Developed countries in the mining industry have effectively solved investment and risk mitigation through social division of labor and convenient financing, achieving sustainable and healthy development of the mining industry.

In summary, the mature practices abroad involve thousands of risk exploration companies that raise funds through partner initiation, angel fund support, and financing in the exploration market. Professional exploration teams conduct the exploration, independent experts are responsible for quality, and mining companies are introduced in the mid to late stages of mineral resource projects, ultimately selling the projects to mining companies for development, achieving high risks and high returns. Most mining companies invest in mineral exploration, often acquiring mineral resources at low costs through mid to late stage exploration projects of risk exploration companies. There are also strong mining companies like Rio Tinto that independently invest in mineral exploration to further reduce the cost of acquiring mineral resources and obtain world-class high-quality mineral resources, gaining a competitive advantage in the market.

Most geological exploration companies and mining enterprises in China have transformed from geological exploration units and mining enterprises during the planned economy period, exhibiting distinct Chinese characteristics. There is a lot of work to be done in commercial exploration!

I had the privilege of organizing commercial exploration at the Northwest Nonferrous Geological Exploration Bureau and the China Aluminum Corporation. During my 9 years as the deputy director of the Northwest Nonferrous Geological Exploration Bureau, responsible for mineral resource exploration, I organized the discovery of over 30 mineral sites, including the Qianjiaping vanadium mine, the Xiajiadian gold-vanadium mine, the Lengshuikou vanadium mine, the Yangpingwan-Shuitianping gold mine, the Wangjiaping-Longtougou gold mine, and the Xigou molybdenum mine. I provided mining development bases such as the Xiajiadian gold-vanadium mine, the Maquan gold mine, the Yangpingwan gold mine, the Longtougou gold mine, the Jiuzigou copper mine, the Xujiaogou copper mine, the Qianjiaping vanadium mine, the Lengshuikou vanadium mine, and the Dongtangzi lead-zinc mine, achieving an average of one commercial exploration project submitted per year. During my 8 years as the general manager of China Aluminum Mineral Resources Co., Ltd., I organized the exploration and submission of five large mineral deposits, including the Qinghai Kangdenongshe gold (silver-lead-zinc) barite mine, the Tibet Angqing lead-zinc-silver mine, the Rongna copper mine, the Naruo copper mine, and the Peru PECOT copper mine, shortening the commercial exploration investment cycle (note: not project investment) to 4-5 years and increasing the investment success rate to 66%.

Based on past practices and experiences in mineral exploration organization, I feel that there are rules to improve efficiency and reduce risks in commercial exploration. My successful approach to commercial exploration mainly consists of five points:

Based on the following:

1. Geological exploration companies should leverage their advantages to persist in mineral exploration, but they should not be constrained by their advantages. They need to make reasonable choices to highlight key points and improve the success rate of commercial exploration investments, optimizing exploration plans to enhance the reliability of results and promote later development.

Chinese geological exploration companies are the largest geological exploration teams in the world, with a peak scale of hundreds of bureaus, thousands of teams, and millions of personnel. Since the reform and opening up, the industry has experienced two major ups and downs, with the scale of teams reduced by half. Most geological exploration units have successively transformed into geological exploration companies. Due to historical accumulation, domestic geological exploration companies have the advantage of possessing a large number of high-quality exploration rights, a strong mineral exploration technical team, a good geological exploration corporate culture, an understanding of industry characteristics, and the ability to endure the long cycles and high risks of mineral exploration. Therefore, geological exploration companies should leverage their advantages to invest in mineral exploration.

The main issue restricting the development of geological exploration companies in China is the lack of financing channels and severely insufficient investment capacity. During market downturns, teams cannot sustain themselves, and there is a serious loss of technical talent.

The situation in recent years is very similar to that in the 1990s, with the mineral resource exploration industry entering a comprehensive downturn, the future appearing bleak, and mineral exploration almost coming to a halt, resulting in a large loss of technical personnel.

Looking back at the 1990s, during the industry's downturn, I served as the director of the Geological Exploration Institute of the Northwest Nonferrous Geological Exploration Bureau. With the full understanding and support of leaders like Lin Shuxing and Jin Wanfeng, the measures taken to cope with the downturn that year were not to be constrained by advantages, firmly postponing most project investments, not investing in projects based on personnel, and doing everything possible to maintain the core team and exploration rights. The basic approach was to manage the entire bureau as a whole, unify exploration rights management, personnel management, and investment management, select key points from a wide range, concentrate investments on key areas, and each year focus human, financial, and material resources on one or two key mineral exploration projects. At the same time, seizing the opportunity of the market downturn, we appropriately supplemented some high-quality exploration rights at low costs. After the situation improved, we further strengthened commercial exploration investment management, implementing the "No. 1 Exploration Project," still selecting one key project each year, with no upper limit on investment, and ensuring that personnel were well-matched and strong, which ensured quick results. By relying on the success of commercial exploration and results, we maintained the team and exploration rights. Additionally, we optimized commercial exploration plans, with mining companies intervening in advance. Wherever pit exploration could be used, drilling was absolutely avoided, and any pit exploration that could be utilized by future mining operations was considered for future mining utilization issues, effectively improving the credibility of commercial exploration results and reducing the risks of later mining development. Through such organizational management of commercial exploration, we achieved continuous success in mineral exploration during the downturn, ushering in a peak in mining development in the early 21st century and a leap in the mining industry.

