Investigation Report on the Lead and Zinc Industry in Henan Province

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Report on the Lead and Zinc Industry in Henan Province, by Kong Xiangzheng et al. Chapter 1: The Current Status of China’s Lead and Zinc Industry 1.1 The International Position of China’s Lead and Zinc Industry Table 1: Comparison of the Development of the Global and Chinese Lead and Zinc Markets Unit: 10,000 tons Time: 1999 2000 2001 2002 2003 2004 Lead Situation World lead production: 623 640 650 658.6 655.6 656.3 World lead consumption: 614 626 645 651.6 663.7 651.3 China’s lead production: 90 110 119.5 132.4 157 165 Percentage of China’s lead production in the global total: 14.4 17.2 18.5 20.1 24 25.1 China’s lead consumption: 52.5 66 64 90 117 126 Percentage of China’s lead consumption in the global total: 8.5 10.5 10 13.8 17.6 19.3 China’s net lead exports: 43 43 42 39 45 43 Time: 1999 2000 2001 2002 2003 2004 Zinc Situation World zinc production: 837.6 897.86 926.1 961.8 966.4 976.6 World zinc consumption: 841.5 900 893.4 921.3 941 981.6 China’s zinc production: 169.5 196 208 210 230 246 Percentage of China’s zinc production in the global total: 20.2 21.8 22.5 21.8 23.8 25.2 China’s zinc consumption: 109.9 135 149 175 190 230 Percentage of China’s zinc consumption in the global total: 13.1 15 16.7 19 20.2 23.4 China’s net zinc exports: 42 54 47 35 17 –15 As can be seen from Table 1, the global lead and zinc industry experienced steady development from 1999 to 2004. According to the data in the table above, global production of refined lead in 2003 was 6.655 million tons, while demand was 6.7 million tons, representing an increase of 1.2% compared to 2002; the supply-demand gap was 35,000 tons. With the recovery of the global economy, refined lead consumption continued to rise in 2004; global production of refined lead reached 6.563 million tons, while demand amounted to 6.513 million tons. However, due to constraints such as transportation issues, the shortage in supply was not fundamentally alleviated. In 2003, the world’s zinc production was 9.664 million tons, while consumption was 9.41 million tons, indicating a situation of supply exceeding demand ； In 2004, global zinc production was 9.766 million tons, while consumption was 9.816 million tons, reversing the supply surplus that had persisted for three years. Due to insufficient global supply of lead and zinc ore alongside continuing demand growth, there will be a shortage of refined lead and refined zinc on a global scale for some time to come; therefore, the market prospects are relatively optimistic in the coming years. Domestically, from 1999 to 2004, China’s lead and zinc industry developed rapidly; the production and demand for lead and zinc increased year by year, and its share in the global lead and zinc market continued to grow. There are numerous reasons for the development of the domestic lead and zinc industry. Firstly, following large-scale expansions in recent years, China’s refined lead production capacity has increased significantly ； Secondly, the closure and conversion of lead-zinc smelters in the West created opportunities for China to increase production, resulting in a significant rise in China’s lead smelting capacity since 2003 ； Furthermore, in recent years, the Chinese economy has experienced rapid growth, with industries such as automobiles, communications, electricity, transportation, computers, and construction becoming sectors of high growth in China. The development of these industries has spurred the growth of the lead-acid battery industry and the galvanized sheet industry, thereby increasing domestic demand for lead and zinc; as a result, the demand for these metals in China has been rising at an annual rate of over 8%. In 2003, national lead and zinc production both saw significant increases compared to the 1990s; China produced 1.564 million tons of lead, a 18% increase from 2002, and 2.319 million tons of zinc, an **8% increase from 2002. This marked the year when China’s lead production surpassed that of the United States, making it the highest in the world – following China’s ranking first in the world in zinc production in 1992. In 2004, China’s lead production accounted for 25% of the world’s total production, while its lead consumption accounted for 19% of the world’s total consumption. China ranks first in the world in terms of lead production, and its lead consumption is increasing at a rate of 15% per year. China’s zinc production accounts for 25.2% of the world’s total production, while its lead consumption accounts for 23.4% of the world’s total consumption. Zinc consumption is also increasing at a rate of 8% per year. China has become a major global producer, consumer, and exporter of lead and zinc, playing a decisive role in both production and consumption in the international lead and zinc market, and exerting a dominant influence on the supply and demand dynamics in this sector. China’s lead and zinc industry holds a pivotal position in the global lead and zinc industry framework as well as in the international lead and zinc market. 1. 2 The status of the lead-zinc industry in our province 1.2.1 General situation Table 2 Overview of the lead-zinc industry in Henan Province Indicators: 2000, 2001, 2002, 2003, 2004 Lead – National production (10,000 tons): 110, 119.5, 132.5, 157.8, 165; Henan’s production (10,000 tons): 19.5, 25.8, 34.2, 50.5, 60.7; Percentage share (%): 17.7, 21.6, 25.8, 32.3, 68 Zinc – National production (10,000 tons): 196, 208, 210, 230, 246; Henan’s production (10,000 tons): 3.2, 3.1, 11.7, 22.2, 92.7; Percentage share (%): 1.6, 1.4, 9.0, 0.99, 1.11 Henan’s revenue from lead-zinc smelting (10,000 yuan); Taxes and profits (10,000 yuan); Profit (10,000 yuan); Total assets (10,000 yuan) As can be seen from Table 2, during the period from 2000 to 2004, the lead industry in our province developed rapidly, and by 2003 it had become the largest producer of lead in the country. Lead production increased from 195,000 tons in 2000 to 607,000 tons, while its share of the country’s total production rose from 17.7% to 36.8%, an increase of 19.1%. In contrast, the zinc industry in our province developed slowly from 2000 to 2004 and continued to shrink, with production dropping from 32,000 tons in 2000 to 27,400 tons, and its share of national production falling from 1.6% to 1.11%, a decrease of 0.49%. 1.2.2 Distribution of enterprises At present, the lead industry in Henan Province is mainly concentrated in the fan-shaped area spanning northern and eastern Henan, which includes cities such as Jiyuan, Anyang, Lingbao, and Jiaozuo. Jiyuan is the city with the highest lead production in our province. At present, there are over 30 lead smelting enterprises registered in Jiyuan, forming a lead processing production base centered around Henan Yuguang Jinlian Co., Ltd. Currently, 9 enterprises in Jiyuan have a complete lead smelting system that covers both rough processing and refined processing; 22 of these enterprises have an electrolytic lead production capacity of over 5,000 tons. The city’s total rough lead production volume is around 350,000–400,000 tons, while the electrolytic lead production volume exceeds 350,000 tons. Electrolytic lead production accounts for more than 30% of China’s total lead production and around 70% of Henan’s lead production. Next is Anyang, where the Yubei Metal Smelting Plant in Anyang City, Henan Province, serves as the key enterprise; this region’s annual lead production reaches 150,000 tons. Following Anyang, Lingbao City also achieved a lead production volume of 120,000 tons. According to the city’s development plan for the 11th Five-Year Plan period, the lead production capacity was set to reach 200,000 tons by 2006, and 320,000 tons in the coming years. Lingbao City is expected to play an increasingly important role in the province’s lead industry, and it is likely to become another major base for lead production and processing, second only to Jiyuan ； Additionally, in Jiaozuo City, the lead industry has also developed rapidly in recent years, with annual lead production reaching a considerable level. The zinc-producing enterprises in our province have low output levels and are scattered across various locations, mainly in Jiyuan, Kaifeng, Xingyang, and other areas. With the commissioning of Yu Guang Jin Lead’s 100,000 t/a zinc production facility in 2005, the backward state of the zinc industry in our province is set to change. 