China Metallurgical : Daily Publishes ‘ Minmetals Provides New Supply by Innovation and Establishes New Power by Reform’

China Daily Publishes 'China Minmetals Provides New Supply by Innovation and Establishes New Power by Reform'

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On the sixth page of China Daily published on December 27th, there is an article entitled 'China Minmetals Provides New Supply by Innovation and Establishes New Power by Reform - the Year of the Recombination Improves'. The full text is reprinted as follows:

On December 21st, in the Minmetals Square on the East 2nd Ring Road of Beijing, the special promotion meeting 'Building an RMB Hundred Billion Internal Market' was very lively; more than 100 domestic and overseas (including Japan and Australia) videotaping points started at the same time… On this day, China Minmetals ' staff all over the world deeply felt the profound changes brought by the term 'supply side structural reform'.

Dating back to a year earlier, at the meeting of the Central Leading Group on Financial and Economic Affairs, 'promoting the effective resolution of excess capacity and promoting industrial optimization and reorganization' became one of the key points for promoting economic structural reform. Meanwhile, the concept of 'supply side structural reform' was put forward at the meeting. Soon after, upon the approval of the State Council, China Minmetals and MCC Group implemented their strategic recombination. After that, a 'super aircraft carrier' of the metal and mining field with total assets of over RMB 700 billion came into being, causing a stir in domestic and overseas markets. An expert in the industry commented that, 'It's obviously not only a time coincidence. It further indicates that supply side structural reform is the direct driving force.'

The RMB hundred billion internal market drives integration to form a new industrial chain

A year has passed. Since the start of supply side structural reform, as the first SOE to implement a strategic recombination, how can the new China Minmetals boost its business integration? As a state-owned capital investment company in the metal and mining field, how can it release the reform bonus to the maximum?

As China Minmetals General Manager Guo Wenqing told the reporter, 'In this new start since the recombination, China Minmetals has considered the situation and conducted many comprehensive studies. After repeated research and calculation, it has launched the key innovative business measure of building an RMB hundred billion internal market, as this can best show the recombination logic of the two enterprises.' The strategic recombination covers the whole metal mining industrial chain, from reconnaissance to mining, smelting processing and trade. To give full play to its complete industrial chain advantages, the new China Minmetals needs an RMB hundred billion internal market to drive integration, eliminate broken joints between links in the industrial chain and seek benefits and rebuilt advantages at the chain's joints.

The new China Minmetals' overseas mines are spread over the main resources of Asia, Australia, South America and Africa. Its overseas agencies and projects can be found in more than 60 countries and regions. Its resource amounts of Cu, Zn and Ni rank in the world's first echelon, and its amounts of W, Sb and Bi rank outright first in the world. In 2015, its total operation revenue exceeded RMB 430 billion. With such a large amount after the functional reform of the Headquarters, China Minmetals took another substantial step in the aspect of integration, setting out to design a new structure through industrial adjustment, provide new supply through innovation, and establish new power through reform.

Setting an example for SOE recombination which realizes '1+1>2'

'The integration work after the recombination is very complex. We are continuously devoting ourselves to finding a powerful handle and reasonable steps,'' Guo Wenqing told us. He added that on the basis of deep research and sufficient investigation, the new China Minmetals has decided to build an RMB hundred billion internal market, which is a big platform and carrier for business collaboration. This is also the most direct and the most effective business collaborative action with the strongest operability. As he explained, 'Building an RMB hundred billion internal market can effectively promote understanding between each business link. The internal market can play a powerful leading role. It's the basis for comprehensive business collaboration and the deepening of integration. If the steps are not firmly taken, other assumptions and planning for collaboration and integration will become castles in the air.'

To date, Minmetals' business collaboration after the recombination has gained some initial progress. The steel distribution business has seen the launch of the early stages of relevant projects between Minmetals Development and MCC. Up to November, they cooperated on 138 projects, and their contracted amount of steel and cement reached 1.83 million tons. Minmetals International, which specializes in trade and resource development, carried out connections with MCC's overseas capacity and concluded relevant transactions. On December 21st, at the signing ceremony of the promotion meeting, many units from the former China Minmetals and MCC Group signed cooperation framework agreements for seven kinds of demonstrative collaboration business: material purchasing, engineering construction, real estate development, financial services, manufacturing and maintenance, metallurgical services and management services.

As the Institute of Chinese Enterprises's Lead Researcher Li Jin said, 'The businesses of the two enterprises are separately distributed in the upstream and downstream of the industrial chain, forming a complementary recombination with little overlap.' In his opinion, the most direct indication of the two enterprises becoming one is that, through re-optimizing and linking each link of the industrial chain, they have naturally created a huge internal market. Li Jin continued, 'Such an internal market can be vigorously explored, and its effects are notable for being able to realize '1+1>2'. Following the recombination, it will provide a demonstration of the integration of large SOEs.'