Translation Tuesday: China Nonferrous Metals News: China Nonferrous Metal Mining Group goes off the beaten path

By Christian Straube

Author: Wang Changming
Translator: Christian Straube
Published on: 04/09/2015
Source: Zambia-China Economic & Trade Cooperation Zone
Original text (in Chinese): http://zccz.cnmc.com.cn/detailtem.jsp?column_no=070402&article_millseconds=1425629687000

 China Nonferrous Metal Mining Group Corporation's leadership

In March of 2015, China held the famous "two meetings." [the annual plenary sessions of the National People's Congress (NPC) and the National Committee of the Chinese People's Political Consultative Conference (CPPCC) - Winslow] On March 5, the third meeting of the Twelfth National People's Congress was held in Beijing and, in the morning, Premier Li Keqiang delivered an exciting government work report. Luo Tao, general manager of China Nonferrous Metal Mining Group Corporation [CNMC Group] and member of the NPC was impressed by the report, as the focus on state-owned enterprise reform has highly raised expectations. Like him, the non-ferrous industry is being guided and inspired by a mission: to perform duties conscientiously; to build the non-ferrous industry; and to share wisdom in order to promote the healthy development of the nation's economic power! 

"All people work together, going to the same direction." Achieving a better "China Dream" is a glorious and career goal; building the non-ferrous metals industry is a long way to go on in that direction. Dream in front of the road. Only one non-ferrous industry leader has cultivated more maturity, more power, more flexibility, more ability in order to better promote the construction of non-ferrous industrial world power step by step into a brilliant reality. In fact, the non-ferrous industry in recent years has been actively responding to major national development initiatives, deepening reform, improving quality and efficiency, strengthening management, greater efforts interpretation of adversity and strong one after another glorious chapter, the emergence of a large number of outstanding Enterprise Group. Among these, the CNMC Group's development is particularly significant. The Group successfully entered into the Fortune 500. Behind the rapid growth of CNMC is a road of transformation, innovation, and strong culture and technology. 

Let us analyze the China Nonferrous Metals Group, to understand how this thriving enterprise has operated in recent years, which blazes a path for the future development of the non-ferrous metals industry, and provides valuable experience for the reform of state-owned state-owned enterprises.
---- Original Chinese editor's note

On 29 January 2015, Standing Committee of the Central Committee of the Communist Party of China member and Premier of the State Council Li Keqiang addressed China Nonferrous Metal Mining Group Corporation with an important remark. He encouraged the CNMC Group “to continue focussing on core business, strengthening management, attaching importance to effectiveness, and constantly raising the level of competitiveness when ‘going out’ in order to further increase China’s natural resource security.” It was the third consecutive year that Premier Li Keqiang gave important instructions to the group. This reflects the importance that the Central Committee and the State Council attach to and what they expect of China’s non-ferrous metals industry and the CNMC Group in particular.

As a matter of fact, the CNMC Group received the attention of Xi Jinping, Li Keqiang, Zhang Gaoli, Li Yuanchao, Hu Chunhua, Qiangba Puncog, Chang Wanquan, Wang Yong, Ma Peihua, and other party and state leaders in 2014. Since 2015, Li Keqiang, Liu Yunshan, Zhang Gaoli, Wang Yang, Wen Jiabao, Chang Wanquan, Guo Shengkun, Wang Yong, and other party and state leaders, as well as Xu Shaoshi, Zhang Yi and more than 20 provincial leaders, have made important comments regarding the CNMC Group. They have high expectations for the group’s development.

The group’s general manager Luo Tao, delegate to the 12th National People’s Congress, said: “This caring encourages new vitality. The CNMC Group always bears in mind with what it was entrusted and what is expected of it by the party and the country. It takes on the mission of state-owned enterprises and stands firm on its pathway to grow better and stronger. Right now, the group strides forward towards the dream of becoming a mining enterprise of international standing.”

A “national team” that goes against the grain and works hard to become stronger

Actions elevate dreams, struggles light up the future. In recent years, the entire non-ferrous mining industry was trapped in decline. In the face of extremely unfavorable market conditions, the CNMC Group tackled and overcame difficulties. These were understood as a state-owned enterprise’s responsibility.