1.3 Basic Information of the Enterprises Under Investigation 1.3.1 Overview and Operational Status of the Enterprises Under Investigation Table 3: Overview of Enterprises Under Investigation in Henan Province Enterprise Name, Type and Date of Registration, Location, Number of Employees, Production Volume in 2004 (10,000 tons), Percentage of Total Provincial Production Lead-Zinc Lead-Zinc Henan Yuguang Jinlian Co., Ltd. – Joint-stock company, established in 1957; Location: Shibin Village, Jiyuan; Number of employees: 2,336; Production volume: 20.6210,000 tons; Percentage of total provincial production: 33.9% Anyang Yubei Metal Smelting Factory – Located in Anyang; Number of employees: 9.55; Production volume: 15.710,000 tons; Percentage of total provincial production: 15.7% Henan Jiyuan Wanyang Smelting (Group) Co., Ltd. – Joint-stock company, established in 1994; Location: North of Sili Village, Jiyuan; Number of employees: 1,300; Production volume: 810,000 tons; Percentage of total provincial production: 13.1% Jiyuan Jinli Co., Ltd. – Private company, established in 2000; Location: Beixun, Chengliu, Jiyuan; Number of employees: 6; Production volume: 9.810,000 tons; Percentage of total provincial production: 9.8% Anyang Minshan Non-ferrous Metals Co., Ltd. – Private company, established in 1992; Location: Matoujian Lead Industry Park, Long’an District, Anyang; Number of employees: 712; Production volume: 8.210,000 tons; Percentage of total provincial production: 8.2% Jiyuan Yongxing Lead Industry Company – Private company; Location: Beishi, Chengliu, Jiyuan; Number of employees: 4; Production volume: 6.510,000 tons; Percentage of total provincial production: 6.5% Lingbao Zhicheng Lead Industry Company – Private company, established in 2003; Location: Lingbao City; Number of employees: 5,003; Production volume: 4.910,000 tons; Percentage of total provincial production: 4.9% Jiyuan Shibin Electrolytic Lead Factory – Collective enterprise, established in 2000; Location: Shibin Village, Jiyuan; Number of employees: 781; Production volume: 1.810,000 tons; Percentage of total provincial production: 2.9% Henan Lingye Co., Ltd. – Joint-stock company, established in 1997; Location: Lingbao; Number of employees: 4,501; Production volume: 1.610,000 tons; Percentage of total provincial production: 1.6% Subtotal: 58.97100.0% In this investigation, the Henan Non-ferrous Metals Industry Association distributed questionnaires to more than 20 enterprises. Additionally, a symposium on lead-zinc enterprises was held in Jiyuan City, during which on-site inspections were conducted of key lead-zinc smelting enterprises in the province, such as Yuguang Jinlian Co., Ltd. and its zinc-related companies, as well as Wanyang Smelting Co., Ltd. Through the compilation and analysis of the returned questionnaires, it was found that the 9 companies under focused investigation produced a total of 589,700 tons of refined lead in 2004, accounting for 96.6% of the province’s total production for that year. In terms of ownership structure, among the enterprises surveyed, there was 1 state-owned enterprise, over 10 privately-owned enterprises, and 1 enterprise under collective ownership. These enterprises have basically undergone corporate restructuring. In terms of company types, there are 2 limited liability companies and over 10 joint-stock companies; among them, only one company, Yu Guang Jin Lead Co., Ltd., is a listed company or has its parent company listed. In terms of production capacity, there are 5 enterprises with a lead smelting capacity of over 50,000 tons, namely: Yuguang Jinlian Group Company, Yubei Metal Smelting Plant, Wanyang Smelting Group, Jiyuan Jinli Co., Ltd., and Anyang Minshan Non-ferrous Metals Co., Ltd. Table 4: Operating Conditions of Lead Smelting Enterprises surveyed in 2004
Unit: 10,000 yuan

| Enterprise Name | Total Assets | Original Value of Fixed Assets | Net Value of Fixed Assets | Total New Fixed Assets | Asset-Liability Ratio (%) | Total Industrial Output Value | Sales Revenue | Total Profit |
|-----------------|--------------|------------------------------|----------------------------|------------------------|--------------------------|------------------------------|---------------|-------------|
| Henan Yuguang Jinlian Lead Co., Ltd. | 146,850,473,064,125,011,747,255.62 | 36,889,238,345,142,70 | — | — | 236.8892383451427 | — | — | — |
| Henan Jiyuan Wanyang Smelting (Group) Co., Ltd. | 60,000 | 32,968 | 18.8172071707052 | — | — | — | — | — |
| Jiyuan Jinli Co., Ltd. | 529 | 10,648,105,81 | — | — | — | — | — | — |
| Jiyuan Yongxing Lead Industry Co., Ltd. | 400 | 12,343,122,10 | — | — | — | — | — | — |
| Anyang Minshan Non-ferrous Metals Co., Ltd. | 170,008,990,798,070,103 | 53.51000478003253 | — | — | — | — | — | — |
| Jiyuan Shibin Electrolytic Lead Factory | 36,005,165,165,164,814 | 449,114,456,180 | — | — | — | — | — | — |
| Lingbao Xinhua Lead Industry Co., Ltd. | 63,701,595,145,5 | 55,585,093,006,50 | — | — | — | — | — | — |
| Henan Lingye Co., Ltd. | 9,989,518,5 | 43,583,50 | — | — | — | — | — | — |

Total: 307,261,107,821,970,291,249,980 | 398,097,341,910,239,030

The data from the surveyed enterprises show the following characteristics regarding their operating conditions (Table 4):
(1) China’s large state-owned or publicly-controlled enterprises have relatively advanced equipment; however, they have a high proportion of non-profitable and problematic assets, which imposes a heavy burden on society. Their input-output efficiency is significantly lower than that of private enterprises that have developed in recent years. In 2004, the total fixed assets of these 9 companies amounted to 3,072.61 billion yuan, with an average debt-to-asset ratio of 42.1%. Among them, large enterprises and big firms have a total fixed asset value of 2 billion yuan, while other enterprises have a total fixed asset value of less than 400 million yuan. Large enterprises produce less than 0.5 tons of output per 10,000 yuan worth of fixed assets, while other enterprises produce 2.0 tons. Private enterprises that have developed in recent years hold a clear advantage; for example, Jiyuan Wanyang Smelting Co., Ltd. has assets worth only 600 million, yet its lead production capacity reaches 80,000 tons. (2) China’s large state-owned enterprises have a high debt ratio. The average debt ratio of large state-owned enterprises in our country is 55%, while that of enterprises with other forms of ownership is only 40%. This is mainly due to the large number of new lead smelting enterprises being established, as well as the variety of ownership structures. 1.2.2 Overall situation regarding the sources of raw materials for enterprises and product sales Table 5: Estimates of raw material supply and product sales for lead enterprises in 2004 Unit: 10,000 tons Enterprise Name Raw Material Supply Product Sales Destination Domestic (in metal terms) Imports (in ore terms) Domestic Exports Henan Yuguang Jinlian Lead Co., Ltd. 5.7 7.67 101.0 Henan Jiyuan Wanyang Smelting (Group) Co., Ltd. 4.1 4.0 Henan Anyang Yubei Metal Smelting Factory 2.5 10.75 4.34 4.3 Jiyuan Yongxing Lead Industry Company Anyang Minshan Non-ferrous Metals Co., Ltd. 5.3 52.0 Jiyuan Shibin Electrolytic Lead Factory 1.8 5.0 1.77 Lingbao Xinhua Lead Industry Co., Ltd. 5.3 0.7 0.9 Henan Lingye Co., Ltd. Total 12.4 51.9 226.01 116.3 Based on the data collected from lead smelting enterprises, the ratio of domestic to foreign supply of lead concentrate in 2004 was 0.65:1 (Table 5), indicating a relatively high proportion of imports. Among them, Henan Yuguang Gold and Lead Co., Ltd. and Anyang Yubei Metal Smelting Plant both imported more lead concentrate than they purchased domestically. In 2004, these companies imported a total of 184,200 tons of lead concentrate, accounting for 96.3% of the total lead concentrate imported that year. In terms of refined lead sales, the surveyed enterprises are the main force in exports. The top companies in terms of export volume are Yuguang Jinlian Lead Co., Ltd., Yubei Smelting Plant, and Minshan Non-ferrous Metals Company. The ratio of domestic sales to exports for these companies is generally 1.59:1. In recent years, the export of refined lead in our province has shown strong growth, driven primarily by the rapid expansion of lead smelting enterprises such as Henan Yuguang Gold and Lead Co., Ltd. and Yubei Metal Smelting Plant. The two aforementioned companies primarily adopt a business model with operations at both ends overseas, relying on lower domestic smelting costs to compete with foreign lead smelting firms. This approach has enabled them to achieve good results and has also enhanced the global influence of China’s lead smelting industry. 