron ore, copper ore and others, is high with more than 50% dependency on supplies from the international market. Without major changes demand for resources from the international market will increase markedly in the next 20-30 years. For this reason the Chinese central government is now pressing for more effort in domestic mineral exploration and mining.Geology research indicates that China has favorable geologic and tectonic conditions for large deposits to form, similar to nations rich in mineral resources such as Russia, Brazil, Mongolia etc. It is very likely that many major metal deposits remain to be found in China. With the development of technology and increased effort focused on strengthening mineral exploration in recent years, Chinese explorers have discovered several mineral fields with great resource potential, such as in the provinces Yunnan,Tibet, Xinjiang, etc. These discoveries encourage hope for additional discoveries.Under the current market system, the central and local governments no longer participate in major commercial mineral exploration. Instead, the governments invest small amounts to encourage larger private funds to invest in mineral resource exploration. Mineral exploration is the first stage of developing the mining industry, and capital investment at this stage requires high capital input, which can produce high yields but involves high risk, and has special professional requirements. It is in the stage of commercial venture investment, and is defined in this thesis as“mineral exploration venture investment.”The various capital funds in society are generally hesitant to invest in the early stage of mineral exploration due to concerns about the high failure rate of mineral exploration. To solve this problem, mechanisms for mineral exploration financing, investing and venture capital withdrawal that suit China’s national conditions and characteristics must be established to encourage investment funds to invest to mineral exploration. This way, more capital will be input into mineral exploration and more minerals will be discovered, and the establishment of sound investment fund participation mechanisms will produce a positive cycle that will become self-sustaining. In this way, the mineral discoveries will be made and domestic supplies of mineral resources will be sustained.The main obstacles to development of mineral exploration are its limited access to financing and to the best technology, and availability of highly skilled personnel. Geologic exploration bureaus in China carry out most exploration, but lack of funds is a big problem for these bureaus, as it is very difficult to obtain financing for mineral resources exploration. Because mineral resources exploration is a high risk, high technology, high profit activity, it is a venture investment. Investors are generally afraid to participate in this field, with only a few venture investors willing to invest in venture exploration.For venture exploration investment to be done smoothly and protect investors’rights and interests, there is need for an effective mineral resources venture exploration investment and financing system and mechanism. This thesis uses venture investment theory as applied by high technology innovative enterprises such as IBM, Yahoo, etc. This proposed system is for finance capital integrated with exploration technology, and potential programs are filtered and introduced to strategic investors.In order to ensure that venture exploration run continues without interruption, it is necessary to set up a capital market designed to serve the needs of mineral resources venture exploration; this is called a second board, on which small exploration companies can list by IPO to obtain funds for further developing their projects.Experience in the international mining industry indicates that an established platform of mining venture capital market will motivate availability of capital to participate in mining development. In addition, establishing a resource and mineral start up board in the stock exchange market will solve the problem of shortage of capital, and encourage mineral exploration.Before setting up the new system it will be necessary to reform geological exploration bureaus into joint-stock companies, or set up new stock companies, and train personnel in the use of technology and financial management. To ensure the viability of the mineral resources venture exploration capital market (growth enterprise board) new laws will be required to cover geologic data management and availability, and a system to manage and supervise independent geological experts to ensure transparent and ethical venture exploration capital marketing,...