In recent years, with the prohibition of natural sand mining and the continuous pressure of environmental protection policies, machine-made sand has gradually become the leading role in the industry, a large number of small mines have been shut down, and the high price of sand and gravel in a short period of time has attracted a large number of large enterprises with abundant funds, such as cement enterprises, large hydropower central enterprises and local state-owned enterprises.
With the environmental storm as a turning point, the industry has stepped into a large-scale and green development path. As an industry attached to natural quarries, the acquisition of sand and gravel is the first link in the industry competition. In the past two years, state-owned enterprises such as local trading companies have frequently taken mines, and the aggregate business has become an important option for local state-owned enterprises to optimize their industrial structure.
The author will take the local trading enterprises as the object to analyze the development of their sand and gravel business.
First, joint cement enterprises and large central enterprises, local trading has become an important participant in
the sand and gravel industry, sand and gravel is a necessary material for infrastructure construction. Transportation groups around the country are responsible for the construction of transportation infrastructure such as highways, railways and bridges, which determines that transportation groups around the country have a large demand for sand and gravel. In order to ensure the supply of raw materials, many trading companies have entered the field of sand and gravel, and explored new growth points in transportation-related industries. There are two main ways to participate in the
sand and gravel industry. Some of the trading companies have intervened in the sand and gravel industry through equity participation, and the trading companies have appeared in the shareholder lists of China Building Materials, Huaxin Cement , Conch Cement and other cement companies.
Table 1: Some trading companies enter the sand and gravel industry
through equity participation Data source: cement big data (https://data.ccement.com/)
In addition to cooperation with cement enterprises, it is not difficult to find. In the past two years, China Power Construction and China Energy Construction, which have frequently taken mines, have often cooperated with local governments. Specifically, China Power Construction (Shanwei) Green Building Materials Co., Ltd., China Power Construction (Guangning) Green Mining Co., Ltd. and China Power Construction (Deqing) Green Building Materials Technology Co., Ltd., which belong to China Power Construction, have been actively mining in Guangdong in the past two years, while Zhejiang Trading and Zhaoqing Trading have appeared in the list of shareholders of the mining company.
Table 2: Local Trading and Large-scale Central Enterprises Cooperate to Take Mines
Data Source: Cement Big Data (https://data.ccement.com/)
. Trading companies will continue to strengthen cooperation with large central enterprises, leading cement enterprises and outstanding private enterprises in the future, and acquire mining rights by means of equity integration and business cooperation. Under the increasingly competitive market expectations, cooperation will become the choice of many enterprises.
Second, the long Pearl River Delta has become one of the main mining companies, and the planned annual production capacity of Guangdong and Zhejiang has exceeded 220 million tons
. In addition to the form of equity participation, the trading company has also strengthened its own acquisition of sand and gravel mining rights in the past two years. According to incomplete statistics, during the period from 2017 to May 2023, at least 83 sand and gravel mining rights were acquired by local trading (and its enterprises), with a transaction price of more than 33 billion yuan and a planned production capacity of more than 300 million tons per year, of which large-scale mining rights (resource reserves exceeding 50 million tons or transaction value exceeding 50 million yuan) accounted for more than 50%.
Among many trading companies, Zhejiang, Guangdong, Guangxi, Hubei and Heilongjiang trading companies rank in the forefront of the country in terms of the scale and quantity of sand and gravel mining rights transactions. According to incomplete statistics, as of May 2023, the planned sand and gravel production capacity of Zhejiang Trading, Ningbo Trading, Huizhou Trading and Nanning Trading has exceeded 20 million tons per year, and the planned production capacity of the four trading companies has exceeded 240 million tons per year.
Table 3: The planned production capacity of Zhejiang Trading, Ningbo Trading, Huizhou Trading and Nanning Trading exceeds 240 million tons per year
Source: Cement Big Data (https://data.ccement.com/)
For self-use and other purposes. All over the country, most of them take mines in the local market. In the Yangtze River Delta region, the demand for sand and gravel is large and the price is high, and the trading companies in the region seize this opportunity to rapidly lay out, making Zhejiang and Guangdong the largest trading and mining locations. Specifically, at least 30 mining rights in Guangdong and Zhejiang have been traded, with a total planned capacity of more than 220 million tons. In all parts of the country, Zhejiang Trading and Huizhou Trading have the largest reserves and quantity of sand and gravel mining rights, and the trading in the Yangtze River Delta has undoubtedly become one of the main mining forces. Figure
1 and Figure 2: At least 30 mining rights in Guangdong and Zhejiang have been received by trading hands
Data source: Cement Big Data ( https://data.ccement.com/)
III. In the
past two years, whether it is the head cement enterprises, large central enterprises, or local trading companies, they are all increasing the number of mines. The scale of capacity release in the next few years is bound to be not small, especially in the Yangtze River Delta and Pearl River Delta regions, and the intensity of competition will be self-evident. According to the aggregate production capacity ranking in 2022, the trading company is undoubtedly one of the competitors that can not be ignored in the sand and gravel industry. Among them, Zhejiang Transportation Resources Investment Group Co., Ltd. and Huizhou Transportation Investment Group Co., Ltd. have entered the top 15 of the national sand and gravel production capacity. After
any industry has experienced disorderly expansion, it is difficult to avoid the consequent overcapacity and imbalance between supply and demand. 2022 is a difficult year, the sand and gravel industry has experienced a decline in demand, and the continued decline in prices has inevitably eroded the industry's profits. According to the listed companies that have published relevant data, the comprehensive gross profit rate of the industry has continued to decline in the past two years, and the gross profit rate of aggregate of more than 70% of enterprises has declined in 2022. Although the major trading companies have no public aggregate profit data, but under the pressure of the industry trend, its aggregate gross profit rate is also difficult to maintain a high level.
Figure 3: The price of sand and gravel will continue to decline
in 2022. Data source: Cement Big Data (https://data.ccement.com/)
At present, it seems that under the worries of declining profits and shrinking demand, Although there is no strong competitiveness in the cost of mining, the enthusiasm for mining in many places remains unchanged. In the next few years, with the help of capital, environmental protection, logistics and other advantages, large enterprises such as trading companies will invest heavily or help the sand and gravel aggregate industry to speed up the transformation and shuffling.
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