1.3.3 Overall situation of production process technology and level Table 6: Lead smelting process equipment of the enterprises surveyed Enterprise Name Raw material processing Main smelting equipment Refining method Flue gas treatment method Henan Yuguang Gold and Lead Co., Ltd. Drying, mixing Oxygen-enriched bottom-blown furnace Electrolysis Two-turn two-suction acid production Henan Jiyuan Wanyang Smelting (Group) Co., Ltd. Sintering machine Lead blast furnace Electrolysis Unsteady-state acid production Yubei Metal Smelting Factory, Anyang City, Henan Province Sintering machine Lead blast furnace Electrolysis Unsteady-state acid production Jinli Co., Ltd., Jiyuan City Sintering machine Lead blast furnace Electrolysis One-turn one-suction Yongxing Lead Industry Company, Jiyuan City Purchase of crude lead Electrolysis Minshan Non-ferrous Metals Co., Ltd., Anyang City Sintering machine Lead blast furnace Electrolysis Shibin Electrolytic Lead Factory, Jiyuan City Xinhua Lead Industry Co., Ltd., Lingbao City Sintering machine Lead blast furnace Electrolysis Henan Lingye Co., Ltd. The traditional lead smelting process involves sintering lead raw materials with fluxes (sintering machines and sintering pots have been banned and phased out), followed by smelting in blast furnaces to produce crude lead, and finally refining it through electrolysis; this process remains the dominant method for lead smelting in China today. Compared to foreign countries, this technology still has a significant gap in terms of addressing and controlling lead dust pollution. In recent years, as environmental regulations have become increasingly stringent, the domestically developed oxygen bottom-blown-blast furnace reduction process for lead smelting has seen rapid adoption; Yu Guang Gold Lead has already implemented this technology, while Jiaozuo Dongfang is currently using it to upgrade its existing processes ； Jiyuan Wanyang Smelting Co., Ltd. and the lead smelting enterprises in Lingbao City are also planning to use this process to upgrade their lead processing systems. The promotion of the oxygen bottom-blown-blast furnace reduction process for lead smelting has greatly contributed to the improvement of the level of lead smelting technology in our province. The existing lead smelting processes in our province, after being upgraded, can basically reach the advanced level in China. Smelting plants that use the sintering furnace-blast furnace lead smelting process include Zhuzhou Smelting Plant, Yuguang Gold and Lead Co., Ltd., Yubei Metal Smelting Plant, Jiyuan Wanyang Smelting Group, etc. This process is relatively mature in terms of application, but it is difficult to recover sulfur dioxide emissions at low concentrations; Yu Guang Jin Lead Co., Ltd., Yu Bei Metal Smelting Plant, and Jiyuan Wanyang Smelting Group use unsteady-state acid production technology. However, due to limitations in processing conditions and equipment, low-level emissions and lead-containing dust in some enterprises have not yet been effectively controlled. The oxygen bottom-blown-blast furnace reduction process for lead smelting is a pool melting technique that was successfully developed in 2002 by the China Nonferrous Metals Design and Research Institute in collaboration with companies such as Henan Yuguang Gold and Lead Co., Ltd. This method results in high concentrations of sulfur dioxide emissions, and the slag contains roughly the same amount of lead as that produced by blast furnaces; it possesses strong competitiveness and is one of the environmental protection projects that are given priority for promotion. Henan Yuguang Gold and Lead Co., Ltd. currently has two oxygen-enriched low-blowing production lines with an annual capacity of 80,000 tons each. This technology enables the generation of flue gas containing high concentrations of sulfur dioxide; by utilizing the mature \"double rotating double absorption\" sulfuric acid production process, the sulfur recovery rate exceeds 97%, and the exhaust emissions meet **the relevant standards. This allows the company to achieve clean production, providing a solution to the pollution problems associated with the lead industry in our province. In lead refining, electrolytic refining is the most commonly used method in our province, ensuring stable product quality. 1.3.4 Technical and economic indicators Table 7: Technical and economic indicators of lead smelting enterprises in 2004 Oxygen-enriched low-blowing lead smelting technology Enterprise name Total smelting recovery rate (%) Crude refining recovery rate (%) Refined refining recovery rate (%) Total sulfur recovery rate (%) Power consumption: Kwh/t; Coke consumption: Kg/t; Comprehensive energy consumption (kilograms of standard coal per ton) Henan Yuguang Jinlian Lead Co., Ltd. 94.15 94.99 99.12 90–93 126.74 14.84 0.8 Sintering-blast furnace lead smelting technology Enterprise name Total smelting recovery rate (%) Crude refining recovery rate (%) Refined refining recovery rate (%) Total sulfur recovery rate (%) Power consumption: Kwh/t; Coke consumption: Kg/t; Comprehensive energy consumption (kilograms of standard coal per ton) Anyang Yubei Metal Smelting Factory 90 94 97 36 4300 Jiyuan Wanyang Smelting (Group) Co., Ltd. 93.59 99 Jiyuan Jinli Smelting Factory 95 93 90 150 Anyang Minshan Non-ferrous Metals Co., Ltd. 93 94.19 8.89 94 00500 650 Lingbao Xinhua Lead Industry Co., Ltd. 98 90.599 275 440 Jiyuan Shibin Electrolytic Lead Factory 9** 145 Oxygen bottom-blowing–blast furnace reduction lead smelting process: It has clear advantages over the blast furnace smelting process in terms of power consumption, coke consumption, and comprehensive energy consumption. Blast furnace smelting: In terms of the overall recovery rate from smelting, Xinhua Lead Industry achieves a good figure of 98%. Looking at the enterprises surveyed, the average recovery rate in crude refining was 92.62%, which is below the designed level, indicating that there is still room for improvement in the lead smelting recovery rate in China. 1.3.5 Environmental Protection: In recent years, the lead industry in our province has developed rapidly; in 2004, the output of electrolytic lead was 607,000 tons, ranking first in the country. However, the environmental situation in the lead and zinc industry is not optimistic; without effective measures to address it, it will inevitably hinder the sustainable development of this industry. Lead smelting causes quite severe high and low-level environmental pollution due to the sulfur dioxide emissions and lead dust generated during the sintering process. Currently, within the entire non-ferrous metal smelting industry in our province, lead smelting is one of those sectors with poor production conditions, a low sulfur recovery rate, and significant environmental pollution; it is therefore an industry that requires focused attention for improvement. The lead produced at the Third Smelting Plant of Yuguang Jinlian Group is manufactured using an oxygen bottom-blown blast furnace smelting process, and a two-turn two-absorption acid production process is employed, enablingほぼ complete recovery of sulfur dioxide emissions. The Second Smelting Plant of Yuguang Jinlian Group, Yubei, Wanyang, and others use a sintering furnace-blast furnace smelting process for production. A SO2 recovery system is installed in the flue gas from the sintering furnaces, and acid is produced using a domestically developed technology for converting low-concentration, unsteady-state SO2 flue gas; the average sulfur recovery rate is 80–85%. Other smelters use sintering pots or sintering tables for sintering, blast furnaces for lead reduction, and all sintering flue gases are discharged directly. 