Statistics are silent on their own. Still, statistics have the ability to illuminate the group’s efforts and struggles within the last year. Up to the end of 2014, the group’s total assets grew by 6.61 percent on a year-to-year basis. Annual total revenues increased by 6.4 percent and total profits by 5.53 percent respectively. The CNMC Group succeeded again in entering the Fortune Global 500, ranked 398th. As the group had surpassed production quotas in every respect, it met all performance indicators released by the State Council’s State-owned Assets Supervision and Administration Commission. It had won the battle to “maintain growth”. When comparing 2014 to the initial stage of the 11th Five-Year Plan [2006-2010], the group’s total assets, operating revenue and production volume of non-ferrous metals products increased 17, 41, and 33 times respectively. This established a solid foundation for future development.

Luo Tao pointed out: “The success of 2014 was the best return for the efforts and hard work of our group over the last ten years.” First set out a plan, then act upon it. The structural framework during the ten years since the 11th Five-Year Plan provided the strategic anchoring for the group’s future development. Since putting forward the strategic idea of “One Body, Two Wings” in 2006, the CNMC Group gradually made clear what was meant with the “Eight Criteria to Establish a Harmonious Enterprise”, the “Ten Important Relations that Necessitate Coordinated Control”, the “Acceleration of the Scientific Development and Realization of the Three Great Leaps”, the “12345” development strategy and striding forward with all one’s strength within the Fortune Global 500, the “One Deepening, Four Advancements” and other strategic processes and goals. Under the guidance of these strategies, the CNMC Group has already evolved from an engineering enterprise with a single business to a large mining conglomerate covering the entire non-ferrous metals industrial chain. The group’s scale of operations and strength has changed tremendously.

Luo Tao especially emphasized that the group’s successes cannot be separated from the practices of scientific and technological progress and self-dependent innovation, which it has embraced from the beginning. In the review of the “2014 China Non-ferrous Metals Industry Science and Technology Awards”, the CNMC Group became the first work unit to receive 17 science and technology achievement awards. Among these were six first-class, five second-class and six third-class awards. The number of first class awards was the highest ever, and the group topped the non-ferrous metals industry for the first time.

“With the development of this enterprise, we increasingly felt the importance of core competitiveness and the value of personnel.” What pleased Luo Tao is the fact that the CNMC Group already possesses a distinct advantage in these two fields. At the present, the group makes and masters breakthroughs in a range of key technologies. It has increased its investments in research and development, technological improvement, equipment, and protecting its intellectual property rights. It owns five post-doc work stations, eight research and development platforms at the national level, 24 research and development platforms at the provincial level, and 7 design research units. The CNMC Group also has two fellows at the Chinese Academy of Engineering, 133 experts receiving special government allowances from the State Council, nine people selected for the “New Century Talents Project”, one person selected for the “National High Level Special Talents Support Program” and three national technical experts. This makes up a daring and ever-improving pool of human resources from which to draw from.

“If you are at home in the world, there is nothing too difficult for you.” When looking back at the determined steps the group took towards their current development, one feels that the cadres and staff members took up the personal responsibility to forge ahead with determination, to have great aspirations, and to be united in their efforts. The double expense and effort leave a trace of shimmering development. Currently, the CNMC Group has businesses and projects in 21 provinces in China. Business overseas has already spread to over 80 countries and regions. For the last two years, the group has entered the Fortune Global 500. In this magnificent surge forward, the CNMC Group has neatly integrated its own development with the take-off in the non-ferrous metals industry and the stable development of the national economy. It is a state-owned enterprise that has the responsibility, capability, conduct, and feel to inspire and please every segment of society.

Action through going out and extracting natural resources

General manager Luo Tao has produced a road map of the group’s overseas investments. “At all times, the CNMC Group was at the vanguard of going out, an actor in natural resource extraction and a pioneer in common advancement. In fact, the group started in Zambia, gradually extending business to countries like the Democratic Republic of the Congo (DRC), Mongolia, and Myanmar. International business began to take shape. It drove the development of the whole business.”

One should always remember the source of one’s benefit. Luo Tao points out: “The Chambishi Mine in Zambia was the first mine in which the CNMC Group invested overseas. The investment resulted in valuable insights for how to motivate Chinese enterprises to launch international operations. “

The Chambishi Copper Mine was the first non-ferrous metal mine China had launched through overseas investment. It was named a “landmark project of China-Africa cooperation”. In 1998, the CNMC Group had successfully competed for 85 per cent of the mine’s stock equity. In 2003, production was taken up, Nonferrous China Africa Mining was founded and made responsible for the mine’s operation. On February 4 2007, the previous President Hu Jintao inaugurated the CNMC Group’s Zambia project with the inscription of “Sino-Zambian cooperation, mutual development”. He encouraged the group to make a new contribution to Sino-Zambian friendship.