2. Mining companies should aim to acquire mineral resources with high efficiency and low cost. Based on the risk patterns of mineral resource exploration, relying on professional organizations and optimizing investments can effectively improve the success rate of commercial exploration investments.

Most mining companies in China have transformed from mines established during the planned economy period, while a few companies were newly established under market economic conditions. Due to the influence of traditional habits, most domestic mining companies, especially monopolistic mining companies, either do not pay enough attention to mineral resource exploration or need to improve their methods. Most mining companies tend to acquire mineral resources primarily through mergers and acquisitions of mature exploration projects. Although the cycle has been shortened and risks reduced, the cost of acquiring mineral resources has significantly increased, losing the competitive advantage of relying on resource acquisition costs compared to first-class mining companies.

The root cause of the above problems in most mining companies is the lack of research on industry development rules, a lack of mineral resource exploration culture, and difficulty adapting to the industry's characteristics of long cycles and high risks.

A comprehensive analysis summarizes the development rules of the mineral resource exploration industry. High risks mainly occur in the preliminary and general survey stages with low investment, while the detailed survey and exploration stages with large investments have low investment risks and are completely controllable!

Based on my basic understanding of industry rules, during my tenure as the general manager of China Aluminum Mineral Resources Co., Ltd., I personalized the commercial exploration of China Aluminum Resources. This idea was formed when I applied for the general manager position, developed into a strategy when building the team, and was adhered to and improved during the organizational management process. The basic idea is: starting from the selection of mining types and areas, laying out globally and nationally, entering in the later stage of the general survey, concentrating investments on detailed surveys and explorations, expanding results through regional integrated exploration, ultimately achieving a success rate of over 50% for enterprise investments in the high-risk commercial exploration field of China Aluminum Resources.

3. Accurately understand the connotation of geological exploration norms, oppose dogmatism, and scientifically organize exploration construction, which can effectively improve the efficiency and effectiveness of commercial exploration work.

China's geological exploration standards are based on the standards of the former Soviet Union, fully absorbing the experiences and lessons of several generations in China over more than seventy years, and are published in the form of industry regulations. They are a collective accumulation and summary of experiences.

During the planned economy period, geological exploration units strictly implemented industry standards. In the implementation of mineral exploration activities, they generally waited for the analysis results of samples from the previous year or batch of exploration projects before designing subsequent exploration projects. This practice ensured the quality of exploration results and guaranteed that the vast majority of exploration results during the national planned economy period did not have major quality issues.

Since the reform and opening up, geological exploration units have continued to adhere to traditional practices while undertaking public geological projects funded by the state, ensuring the quality of results.

However, in the commercial exploration market, two extreme situations have emerged. One situation is that some enterprises seriously violate standards, leading to a decline in the quality of exploration data and results, even resulting in a large number of false reports; the other situation is that geological exploration units rigidly implement standards, leading to wasted investments and decreased efficiency.

In organizing the commercial exploration of China Aluminum Resources, we first resolutely stop any possible false data based on responsibility and ethics, and then focus on efficiency while opposing dogmatism. The specific approach is: accurately understanding the connotation of standards and strictly implementing them, not simply piling up effective exploration methods during the design phase, insisting on selecting the most effective exploration methods for investment, maximizing the role of geophysical exploration in guiding drilling design during the exploration of the Duolong copper mine in Tibet, and resolutely not engaging in some projects that are generally effective but have little impact on specific exploration projects, effectively improving the quality of commercial exploration design. During the exploration construction phase, we insist on high efficiency. Due to the remote location of the Duolong mining area in Tibet and inconvenient transportation, testing and analysis were severely delayed. After the first batch of exploration projects was completed, we could not obtain the analysis results in time. If we waited for the analysis results of the first batch of exploration projects before designing the second batch, the efficiency of commercial exploration would be greatly reduced. In this case, two completely different opinions emerged within China Aluminum Resources: one viewpoint insisted on designing subsequent exploration projects after the analysis results of the first batch were available, while the other viewpoint suggested accelerating the exploration pace and advocated for quickly designing and constructing subsequent exploration projects. Based on the situation that copper ore can be visually identified and the results of on-site rapid analysis can be referenced, China Aluminum Resources decided to break through the constraints of rigid rules, fully utilize the role of exploration geologists with practical production experience, and support the design of subsequent exploration projects based on on-site professional technical judgments without waiting for sampling and testing data, effectively improving exploration efficiency. In the report summary work, we insisted on using computers and mature software technology, with the owner, supervision unit, and exploration unit working together to dynamically grasp the management of exploration progress. Through a series of innovations and practices in commercial exploration, we achieved high efficiency in enterprise investment in long-cycle commercial exploration, with the investment cycle for a single ore deposit (note: not the entire project investment cycle) being only 4-5 years.