0.6–0.7 tons of SO2 are produced per ton of lead mined. In 2004, approximately 360,000–420,000 tons of SO2 were released into the atmosphere from lead smelting, contributing to acid rain pollution in the region. During the sintering process, there is multi-stage return of powder for crushing, and low-level pollution from lead dust and lead vapor is also severe, resulting in poor working conditions. Some lead smelting enterprises are small in scale, producing only a few thousand tons of lead per year; their lead recovery rates are low, and waste gases and wastewater are discharged without treatment, posing a threat to the health of the workers and local residents. Lead poisoning among workers occurs from time to time. 1.3.6 Recovery of Valuable Metals Table 8: Status of valuable metal recovery in lead smelting enterprises Enterprise Name Smelting Method Valuable Metals Recovered Henan Yuguang Gold and Lead Co., Ltd. Blast furnace, bottom-blown furnace Gold, silver, copper, antimony, bismuth, cobalt, cadmium Yubei Metal Smelting in Anyang City, Henan Province Blast furnace Gold, silver, bismuth, antimony Anyang Minshan Non-ferrous Metals Co., Ltd. Blast furnace Gold, silver Henan Jiyuan Wanyang Smelting (Group) Co., Ltd. Blast furnace Sale of anode slime Jiyuan Jinli Co., Ltd. Blast furnace Sale of anode slime Jiyuan Yongxing Lead Industry Company Blast furnace Sale of anode slime Jiyuan Shibin Electrolytic Lead Factory Blast furnace Sale of anode slime Lingbao Xinhua Lead Industry Co., Ltd. Blast furnace Sale of anode slime Overall, the recovery of valuable metals in the lead smelting industry in our province is not adequate, mainly due to limitations in the maturity of recovery technologies and recovery costs. At present, the valuable metals recovered in China’s lead smelting industry mainly include gold, silver, copper, antimony, bismuth, cobalt, cadmium, etc. Based on the findings of this survey regarding the comprehensive utilization in lead smelting plants, large enterprises have well-developed facility infrastructure, which results in better levels of comprehensive utilization. They are able to recover not only precious metals such as gold and silver, but also rare metals such as copper, antimony, bismuth, cobalt, and cadmium ； Small and newly established enterprises do not have well-developed comprehensive utilization facilities, and the anode slime generated during lead smelting is sold directly. 1.3.7 Costs Table 9 shows the lead smelting costs in our province during 2002. Region: Production costs; Raw materials, Fuel and power, Wages, Others; Manufacturing expenses. Henan: 49504000400200200150. Table 10 presents the lead smelting costs of the enterprises surveyed in 2004. Enterprise name: Production costs; Raw materials, Fuel and power, Wages, Others; Manufacturing expenses. Yuguang Jinlian Lead Co., Ltd.: 6909.25, 6174.59, 452.22, 92.95, 119.46, 70.72. Anyang Minshan Non-ferrous Metals Co., Ltd.: 7771, 6989, 484, 147, 53, 98. Lingbao Xinhua Lead Industry Co., Ltd.: 6780, 5545, 160, 123, 916, 36. Jiyuan Shibin Electrolytic Lead Factory: 844**, 8000, 3**, 210, 200. As can be seen from these two tables, lead smelting costs increased from 2002 to 2004, mainly due to rising prices for lead concentrate and energy sources such as coal and electricity. As can be seen from Table 10, in terms of manufacturing costs in lead smelters, there is not much difference among various companies. In terms of raw materials, the purchasing prices by smelters are similar; the price range for these raw materials varies between 629 and 2455 yuan. The differences in prices are due to variations in transportation costs and whether the minerals are sourced internally or not. Moreover, raw materials are closely tied to LME lead prices; when LME lead prices are high, the price of lead concentrate also reaches relatively high levels ； LME lead prices are low, and lead concentrate prices are low as well. Fuel costs range from 150 to 450 yuan per ton, mainly due to differences in electricity costs and shipping fees ； The wage costs for lead smelting range from 50 to 150 yuan per ton; there is little difference among large enterprises, with an average of 100 yuan per ton ； The manufacturing cost ranges from 70 to 200 yuan per ton; due to differences in management practices among various enterprises, these costs vary, with a difference of up to 150 yuan per ton between different companies. Among the lead smelting enterprises in our province, the one with the lowest costs is Lingbao Xinhua Lead Industry Co., Ltd. Xinhua Lead Industry has its own local raw material production bases, which results in lower prices for raw materials – a factor that plays a significant role in its production costs ； Second is Yu Guang Jin Lead Co., Ltd.; its ability to control production costs is largely attributed to its ownership interests and control over mines, which reduces the exploitation by intermediate suppliers of raw materials and thus lowers the cost of these materials. Additionally, standardized management practices and advanced technology help to reduce other cost factors such as manufacturing expenses. Therefore, to reduce costs, efforts must be made in raw material control, technological innovation, and standardized management. Of course, other influencing factors (such as comprehensive utilization, financial costs, investment control, etc.) may also have an impact on costs. It is evident that the management level and business strategies of smelters are becoming the key factors affecting a company’s performance. A comprehensive look at the lead industry in our province shows that its relative advantages in lead smelting lie in low labor costs, outdated smelting processes and equipment, as well as low environmental protection costs resulting from these outdated production methods and equipment. Chapter 2: Summary of Industry Experience 1. Comply with **regulatory policies, introduce advanced technologies, and phase out outdated production methods**. Such policies provide a direction for the development of the industry and create a favorable environment for growth. The 10th Five-Year Plan for the non-ferrous metals industry set the direction for the development of the lead and zinc industry ； At the same time, **a series of industrial policies were introduced, such as the “Catalogue of Industries, Products, and Technologies That Are Currently Encouraged for Development,” the “Catalogue to Prevent Duplicate Construction in the Field of Industrial and Commercial Investment,” and the “Catalogue of Outdated Production Capacities, Processes, and Products.” Additionally, the “Guidance Catalogue for Industrial Structure Adjustment” was developed to guide the investment directions of lead-zinc enterprises, financial institutions, and private funds, to promote technological progress in the industry, to curb unnecessary duplicate construction, to accelerate the phasing out of outdated technologies, processes, and products, and to facilitate the optimization and upgrading of the industrial and product structure, thereby enhancing the overall competitiveness of the industry. Secondly, the favorable environment for economic development at home and abroad has provided strong support for the steady growth of the lead and zinc industry. Since the 1990s, the world economy has seen a gradual recovery, and China has adopted a prudent monetary policy, enabling its economy to grow rapidly and steadily. The favorable