Research on the Nested Model of Global Mining Cycle and the Suggestions for China’s Mining Development

Author:Zhang Heng

Supervisor:wang xun lian

Database:Doctor

Degree Year:2019

Download:19

Pages:128

Size:5511K

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In this paper,the cycle theory of economics is introduced into the mining industry.Based on the four scales of economic cycle,we look for the periodic changes of mining industry in different scales of economic fluctuation.Through the induction of the global output and price changes of coal,pig iron(crude steel),copper,aluminium,lead,zinc and other large mineral products in the past 200 years,it is found that there are four scales of periodicity in the global mining development.We divide the periods of each scale,match the different periods,and set up the global mining cycle nesting model.This paper holds that there are four scale cycles in the global mining industry,and the superposition of cycles promote the continuous fluctuating development of the mining industry.A mining long cycle can nest 2-3 medium-long cycles or 5-6 medium-long cycles,a medium-long cycle can mostly nest 3 medium cycles,and a medium cycle can nest 2-3 short cycles.When the upstream periods of several cycles are superimposed,the price of mineral products often soars and the mining production rises rapidly.When several cycles overlap and descend at the same time,the mining industry will bring about a major recession.According to the law of cycle nesting,a new round of economic crisis and bear market of mineral products may occur from 2021 to the first half of 2022.Similarly,similar recessions may occur in 2029 or 2036.The long cycle of global mining is driven by industrialization and urbanization,each lasting about 50 years on average.The next long mining cycle is most likely to be driven by urbanization and industrialization in emerging countries such as India,starting in the mid-2030 s.The population-driven mid-long period can be 18-24 years.And the three mid-long cycles can correspond to the three stages of the growth,maturity and decline of the long cycle in lead country.After 2023,the weak third round of mid-long period pushed the global mining industry into a long-term recession.The mining industry has a cycle of about 7-11 years,and its basic driving force is the renewal of investment and equipment,which is closely related to the U.S.dollar index and the U.S.interest rate cycle.The turning point of the mining cycle can be judged by the dollar index and interest rate.The current mining cycle started in January 2016 and is expected to last until the end of 2022.The median period of China’s geological prospecting investment is 8 years on average,which is consistent with that of mining industry.It reflects the combined effect of cycles in China’s economy and finance.Mining short cycle is mainly driven by inventory cycle,lasting for 3-4 years.The main reference indicators are industrial inventory,PPI,narrow M1 and so on.The turning point of short mining cycle can be judged by several indicators.The short cycle of mining industry started in November 2015 and ended in January 2019.It is expected that the new mining short cycle will last until 2022,and the upstream peak of the two short cycles coincides with the peak of the medium cycle.According to the periodic fluctuation and nesting characteristics of mining industry development,the countermeasures and suggestions for China’s mining industry development are put forward.Firstly,the state should establish a basic principle,that is,it should lead the mining cycle appropriately when formulating mining policy.To adapt to the periodic process,we should adjust the policies of mineral resources exploration,resources tax and fee,foreign merger and acquisition,and resources import and export.Secondly,mining enterprises should strive to make counter-cyclical investment,reduce and avoid the impulse of pro-cyclical investment,protect cash flow,and use the U.S.dollar index,the U.S.interest rate cycle and other indicators to do a good job of judging the turning point of the mining cycle.Thirdly,mining industry chain enterprises should be good at using short cycle to hedging in order to avoid enterprise risks or maximize financing for long-term development of enterprises or select appropriate entry points for investment to obtain profits.With the observation of industrial inventory,PPI,M1 and other indicators,the short cycle stages and turning points of mining industry are judged.