Meanwhile, mining enterprises have begun to turn to technological innovations and energy-saving measures to try to bounce back. Now it has been widely recognized that technological innovations and energy-saving measures might yield new growth momentum for the sector.

"When the market is good, enterprises do not have time or energy to innovate their technology," said Shang Fushan, Vice President of China Nonferrous Metal Association, at the 2009 China Mining Merger and Acquisition Forum in Beijing on January 10. "Now that the market is going under, they have time and energy to retrofit machines."

Some mining companies have already successfully put in place innovations that have improved their production. In October 2008, Xinjiang Xinxin Mining Industry Co. Ltd. (Xinxin) launched a nickel technological innovation project to expand its annual production capacity to 10,000 tons.

"Technological innovation has become the giant engine of Xinxin's development, and it will produce significant benefits for further development," said Yuan Ze, President of Xinjiang Nonferrous Metal Industrial Group Co. Ltd., the holding company of Xinxin.

Qi Lin, General Manager of Zinc-china.com, an e-commerce site for the mining industry, said that now is a good time for enterprises to undertake technological innovations. "The price of production equipment is only half what it was a year ago," he told Beijing Review.

Attracting investment

The present financial crisis is a double-edged sword for the mining industry. For enterprises with good liquidity, it is a good chance to expand with low costs, some industry experts said.

"After years of development, my company now has no external debt, and its available funds have hit 5 billion yuan ($735 million)," said Yuan Ze."Now many mine owners have come to us for cooperation. Under the present situation, many small mines are suffering capital chain ruptures and are going under. It is a good chance for us," he added.

Private capital has been no less active in investing in mining companies. Lu Fuxing, a 50-year-old businessman from Wenzhou of Zhejiang Province, together with four other Wenzhou businessmen, bought a coalmine in Qinghai last October for 90 million yuan ($13.2 million) and have started making preparations to begin mining operations. Prior to that, Lu had invested in an iron mine in Qinghai which has been closed down temporarily because iron prices are too low. Nevertheless, he said he is optimistic about the future.

"I am not worried about my investment return in mining," Lu said. "The present crisis will not last long. The country is taking measures to stimulate domestic demand. Premier Wen Jiabao set an example for us, so I have no reason to panic." He added that the Central Government's 4-trillion-yuan ($586-billion) stimulus package would boost iron demand, so that his mine in Qinghai could reopen after the Chinese New Year at the end of January.

Shang Fushan of the China Nonferrous Metal Association said the nonferrous metal industry would recover by the end of this year, but he also reminded those at the conference to be more cautious about the values of mines to avoid making blind investments.