development trends have driven rapid growth in a range of industries; sectors such as automobiles, communications, electricity, transportation, computers, and construction have become those with high growth rates in China. The development of these industries has driven domestic demand for lead and zinc, thereby stimulating the growth of the lead and zinc smelting industry. Henan Province is located in the central-eastern part of China, stretching from south to north and connecting the east with the west, thus possessing unique geographical advantages. In the \"Outline Plan for the Comprehensive Development of a Well-Off Society in Henan Province,\" the province has adopted the strategic decision to rely on central cities to drive development, accelerate the growth of the Central Plains urban cluster, and foster an economic hub within this urban cluster. In the process of advancing regional economic integration, it has enhanced the influence of the entire region as well as its ability to attract economic resources from outside the region, thereby providing strong support for the development of the central region. A favorable investment environment and a series of investment incentives have also created a positive atmosphere for the development of the lead and zinc industry in our province. Thirdly, the diversification of investment entities has injected new vitality into the development of the lead and zinc industry in our province. The investment entities in this industry are becoming more diversified; the joint-stock system has become the main business model for enterprises. At the same time, private capital and foreign capital are flowing into this sector, and collective-owned enterprises are also showing renewed vigor ； Diversified investment methods have led to the establishment of a sound corporate organizational management system. The corporate structure is simple, operations are flexible, the property rights system is clear, the financial burden on enterprises is light, the personnel management systems and incentive mechanisms are flexible, and there is a strong capacity for introducing and adapting technology – all of which have contributed to the rapid development of the lead-zinc industry in our province. Chapter 3: Development Trends of the Lead and Zinc Industry in Our Province 3.1 Development Trends of the Lead Industry in Our Province 3.1.1 Technology: With the implementation of a series of environmental regulations and industrial policies, some enterprises in Henan have shut down their sintering furnaces and sintering tables. As a key city in the province’s lead industry, Jiyuan City, in 2004, carried out rectification measures on all sintering furnace production lines within its territory in accordance with the annual work plan for air pollution control; as a result, 70 sintering furnaces were shut down, eliminating 92,000 tons of the city’s sintering furnace production capacity. By May 2005, all sintering furnace production lines in the city were to be shut down. At present, the lead industry in our province has widely adopted the sintering furnace-blast furnace process, while some enterprises use the internationally advanced and domestically leading oxygen-enriched low-blown lead smelting technology. Henan Yuguang Gold and Lead Co., Ltd. has used this technology to build two lead slag production lines with an annual capacity of 80,000 tons each ； Jiaozuo Dongfang Smelting Plant is using this technology to upgrade and phase out its existing outdated production processes ； Henan Lingye Co., Ltd. plans to invest 250 million yuan in 2005 to build an oxygen-enriched low-blow lead smelting production line with an annual output of 100,000 tons of lead ； Jiyuan Wanyang Smelting Plant also plans to set up an oxygen-enriched low-blow production line with an annual output of 80,000 tons of lead. Therefore, the introduction, utilization, and promotion of this technology will be the future development direction for the process technologies in the lead smelting industry of our province. With the increasingly standardized and stringent environmental protection policies, most lead smelting plants today pay close attention to the recovery of SO2 emissions. The non-steady-state acid production process is now widely used; in 2000, Anyang Yubei Smelting Plant already employed such a system to recover low-concentration SO2 emissions, enabling the exhaust gases to be discharged in compliance with regulations. In 2002, the factory installed another set of this device, and its operational performance was better than that of the first set. The non-steady-state acid production unit at the smelter in Xiuxiu, Henan, has been built and is currently under commissioning. The non-steady-state acid production facility of Jiyuan Wanyang Group is currently under construction, with completion and commissioning scheduled for August this year. The non-steady-state acid production plant at Jinli Smelting Factory in Jiyuan, Henan, will also come online in December this year. Individual large-scale enterprises such as Yuguang Jinlian Lead Co., Ltd. employ a mature \"double conversion and double absorption\" sulfuric acid production process, achieving a comprehensive sulfur recovery rate of over 97%, thereby reducing environmental pollution. 3.1.2 Production Capacity: The production capacity of the lead smelting industry in our province is on the rise. Table 11: Under-construction and planned lead production capacities of smelters. Unit: 10,000 tons. Enterprise, Additional capacity, Capacity achieved, Remarks. Henan Yuguang Gold and Lead Co., Ltd.: 628,200; A project for the comprehensive utilization of 100,000 tons of recycled lead per year will begin construction in 2005, with an additional capacity of 60,000 tons. Jiyuan Shibin Smelting Plant: 22,400; An electrolytic lead production line with an annual capacity of 12,000 tons will be built in the second half of 2005, and a project for producing 10,000 tons of recycled lead per year is planned for 2006. Lingbao Xinhua Lead Industry Co., Ltd.: 101,120; A project to expand and upgrade lead smelting capacity to 100,000 tons per year will begin construction in 2005, with completion expected in 2008. Lingbao Zhicheng Non-ferrous Metals Company: 101,300; New capacity of 100,000 tons. Henan Lingye Co., Ltd.: 101,120; Plans to expand lead production capacity to 100,000 tons began in 2005, with completion expected in 2006. Total: 3.1.3 Industrial integration: By expanding into upstream and downstream products related to lead, these enterprises aim to continue growing and strengthening their operations ； Establishing an industrial chain that includes prospecting, mining, ore processing, smelting, further processing, and recycled lead production, as well as increasing efforts in comprehensive recycling, will represent a new path for the sustainable development of the lead industry in our province. At present, lead smelting enterprises in the province have recognized the importance of further processing lead smelting products, and have begun to try to extend their product chains in order to increase the added value of their products. Henan Yuguang Gold and Lead Company has reached a considerable scale in the production of processed products such as mining lamps, lead oxide, and batteries. At the same time, most companies have begun to include the production of downstream products in the lead industry, such as alloy lead and lead-acid battery plates, in their future development plans. For example, the Jiyuan Shibin Smelting Plant is currently constructing a production line for alloy lead with an annual capacity of 10,000 tons. In addition, lead smelting enterprises place emphasis on comprehensive recycling and intensify their recycling efforts, recovering sulfuric acid, zinc oxide, copper, antimony, bismuth, etc., on an annual basis, thereby improving the efficiency of comprehensive resource utilization. 