As a starting point, the CNMC Group gradually built up a non-ferrous metals industry cluster overseas which included the entire industrial chain. The group has a well-deserved reputation as a trailblazer for the non-ferrous metals sector opening up international operations. The Zambia-China Trade and Economic Cooperation Zone was the first such Chinese zone in Africa and is to this day the largest overseas trade and economic cooperation zone. It is also Zambia’s first multi-facility economic zone. Zambia’s Chambishi Copper Smelter with a production capacity of 250,000 metric tons is China’s largest overseas investment in a copper smelter project. CNMC Luanshya Copper Mines is an example for how Chinese enterprises turned the global financial crisis into an opportunity by making a low-cost acquisition. The hydrometallurgy plant in Chambishi is a new profit growth point for the CNMC Group. In the DRC, investments in the Mabende project return 20,000 metric tons of cathode copper annually. It is called “the garden-like factory in the forests of Africa”. In Mongolia, investments in the Tumurtin-Ovoo Zinc Mine represent the largest joint cooperation between China and Mongolia in the mining sector. In the Tagaung Taung Nickel Mine in Myanmar, mining, processing and smelting are integrated into a large-scale nickel smelting project. It is the largest cooperation project between China and Myanmar as well as the first important industrial project built by China and currently oeprating in Myanmar.

At present, the group’s production of heavy non-ferrous metals overseas has surpassed 20 million metric tons. This involves a variety of over 40 different non-ferrous metal products. Business has spread to over 80 countries and regions. It includes 261 corporate holdings and 79 enterprises overseas at all levels. Starting with the two overseas mines in Zambia and Mongolia, the CNMC Group progressed to 19 mines, six smelting plants and the Zambia-China Trade and Economic Cooperation Zone. The group’s projects employ more than 15,000 people and pays taxes worth over $400 million. The projects also shapes the copper and cobalt deposits in Zambia and the DRC, MIanmar’s nickel deposits Mongolia’s zinc deposits, central Asia’s copper and gold deposits, and seven more resource bases. The CNMC Group has become a prominent example for international operations in the non-ferrous metals sector.

Luo Tao summed up the experience of the group’s overseas development in four sentences: “One, risk management has to take the top spot on the agenda. This applies to the selection of industries and regions, and the strategy of investment directed at differentiation. It also applies to the investor, forms of investment, and the diversification based on the investment’s entry point. Two, only select what you are capable of doing well as the main business. Do your best in developing your core competitiveness. Three, adopt a framework of optimizing your global industries. Assemble all your strength and accelerate the development of overseas natural resource extraction. Promote major projects focussed on construction, a scientific layout for business and an advancement of your overall strength. Four, adhere to green development and compliant operations. Always cherish a strong sense of mission and responsibility. Devote yourself to the creation of a harmonious enterprise.”

In constructing and running the overseas mines and smelters, the CNMC Group maintains close contact and cooperation with Jiangxi Copper, Tongling Nonferrous Metals Group, Yunnan Copper, and the Beijing General Research Institute for Nonferrous Metals, Central South University, University of Science and Technology Beijing as well as other famous Chinese enterprises, scientific research institutions, and institutions of higher learning. During the investment in the development of “going out”, close cooperation and mutual development were realized. This resulted in cluster effects. “Chinese enterprises set in motion a new development boom overseas. We will unite more enterprises in the non-ferrous metals sector in the future. We will steadily carry forward with the “going out” strategy and will be an even greater force for the development of China’s economy and society, and contribute to the friendly exchange of China with other countries,” Luo Tao explained resolutely.

Vanguard for deepening reform and running an enterprise according to the law

The pace of the group’s development increased further in 2014. This brought much attention from all segments of society. In July 2014, the CNMC Group consecutively entered the Fortune Global 500, ranked 398th. It had risen by 84 ranks compared to 2013. The group also ranked 83th among China’s top 500 enterprises, 28th among China’s top 500 manufacturing enterprises, 34th among China’s top 100 multinational corporations, and third in China’s brand value evaluation.

[Many paragraphs are cut as they are quite repetitive and do not not add anything to the China-Africa discussion - Winslow]

“Ruling the people needs law adjustment.” While the CNMC Group deepened reform, it actively promoted the idea of managing the company according to the law at the same time. It demanded from all companies that receive its funding, and from cadres and staff members as well, to further strengthen the idea of the rule of law. It raised the enterprise’s governance level and adhered to putting legal compliance above economic revenue. The group’s operations respect the compliance framework and have zero tolerance toward infractions. The CNMC Group currently has eight stock listed companies in Shenzhen, Hong Kong, London, Sydney, and Toronto. These enterprises are the group’s cornerstones committed to the spirit of the Fourth Plenary Session of the 18th Central Committee and the advancement of managing enterprises according to the law. Luo Tao used three listed companies: China Nonferrous Metal Industry’s Foreign Engineering and Construction Corporation (NFC); China Nonferrous Metal Mining Corporation (CNMC); and China Daye Nonferrous Metals (China Daye), as examples to explain this process.