4. Fully leverage the role of frontline technical teams and timely optimize exploration designs to promote quick results.

Mineral resource exploration is an exploratory project, and field conditions are ever-changing. However, in the past organization and management of mineral exploration, designing and adjusting exploration projects was often very difficult because the investment decision-making power was firmly held by the investors and their management teams. Once changes occurred in exploration projects that required design and engineering adjustments, the field technical teams needed to provide supporting documentation and propose design and engineering adjustment suggestions, which then had to be submitted for approval through multiple layers. Such procedures and efficiency led to field technical personnel losing the enthusiasm to actively research and timely optimize designs, and some technical teams even gave up on design and engineering optimization, simply executing the mineral exploration designs approved by superiors, significantly reducing the effectiveness of mineral exploration investments.

In organizing the commercial exploration of China Aluminum Resources, we fully leveraged the role of the front-line technical teams, encouraging and supporting the on-site field technical teams to closely collaborate and strengthen research, optimizing designs and exploration projects in a timely manner based on exploration conditions, ensuring that investments are used on effective exploration projects, and promoting quick results.

A successful practice in this regard is the exploration of the Duolong copper mine in Tibet. The on-site technical team for the commercial exploration of Duolong by China Aluminum Resources mainly includes the technical teams of the project owner, China Aluminum Tibet, and China Aluminum Jinlong, the quality supervision team, and the research team from the Mineral Resources Research Institute of the Chinese Academy of Geological Sciences led by Tang Juxing, as well as the construction team from the Tibet Geological Fifth Team and other geophysical and drilling construction teams. In commercial exploration, the owner and the quality supervision party jointly organized weekly meetings, ensuring that all technical teams communicated and exchanged ideas fully. In 2013, significant changes occurred at the exploration site; the originally designed focus on the Naru mining area no longer had the potential to expand resource quantities, while the previously overlooked Rongna mining area discovered thick and rich ore. In this case, the front-line technical team proposed a rational suggestion to 'shift the focus to Rongna, increase the exploration project volume, set up deep holes, and proactively start detailed surveys.' China Aluminum Resources actively adopted and approved this on-site, resulting in the drilling workload for Rongna increasing from 3,000 meters at the beginning of 2013 to 14,069 meters, with all 22 exploration drill holes encountering ore. By the end of 2013, Rongna achieved a copper metal resource quantity of 5.28 million tons, realizing rapid exploration and breakthroughs.

5. Insist on seamless integration of public welfare geological work and commercial exploration, which can boost significant mineral discovery results.

In our country, to improve the success rate of commercial exploration, it must rely on public geological results.

China Aluminum Resources attaches great importance to the close integration of public geological work and commercial geological work, relying on public exploration results and technical support to achieve rapid selection of commercial exploration areas, quick verification, and fast results.

The exploration results of the Duolong copper mine in Tibet are empirical evidence of the seamless connection between public geological work and commercial exploration. Since 1999, the continuous investment and comprehensive development of public geological work nationwide have greatly improved the level of basic geological work in our country, forming an extremely rich base of results and discovering a number of important exploration information and clues, submitting a number of important mineral site results. Based on the public geological survey results of the Duolong mining area in the Banruo mineralization belt, which was invested by the China Geological Survey, China Aluminum Company decided to invest in the exploration and development of the Duolong copper mine; after the commercial exploration was initiated, the China Geological Survey actively supported and timely filled in the gaps in public geological data, arranging a 1:25,000 scale electromagnetic survey and a number of supporting research projects. China Aluminum Resources ensured commercial exploration investments and timely verified public geological results, greatly enhancing the efficiency of the transformation of public geological results.

Due to the close integration of public geological work and commercial geological work, efficiency was improved during the selection of areas and points, directing commercial geological work towards key areas; during the mineral exploration phase, basic data and technical support were provided in a timely manner, improving the quality of exploration project design and promoting rapid breakthroughs in mineral exploration. The close integration of public geological work and commercial geological work facilitated the discovery of the world-class Duolong copper mine in Tibet.

The transformation of China's geological exploration units into enterprises is a long and arduous journey. There are many issues in commercial exploration that need to be addressed. The experiences summarized here are just the tip of the iceberg, and I hope they can serve as a catalyst for further discussion, contributing to the development of commercial exploration in China.

Source:Exploring Earth's RocksHeadline Account