3.1.4 Energy conservation, environmental protection, and circular economy: Vigorously develop the circular economy, accelerate the construction of recycled lead production lines, and establish a closed-loop industrial chain for the circular economy that encompasses smelting, alloy production, battery (headlamp) manufacturing, and recycled lead production, thereby creating an industrial system for the circular economy with a higher structural level ； In line with the requirements of circular economy development, it integrates clean production, comprehensive utilization of resources and their waste, ecological design, and sustainable consumption to achieve a continuous cycle of materials in the form of \"resources – products – recycled resources – recycled products\". The principles of \"reduction, reuse, and recycling\" are applied in production, thereby protecting increasingly scarce mineral resources to a greater extent, improving the efficiency of resource allocation, and reducing reliance on scarce energy sources such as coal and electricity. At present, the 100,000 t/a comprehensive recycling project for lead at Henan Yuguang Gold and Lead Co., Ltd. has begun construction. It has passed the evaluation process for key industrial projects in the province in 2004, carried out by the Henan Provincial Development and Reform Commission, and the feasibility study report for this project has been completed ； The environmental impact assessment for this project has been approved by the provincial environmental protection agency, and the pre-treatment equipment required for the project is currently being procured through international public bidding ； The 80,000 t/a batch lead smelting process supporting this project has been built and put into operation. In addition, the Jiyuan Shi Shi Bin Smelting Plant also plans to build a recycled lead production line with an annual processing capacity of 10,000 tons in 2006. Therefore, increasing the recycling of used batteries and raising the proportion of recycled lead in primary lead will be the only way to overcome the bottleneck posed by the shortage of lead ore resources, and it is essential for the sustainable development of the lead industry in our province. 3.1.5 Implementing an outward-oriented strategy: Raising funds through various channels, utilizing financial and securities markets to optimize the use of capital, and seeking cooperation with large enterprise groups, financial institutions, and multinational companies in order to diversify the investment entities ； Increase efforts in the exploration and development of lead and zinc mineral resources, adopt an outward-oriented strategy, and participate in the development of such resources both domestically and abroad through joint ventures or wholly-owned investments, thereby providing a reliable supply of raw materials for the development of the lead industry. 3.2 Development trends of the zinc industry in our province 3.2.1 High starting point: At present, the only zinc smelting enterprises in our province are Kaifeng Zinc Plant, with a production capacity of 30,000 tons, and one enterprise in Xingyang, whose production capacity is no more than 20,000 tons. Yuguang Jinlian Group’s 100,000-ton electric zinc resource comprehensive utilization project has a total investment of 860 million yuan. It is the first project in China to adopt the zinc-electric co-production model, utilizing an internationally advanced wet zinc smelting process that involves two stages of leaching and three stages of purification. For acid production from flue gas, a mature two-turn two-absorption acid production process is employed. The annual production capacity is 100,000 tons of electrolytic zinc ingots and 180,000 tons of sulfuric acid. Once completed, Yuguang will become the fourth-largest zinc smelting enterprise in the country. By 2005, this plant is expected to reach a production capacity of 50,000 tons per year, ranking first in the province; it will also help to change the unfavorable situation characterized by outdated technology and low production capacity in the zinc smelting industry of our province. It is also reported that Nanyang Xinfeng Mining Co., Ltd. is planning to establish a production facility for electrolytic zinc with an annual output of 60,000 tons. The total investment for this project is 125 million yuan, and it is a joint venture; the company is currently seeking partners. Xinyang is also planning to invest 400 million yuan in a new electrolytic zinc production line with an annual capacity of 60,000 tons; the feasibility study for this project has already been approved. Therefore, during the 11th Five-Year Plan period, the zinc industry in our province will experience rapid development, gradually establishing itself as a major and strong province in lead and zinc production. 3.2.2 High cluster degree: China’s zinc smelting enterprises are mainly located in Hunan, Liaoning, and Guangdong. Based on the production figures of the top 9 zinc producers in China as recorded in 2003, the output of zinc smelting enterprises in these three provinces accounts for over 30% of China’s total annual zinc production. The successful commissioning of Yu Guang Jin Lead Group’s 100,000-ton zinc electrowinning plant will change the industrial landscape of zinc smelting enterprises across the country. Meanwhile, Yu Guang’s long-term development plan includes a project to expand its zinc oxide production capacity by 100,000 tons per year; the aim is to increase the current annual production of 100,000 tons to 200,000 tons per year. This will inevitably change the current situation of a fragmented zinc smelting industry in our province, with low levels of clustering, and enhance the overall strength of this industry. 3.2.3 Complementary development of lead and zinc through synergy: Due to the occurrence of lead and zinc together in mineral deposits, most zinc smelting enterprises possess considerable lead smelting capabilities. The completion of Yu Guang’s 100,000-ton electric zinc resource utilization project will surely take advantage of the complementary nature of the lead and zinc industries, reduce the need for resource transfer, and enhance the comprehensive utilization of resources, thereby achieving synergistic development. This is also an experience worth learning from in the development of the lead and zinc industry in our province. Chapter 4: Major Problems Exist 4.1 The resource situation is not optimistic, and the sustainable development of the lead-zinc industry faces challenges. According to the re-evaluation of lead-zinc resources carried out by the Ministry of Land and Resources in accordance with international standards, by the end of 2002, China’s proven reserves of lead ore amounted to 12.5108 million tons, of which 8.1841 million tons were actual reserves ； The zinc base reserve is 37.5603 million tons, of which 25.1843 million tons are reserves. Based on the consumption of 1.6 tons of lead-zinc reserves per ton of lead-zinc concentrate produced in terms of metal content, and considering China’s production volumes in 2003 – 630,000 tons of lead concentrate in terms of metal content and 1.69 million tons of zinc concentrate in terms of metal content – the static reserve life for lead and zinc in China is estimated to be 8 years and 9 years respectively. If all of the existing proven reserves are upgraded, the static reserve life for lead and zinc would be only 12 years and 14 years respectively. In 2003, China’s apparent consumption of lead and zinc was 1.21 million tons and 1.92 million tons respectively; based on these consumption levels, the degree of resource security will further decline. At present, the degree of development and utilization of lead-zinc ore resources in our country is relatively high. Of the existing 800+ mining areas, more than 500 have been developed and utilized, with 88% of the total lead reserves and 93% of the total zinc reserves already exploited. Due to the high costs associated with exploring alternative resources in existing mining areas, the backlog in exploration work, and the depletion of resources in key mines or insufficient reserve levels, the lead-zinc resources in the eastern region have gradually been exhausted, leading to the gradual closure