NFC was the first Chinese enterprise in the non-ferrous metals sector to go abroad. It was the first listed enterprise of the CNMC Group and has made contributions of historic significance in regard to the group’s existence and development. Since its foundation, NFC has adhered to opening up its operations and taking up responsibility. It took full advantage of the international and domestic market and resources. In those glorious years, the cadres and staff members melted their wisdom and sweat into a mutual development for stockholders, the society and employees. This is what we call “trying out things in order to know about their advantages and disadvantages”. In 2014, NFC increased its vigour in management compliance and followed the strategy of “One Belt, One Road”. It worked hard on the three articles “The Creation of Internal Capacities”, “The Embrace of the Market” and “The Adjustment of Structure”. In regard to its business operations, NFC made an important breakthrough. The total profit grew by over 70 per cent on a year-to-year basis. On 14 December 2014, Premier Li Keqiang and Kazakhstan’s Premier Massimov witnessed NFC signing the contract on the Aktogay copper mill plant project. The project contract involved a capital volume of 530 million US$. This occasion became the bottom note on NFC’s management according to the law, steady development and active action.

CNMC comprises the four enterprises Nonferrous China Africa Mining, CNMC Luanshya Copper Mines, Chambishi Copper Smelter and Chambishi Wet Smelting located in Zambia. It was successfully listed at the Hong Kong stock exchange on 29 June 2012 and was the first African stock listed at the exchange in Hong Kong. As an internationalized stock listed company, CNMC was committed to the nation and took roots in Africa right from its enlisting. It developed natural resources, unearthing their value. CNMC strove to be a promoter for Sino-African and Sino-Zambian friendly cooperation. It had to face the continued recession of the world economy in 2014. On the base metal market is was especially the price of copper that kept declining. CNMC perfected the composition of the board of directors and its information disclosure system. It intensified the management of the investor relations and strengthened the financial and monetary management. The total revenue grew by 20 per cent compared to the year before. This contributed importantly to the improvement of the quality and effectiveness of the entire CNMC Group. Today, CNMC’s operations have spread to Zambia and the DRC. They became an important force of Chinese enterprises entering Africa.

China Daye is a listed company of the Daye Nonferrous Metals Group. It was successfully listed in the Hong Kong Stock Exchange on the March  8 2012 and became the first red chip [foreign-registered Chinese company] from Hubei province to be listed there. It was a final step by DYYS after decades. Finally, China Daye had stepped onto the capital market stage. Since its listing, China Daye has actively advanced in asset and capital management. It has realized the effective combination of industrial capital and financial capital. With the support of China Daye, Daye Nonferrous Metals Group has great leeway for direct financing and profit-generating capital. The group steadily implemented “resource capitalization”, “capital securization”, “security demutualization” and “equity diversification”. In the fields of property, finance, mutual transactions, environmental protection, quality, information distribution, and management, it matched with international standards. It standardized and improved its management level. It  raised liquidity tremendously and reduced its financial costs.

As for Luo Tao, he not only wants to guide the enterprise towards model of management according to the law. From the perspective of a delegate to the People’s Congress, he wants to actively promote the legislative work on a national level. After putting forward a motion to formulate a “Foreign Investment Law of the People’s Republic of China” last year, he submitted two motions this year on formulating a “Law on the Sustainable Development of Resource-exhausted Cities”. “I hope to use my humble strength in order to do the little I can for the great project of the rule of law,” Luo Tao sincerely expressed.

There are even more examples that show how the CNMC Group embodies deepening reform and management according to the law. Intensifying reform and running the enterprise according to law means doing their best and looking into the future for the people at the CNMC Group. This is exactly the responsibility state-owned enterprises must bear.

A pioneer in work ethic and product quality

Luo Tao became emotional when reminiscing about the group’s development: “Looking back at the group’s development, we never lost our fighting spirit and diligent work ethic.”

The CNMC Group started from scratch with the help of a 12.98 million RMB loan in 1983. It became the first enterprise to go abroad. In the beginning, the group did not have any achievement to refer to. It could only advance cautiously. While working, it cultivated a corporate culture of setting out fearlessly towards new horizons. The management team and headquarters took the lead by establishing a style of work consisting of diligence and earnestness. This is just like President Xi Jinping’s assessment when he inspected the group’s headquarters. The CNMC Group possesses pioneering spirit and stamina.

