The Research On Financing Problems Of Small And Medium-sized Mining Enterprises In China

The mining industry is a basic and strategic industry, and also the basement of China’s industrial and social development. The author makes a statistic analysis to verify the vital importance of the mining industry to the real economy, according to the Cobb-Douglas input-output model.The development of China’s mining industry has made remarkable achievements, but also faced with some grim problems, mainly as follows: inadequate resource reserves and the large gap between supply and demand; badly shortage of development funding, financing difficulties, especially to the small and medium-sized mining enterprises(SMEs). In the analysis of the size distribution of mining companies in China, the vast majority are SMEs. And proposed that the government should continue to support the merger and reorganization of the powerful mining enterprises (large and medium-sized mining enterprises) to improve industrial concentration; on the other hand, should be appropriately concerned about the survival status of the SMEs, especially the support of the financing for its sustainable development, thus avoiding the occurrence of "vacuum phenomenon" to the China’s mining industry.The author makes an analysis to the traditional financing model of large and medium-sized mining enterprises, in contrast to the SMEs financing model. At the same time, the main risks and features of the SMEs financing models are also analyzed. In this paper, the way of self-financing, bank loans, mining trust financing, private equity financing, project financing, collection of loans and collection of bonds to the SMEs financing are all analyzed. In particular, the author makes a more in-depth analysis to the mining trust financing and private equity financing model.At the same time, in order to find more references to domestic SMEs financing of mining enterprises,the author make an analysis to the Canadian TSX Venture Exchange (TSXV),which is the most developed financing market for the global SMEs of mining industry. In order to the further study, the author selects a real case to analyze the problems of the SMEs mining financing.Combining all of the above analysis, the article comes to the conclusion that: the traditional model of bank loans, government financing and the existing capital market financing only applies to large and medium-sized mining companies; mining trust, as an emerging financing models in recent years, have alleviated the gap of the SMEs funding in mining enterprises; private equity financing, project financing, collection of loans and collection of bonds and collective trust which are innovative financing models, will have a bright future in the SMEs mining financing,although it’s still in a steady exploration and development stage as now.Finally, based on research findings, the author makes some policy suggestions as follows:the government should give a stable policy and legal expectations to the SMEs of mining industry and the potential investors; the government should make further market-oriented reforms to the circulation and trading of mineral rights and so on. The author also suggests the SMEs should strengthen the efforts of the geological reserves of exploration, production safety and environmental protection, and consciously reduce these risks. And also suggests that the SMEs should initiatively seek opportunities for mergers and reorganizations, and make great efforts to try and practice of innovative financing models to provide funding for continued development.