of these mines ； After years of exploitation, the reserves of large mines in South China have significantly decreased ； In places such as Guangxi, rampant and excessive mining has led to a rapid depletion of resources and a decline in production. Our province lacks natural endowments in lead and zinc mineral resources, which does not match its status as a major producer of these metals. The lead-zinc mines in our province are mainly located in Luanchuan, Lingbao, Wenyu and other areas. As the number of lead-zinc enterprises increases and production capacity keeps rising, the reserves of lead-zinc resources in these regions are gradually decreasing, leaving very limited room for increased output. Therefore, the development of lead and zinc enterprises in our province relies heavily on resources from other provinces and abroad, where such resources are abundant. Other provinces are taking advantage of their resource advantages to establish processing enterprises in order to increase the added value of those resources; as a result, domestic resources are no longer sufficient to meet production needs. This has led to our provincial enterprises seeking to import resources from abroad, with an increasing dependence on them. Moreover, the volatile prices of foreign resources pose various risks for the lead and zinc smelting enterprises in our province. Based on the current status of geological exploration in our country, there were few large and medium-sized lead-zinc mines available for development before 2010. With a limited number of mines that could be built or expanded, coupled with the reduction in production capacity of existing mines, it is estimated that the increase in domestic lead-zinc concentrate production will be limited. As a result, for provinces in the lead-zinc industry that lack resource advantages, the resource situation for this industry in our province is not optimistic, and the sustainable development of the lead-zinc industry faces severe challenges. 4.2 Raw material supply has become a bottleneck for the development of smelting enterprises. Among the large and medium-sized smelting enterprises in our province, only Yu Guang Jin Lead Co., Ltd. and some enterprises in Lingbao City have their own mines, but their self-sufficiency rate in terms of raw materials is also quite limited. Taking Yuguang Jinlian Co., Ltd. as an example, the raw material self-sufficiency rate for its own and controlled mines is also less than 40%. The other smelters in the province do not have a stable and reliable supply of raw materials, so the enterprises need to purchase these materials domestically and internationally. In domestic raw material supply, the proportion of long-term contracts is less than 50%. In 2004, several large lead-zinc smelting plants in our province relied on imported raw materials to the extent of about 55%, which undoubtedly increased the operational risks for these plants. Due to the organizational structure of enterprises in China’s lead and zinc industry, mining development centers are currently shifting to the central and western regions, and smelting capacity is also concentrating there. However, the separate operation of mines and smelters remains unchanged, reflecting a lack of unified planning and an effective market orientation in the development of this entire industry. The overall trend of increased smelting capacity continues, competition for raw materials among smelters is intensifying, and the supply of raw materials has become a bottleneck for the development of smelting enterprises. 4.3 The production organization is decentralized, industry concentration is low, and the overall strength of enterprises is generally weak. At present, there are over 40 lead smelting enterprises in our province, but only 3–4 independent smelters have an annual production volume of over 50,000 tons. Although large-scale projects are under construction and the number of large enterprises is increasing, due to the high total number of enterprises, the average production scale of lead-zinc smelting enterprises in our province is around 14,000 tons. The largest enterprises account for 30% of the total production, while the top 3 enterprises account for approximately 50%. In 2002, Yu Guang Jin Lead-Zinc Group Co., Ltd. of our province made it into the list of the top ten global producers of primary lead and zinc, ranking 10th in terms of its comprehensive lead-zinc smelting capacity. However, with a series of mergers and reorganizations among Western smelters in 2003, Yu Guang Jin Lead-Zinc Co., Ltd.’s global position might decline. According to the 2003 Report on the Development of China’s Non-ferrous Metals Industry, there were 7 enterprises that produced more than 50,000 tons of lead in 2003; Henan Yuguang Gold and Lead Group Co., Ltd. from our province and Yubei Metal Smelting Factory in Anyang City, Henan Province, were among them. However, neither of these two factories made it onto the list of the 18 non-ferrous metals manufacturing enterprises that had sales revenues of over 2 billion yuan in 2003, nor onto the list of the 10 such enterprises whose total assets exceeded 5 billion yuan at the end of 2003. Therefore, compared with provinces outside the region and foreign countries, the overall strength of lead smelting enterprises in our province is significantly insufficient. Furthermore, in our province, apart from Yu Guang Jin Lead Co., Ltd., which is a state-controlled enterprise, most lead smelting companies are private, privately-owned, or joint-venture enterprises. With limited funds and difficult access to financing, commercial banks tend to be reluctant or refuse to provide loans, which also affects the development potential of a large number of lead-related industries in our province. The zinc industry in our province is underdeveloped; the only enterprise with a production capacity of over 50,000 tons is the zinc processing company affiliated with Yu Guang Group, which began operations this year. Other zinc factories in cities such as Kaifeng and Zhengzhou have a production capacity of less than 30,000 tons each, resulting in an even lower level of industry concentration. 4.4 Low level of integration makes it difficult to reach agreements on key issues within the industry. China’s lead-zinc industry consists of numerous independent mining enterprises and separate smelting companies. Due to the low level of integration, it is hard to reach agreements on important issues within this industry. Firstly, mines and smelters always take unilateral positions when it comes to setting prices for concentrates and sharing profits, which hinders mutual cooperation and prosperity. Secondly, the lead-zinc smelting industry relies increasingly on foreign raw materials, but these imported materials are generally acquired through intermediaries, with no long-term contracts signed directly with foreign mines. As a result, it is difficult to reach a unified price in the negotiations over processing fees for imported raw materials, allowing foreign companies to take advantage of the situation. The export trade of lead and zinc metals is also mainly based on spot transactions. Furthermore, due to the large number of enterprises, each individual company is too weak to engage in capital management. Coupled with a complex system that hinders smooth capital flow and makes corporate mergers difficult, the fragmented state of the industry is unlikely to change in the short term. 4.5 The lead-zinc recycling industry and the deep processing industry are underdeveloped. Lead and zinc production in our province relies mainly on primary sources; recycled lead and zinc fall far short of the world average in terms of technological processes, scale, and output. The main problems at present are the small number of legitimate enterprises engaged in the production of recycled lead and zinc, outdated recycling technologies, severe secondary pollution, and a lack of effective management. Our province’s lead and zinc industry lacks the capacity for technological innovation; products among enterprises are similar to one another, progress in developing new products is slow, and most lead and zinc smelting plants do not yet have the capability to produce processed or value-added products. Chapter 5: Policy Recommendations 5.1 Increase efforts in environmental protection and technological upgrading to accelerate the industrial advancement of the lead-zinc sector. During the 11th Five-Year Plan period, China’s lead-zinc industry should focus on technological upgrades and industrial advancement, resolutely phasing out outdated smelting methods, and encouraging lead-zinc smelting enterprises to use advanced technologies to upgrade their existing production processes. It is necessary to pursue both industry development and energy conservation, giving priority to conservation. We should vigorously develop a circular economy, gradually establish a resource-conserving industrial and consumption structure, and forge a new path of industrialization characterized by resource conservation that suits China’s conditions. 