“Going Out” serves as a good example for how cadres and staff members of the CNMC Group put themselves at risk of war during peace times when they faced international challenges: the Gulf War; riots in Thailand; upheaval in Libya; and various conflicts in Myanmar. They relied on a tenacious style of work and overcame one obstacle after another. They continuously opened up new dimensions of “Going Out”. The CNMC Group has invested in 14 enterprises in Zambia. Together, these make up one integrated production chain covering resource extraction, processing, smelting, construction, trade, and logistics. They became a model for Chinese-funded enterprises in the context of Zambian development. The production and overall conditions of the enterprises gradually moved towards the right path and continuously improved. However, in recent years, when people from all over China came to Zambia, they faced innumerable difficulties. Whenever Luo Tao sees the movie “Dedication” that was shot by a Zambian company, it moves him deeply: “A mother always worries about her travelling children. Those comrades went far away from the mother land. Whose parents would not be concerned, would not worry? Their spirit aroused people’s admiration.” The project the CNMC Group was contracted to build in Iran yielded the country’s first pieces of ferro-chrome, ferro-manganese, ferro-molybdenum, and zinc ingot, as well as the first ton of aluminium and electrolytic aluminium. The project exemplifies the friendly cooperation between China and Iran. Still, Iran’s general situation is very complex. Cadres and staff members had to face life and death situations repeatedly. While operating the Tagaung Taung Nickel Mine the group encountered power line destruction, strikes, and other incidents. Eight Chinese and seven Burmese workers volunteered for the army. They headed the repair team and overcame heroic difficulties. Sparing no effort, they repaired the power supply circuit. They created the Tagaung Taung spirit of “holding on, not fearing death, and facing difficulties”. CNMC Group’s China 15th Metallurgical Construction Group is the iron army of China’s construction industry. Overseas operations have spread to 51 project sites in 12 countries. The slogan of “start to move, establish a standing, and become proficient” can now be heard within and outside of China. Looking back at the hardship when they constructed the Tumurtin-Ovoo Zinc Mine in Mongolia, at the challenge when they developed the Lop Nur potash project and at the dangers when they evacuated Chinese nationals from Libya, Luo Tao felt a sudden rush of emotion: “I still remember the first business trip after becoming the general manager of the CNMC Group at the inauguration ceremony of the Tumurtin-Ovoo Zinc Mine in Mongolia. I looked at a towering modern factory in the middle of nowhere and listened to the touching story behind the project. I could not help but admire the selfless dedication of all comrades!”

The cadres and staff members of the CNMC Group produced innumerable miracles while relying on a tenacious struggle. They have disseminated the best parts of the “Ovoo spirit”, “Qianzitou spirit”, “Banner spirit”, “Xiaohuangniu spirit” and “Tagaung Taung spirit”, and a perfected work style among the group’s enterprises in China and overseas. Luo Tao affectionately expressed: “The qualities of contributing silently, making no demands, and working to become stronger have already passed into the blood of the group’s cadres and staff members. This it what guarantees the primary force for sustainable development and lasting success."

2015 was the last year of the 12th Five-Year Plan. It was also the year in which the CNMC Group crucially relied on the strength of being in the Fortune Global 500 and the dream to build a world-class enterprise. The task to deepen reform, strengthen management and improve quality and effectiveness became more and more complex. “Premier Li Keqiang once said: ‘One today is worth two tomorrows.’ This year we will comprehensively implement several important speeches of General Secretary Xi Jinping and the spirit of the meetings of the party’s Third and Fourth Plenary Session of the 18th Central Committee, the Central Economic Work Conference, the heads of the state-owned enterprises, the National People’s Congress and the Chinese People’s Political Consultative Conference. On the basis of established plans, we will be steady, meticulous, precise and accomplished in our work at every current project. By developing in a thoroughgoing manner, we will make an even greater contribution to strengthening the country through the preservation and increase of state-owned assets and the development of the non-ferrous metals sector,” Luo Tao acclaimed confidently with regard to the group’s future development.

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"Zambia-China Economic & Trade Cooperation Zone (ZCCZ) is the first Multi-Facility Economic Zone (MFEZ) declared by the Government of Republican Zambia according to ZDA Act. It is also the first Chinese overseas economic & trade cooperation zone established in Africa. As the biggest Chinese investor in Zambia, CNMC is the developer of ZCCZ."
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