No one knows this better than China's mining industry that confidence is more precious than gold. The sector experienced a dramatic upswing followed by a sharp decline last year. As the global economic crisis unfolds, it now is experiencing a winter freeze. Price slumps and sluggish demand have forced the country's mining companies to cut their costs.

STRONG BACKING: The Ministry of Land and Resources sponsored the 2008 China Mining Congress and Expo held in Beijing, where government officials, industry experts and investors gathered to discuss the prospects for the country’s mining sector

But the mining industry is fighting the downturn and managing to stay afloat thanks to a boost from the government. Some industry insiders at a mining industry conference in Beijing earlier last month suggested that mining companies use the crisis as an opportunity to gather their strength and make preparations for next industry upswing.

Joint efforts

When the sprawling U.S. financial meltdown sent a chill through China's mining industry late last year, southwest China's Yunnan Province, which has bountiful nonferrous metal resources, was hit the hardest. Because of the sharp fall in copper prices last October, Yunnan Copper Industry Co., China's third largest copper producer, has a loss of 470 million yuan ($69.1 million) in the fourth quarter of 2008.

When the mining companies started to suffer, the local government did not take the situation lightly. On December 5, the Yunnan Provincial Government promulgated the Trial Measures on Nonferrous Metal Reserves in which it declared it would reserve 1 million tons of nonferrous metals produced by Yunnan-based enterprises. The creation of the reserves caused the prices of nonferrous metals to jump 23 percent in one week as of January 9.

The provincial government also said it would issue short-term loans worth 5 billion yuan ($735.2 million) for small and medium-sized mining enterprises to help them maintain their regular production levels and close down inefficient production facilities. The government also took measures to encourage geological prospecting units to explore more mines and large mines to prepare for the next mining boom.

The Central Government also provided a helping hand for the mining industry to reduce their inventories. On December 25, the State Reserve Bureau under the National Development and Reform Commission declared a 290,000-ton electrolytic aluminum reserve to be implemented in January.