5.2 Rely on domestic resources while paying attention to the development of foreign resources in order to enhance the security of lead and zinc resources. Ensuring a stable supply of resources and raw materials is the primary issue that needs to be addressed in the structural adjustment and industrial upgrading of the lead and zinc industry in our province; it is also key to the sustainable development of this industry. A strategy for ensuring a stable supply of lead and zinc resources and raw materials should be implemented based on the principle of relying on domestic resources and giving importance to foreign supplies, that is, by relying on domestic mining operations to meet the basic demands of the domestic market ； Pay attention to the long-term stability of overseas raw materials. On the one hand, it can integrate the lead and zinc industry and increase the scale concentration of mining enterprises in our province. Through proactive fiscal and tax policies, support should be provided for the reform, innovation, and development of existing mines, particularly by increasing efforts in geological exploration, so as to help these mining enterprises enhance their ability to survive and thrive. On the other hand, joint ventures and mergers of mines, as well as the participation of smelters in mine development, are encouraged. Faced with the current shortage of lead and zinc raw materials in our country and the increasing import of concentrates, the lead and zinc smelting enterprises in our province should boldly attempt to enter into long-term contracts directly with mines in the West. Those enterprises that have the necessary capabilities can go abroad to develop and utilize mineral resources there, by acquiring such mines, taking control of them, or carrying out exploratory activities overseas. Therefore, **companies should be encouraged to engage in overseas investment, with support provided for overseas resource development projects that can compensate for the relative shortage of domestic resources, in order to mitigate investment risks. It is necessary to introduce risk protection mechanisms for key overseas investment projects, providing such services as investment consulting, risk assessment, risk control, and investment insurance to safeguard against risks associated with overseas investments ； Provide risk protection services for domestic (foreign) financial institutions that finance key overseas investment projects. 5.3 Establishing a domestic lead-zinc futures market: On the one hand, establishing such a market helps to improve the price system, enhances the pricing mechanism for lead and zinc raw materials, and promotes market standardization, which is beneficial to the long-term stable development of the lead-zinc industry. On the other hand, it can enhance a company’s ability to utilize the futures market, facilitate its transformation from a production-oriented enterprise to a business-oriented one, improve economic efficiency, and increase its level of international operations. 5.4 Vigorously develop the utilization of recycled lead and zinc resources to reduce reliance on and consumption of virgin minerals. It is recommended to **strengthen the management of the waste lead and zinc recycling industry as well as the import of lead and zinc waste, along with environmental protection enforcement** ； Vigorously promote pilot projects for a circular economy, increase support through fiscal and tax policies, encourage the effective utilization of secondary lead and zinc resources, and foster the healthy and rapid development of the lead and zinc recycling industry. It is recommended that enterprises keep track of the development of global lead-zinc recycling technologies, improve smelting techniques and equipment, and enhance their ability to handle complex raw materials ； Monitor **relevant recycling policies, establish corresponding management systems, and increase the production of recycled lead and zinc as appropriate. 5.5 Relying on technology to adjust the product and industrial structures and enhance resilience to risks. At present, about 80% of the non-ferrous metal products in our province are in the form of metal ingots, resulting in an unreasonable product structure ； Non-ferrous metal mines have limited capacity for mining and deep processing, while smelting capacity continues to expand, resulting in a prominent structural contradiction characterized by weak capabilities at both ends and a stronger one in the middle. Therefore, investment in technology should be increased to use advanced technologies to transform traditional production processes. It is necessary to develop, adopt, and introduce the latest domestic and international process technologies. Without increasing or only slightly increasing energy and raw material consumption, the main products should be processed in a way that adds value, based on market demands; some products should undergo further deep processing and refinement in accordance with international standards ； In terms of industrial structure, it is necessary to develop the \"both ends\" through various means and adjust the industrial structure at appropriate times. 5.6 Innovate the institutional framework and adjust the corporate structure. Due to the scattered distribution of geological resources, non-ferrous metals industries have historically seen a fragmented and small-scale structure, with low industry concentration. As for mining companies, the concentration is even lower. Therefore, colored enterprises (groups) must expand their scale through a range of corporate operations (such as mergers and acquisitions) in order to enhance their strength and competitiveness. Vertical integration is one of the common expansion models used by non-ferrous metal enterprises (groups) today. It generally takes smelting enterprises as the core, and through forms such as alliances, investment holding, and restructuring, it controls raw material (mainly concentrate) production and supply enterprises via backward integration, while acquiring or establishing metal processing enterprises via forward integration. Implementing institutional and systemic innovations, achieving diversification of property rights, integrating the management advantages of various systems to adjust corporate organizational structures, accelerating mergers and acquisitions among enterprises through capital operations, and carrying out strategic reorganizations within industries in order to create large companies and enterprise groups with international competitiveness – this is the inevitable path for the coordinated and sustainable development of the non-ferrous metals industry. 5.7 Encourage and guide the development of private-owned enterprises through policy measures; the growth of such enterprises has injected new momentum into the development of the lead and zinc industry in our province. Therefore, **appropriate preferential policies should be provided to private enterprises in areas such as finance, taxation, and banking, in order to encourage, guide, and coordinate their healthy development.