National People's Congress Representative and Chairman of Tongling Nonferrous Metals Group Ding Shiqi: Establish an LME delivery warehouse in Shanghai to enhance China's international pricing power for bulk commodities

Securities Times Reporter Ye Lingzhen

At this year’s National People’s Congress and the Chinese People’s Political Consultative Conference, Ding Shiqi, Party Secretary and Chairman of Tongling Nonferrous Metals Group Holdings Co., Ltd. (hereinafter referred to as “Tongling Nonferrous Group”) and a National People’s Congress delegate, shared several suggestions based on frontline research and industry practice, including establishing an LME (London Metal Exchange) delivery warehouse in Shanghai and further optimizing mineral resource mining rights trading rules.

“China, as the world’s largest consumer of nonferrous metals, accounts for over 50% of global consumption of key varieties such as copper, aluminum, and nickel, but has long lacked pricing power,” Ding Shiqi told Securities Times reporters. The LME, as the core global pricing platform for nonferrous metals, has a network of delivery warehouses covering 34 countries and regions, but has not yet established a key node in mainland China. Chinese companies participating in LME deliveries face high costs for shipping, insurance, and customs clearance, with delivery cycles lasting several weeks, risking delays, cargo damage, and “warehouse congestion.”

In Ding Shiqi’s view, Shanghai, as a core city in China’s “Five Centers” development, has formed a comprehensive bulk commodity market system characterized by “futures-spot linkage and internal-external connectivity.” With a complete policy framework, strong logistics and warehousing infrastructure, and robust industry demand, Shanghai possesses the essential conditions for establishing an LME delivery warehouse.

How to promote the work related to the Shanghai LME delivery warehouse? Ding Shiqi recommends strengthening government coordination by establishing a “Shanghai LME Delivery Warehouse Promotion Working Group,” integrating departments such as commerce and customs to accelerate approval and registration processes for delivery sites. Qualified warehousing enterprises with LME credentials could serve as the main operators, upgrading and transforming storage facilities to meet LME standards, equipped with intelligent inventory management systems and testing equipment. Additionally, it is suggested to include warehousing and logistics in Shanghai’s bulk commodity supply chain financial support scope, providing services such as warehouse receipt pledge financing. For industry chain collaboration, it is recommended to build a cross-border trading service platform for bulk commodities based on the delivery warehouse, integrating logistics, customs clearance, inspection, and financing services to offer comprehensive solutions for enterprises.

While focusing on pricing power for bulk commodities, Ding Shiqi also emphasizes the efficient development of domestic mineral resources and suggests optimizing mineral rights trading rules.

Ding Shiqi stated that according to the “Mineral Rights Transfer Trading Rules” issued by the Ministry of Natural Resources in 2023, various provinces and autonomous regions have formulated local rules for mineral rights transfer, but there are differences in implementation, mainly in transfer methods, qualification review of bidders, and deposit requirements, with some regions lacking restrictions.

In response, Ding Shiqi recommends raising qualification requirements for bidders to ensure that resources are put into production on time. For strategic mineral resources, it is suggested that the state adopt open bidding for transfer, using comprehensive evaluation criteria such as enterprise nature, technical and financial strength, and track record.

To prevent bidders from failing to fulfill payment commitments after acquiring mineral rights, Ding Shiqi proposes that relevant entities pay a deposit of no less than 30% of the bid or auction price when participating in national mineral rights public transfer. For listings and auctions, it is also recommended to require bidders to continue depositing additional guarantees during the listing and bidding process, significantly increasing the cost of non-compliance and ensuring effective transfer and high-quality development of mineral rights.

(Edited by: Wen Jing)

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