My countrys sand and gravel industry has fully entered a new stage of high-quality development marked by green and low-carbon development

The "2021 China Sand and Gravel Industry Operation Report," compiled by the China Sand and Gravel Association, was recently officially released. The report shows that my country's sand and gravel industry has fully entered a new stage of high-quality development characterized by green and low-carbon development. In 2021, the national sand and gravel industry maintained an overall stable trend, with a slight decline in total sand and gravel output and prices initially low and then rising.

Sand and gravel are the largest, indispensable, and irreplaceable raw materials used in my country's infrastructure construction, with an annual consumption of approximately 20 billion tons. my country's annual sand and gravel output value exceeds 2 trillion yuan, with transportation costs reaching over 500 billion yuan. According to incomplete statistics, by the end of 2021, there were approximately 15,000 sand and gravel mines, over 30,000 related enterprises, and nearly one million employees. Currently, my country's sand and gravel industry has fully entered a new stage of high-quality development, and a green and low-carbon management system for the industry, characterized by "green mines, green factories, and green bases," is being rapidly established.

The report indicates that in 2021, 805 new sand and gravel mining rights were established nationwide, with Yunnan and Xinjiang leading the way with 166 and 156 new rights, respectively. Over 50 major aggregate production lines were newly built nationwide. With rising prices, the "north-sand southward transport" strategy has emerged. Liaoning Province primarily transports sand and gravel north, with a small amount shipped north to Jilin and Inner Mongolia.

The report predicts that in 2022, my country's demand for sand and gravel will remain generally stable, while supply may contract. The annual supply of construction sand and gravel is projected to be approximately 19.5 billion tons. Based on industry data, the average annual price may increase by 1%-2% compared to 2021.

2021 China Sand and Gravel Industry Operation Report

China Sand and Gravel Association

2021 Sand and Gravel Industry Overview

In 2021, the supply of the sand and gravel industry was impacted by factors such as carbon peaking, energy consumption control, the normalization of epidemic prevention and control, and limited sand and gravel transportation capacity in some regions. On the demand side, infrastructure construction and real estate investment continued to grow, and the economic performance of the sand and gravel industry maintained a stable and positive development trend throughout the year.

In 2021, national sand and gravel production reached 19.7 billion tons, a slight decrease of 1% compared to 2020. The sand and gravel industry was impacted by the slowdown in infrastructure and real estate growth in 2021, leading to a slowdown in sand and gravel demand growth. Furthermore, the normalization of epidemic prevention and control, carbon peaking, and energy consumption control affected the start-up time of sand and gravel mines, resulting in a slight contraction in sand and gravel production.

In the first half of 2021, national sand and gravel prices remained relatively stable. In the second half of the year, with the arrival of the peak construction season, national sand and gravel demand increased. However, on the supply side, sand and gravel companies were affected by the dual energy consumption control measures, resulting in a continued tight supply, leading to a continued rise in sand and gravel prices in the second half of the year.

According to data from the National Bureau of Statistics, in 2021, fixed asset investment in the national mining industry increased by 10.9% year-on-year. In the sand and gravel industry, amidst regional shortages and continued price increases, fixed asset investment in sand and gravel mines significantly outpaced other minerals, with preliminary statistics showing an annual growth rate of around 15%.

In recent years, with the rapid consolidation of small-scale sand and gravel mining rights, the number of sand and gravel mines nationwide has been declining. The scale and intensification of sand and gravel mines have begun to show results. By the end of 2021, there were approximately 15,000 sand and gravel mines.

Industry Assets

Sand and gravel are the largest, indispensable, and irreplaceable raw materials used in my country's infrastructure construction, with an annual consumption of approximately 20 billion tons. They are the world's largest mineral resource, raw material, and bulk commodity. my country's annual sand and gravel output value exceeds 2 trillion yuan, with transportation costs reaching over 500 billion yuan. According to incomplete statistics, by the end of 2021, there were approximately 15,000 sand and gravel mines, over 30,000 related enterprises, and nearly one million employees. The sand and gravel industry has fully entered a new stage of high-quality development characterized by green and low-carbon development. China's sand and gravel industry is rapidly developing a green and low-carbon management system, characterized by "green mines, green factories, and green bases."

Sand and Gravel Industry Operations

1. Slight Decline in Output

In 2021, national sand and gravel production reached 19.7 billion tons, a slight decrease of 1% compared to 2020. In 2021, the slowdown in growth in infrastructure and real estate investment led to a slowdown in sand and gravel demand. Furthermore, the normalization of epidemic prevention and control measures and environmental protection inspections impacted the start-up schedule of sand and gravel mines, leading to a slight contraction in sand and gravel production.

2. Prices Initially Low, Then High

According to the Big Data Center of the China Sand and Gravel Association, the national average price of sand and gravel in 2021 was 113 yuan/ton, a year-on-year increase of 2.2%.

In the first half of 2021, the average price of natural and manufactured sand and gravel fluctuated significantly due to factors such as construction schedules on the demand side, fluctuations in sand and gravel mine production on the supply side, and tight shipping conditions in the middle and lower reaches of the Yangtze River. In the second half of the year, with the arrival of the peak construction season, demand for sand and gravel steadily increased, pushing up the price of natural sand and gravel. Prices of both natural and manufactured sand and gravel have continued to rise since the second half of the year.

As of December 31, 2021, the national average price of manufactured sand was 102 yuan/ton, unchanged from the previous month; the average price of natural sand was 142 yuan/ton, up 0.7% from the previous month.

In the second half of 2021, prices continued to rise as supply and demand in the sand and gravel market shifted. As of December 31, the average price of crushed stone was 102 yuan/ton, unchanged from the previous month.

3. Sand and Gravel Mine Overview

As of the end of 2020, the distribution of sand and gravel mines in various provinces, autonomous regions, and municipalities showed that Guizhou and Yunnan had the largest number of sand and gravel mines, with 1,632 and 1,049 mines, respectively. Xinjiang, Sichuan, Hunan, Guangxi, and Jiangxi each had between 500 and 800 sand and gravel mines. Inner Mongolia, Gansu, Heilongjiang, Guangdong, Shanxi, Chongqing, and Hubei each had between 300 and 500 sand and gravel mines. Zhejiang, Jilin, Shaanxi, Fujian, Hebei, Henan, Anhui, Liaoning, Qinghai, Shandong, Ningxia, Hainan, Tibet, and Jiangsu had fewer than 200 sand and gravel mines. Beijing, Tianjin, and Shanghai had zero sand and gravel mines.

In 2021, Fujian and Shanxi provinces established over 10 new major aggregate production lines; Henan, Guangxi, Liaoning, Guizhou, Anhui, and Hunan added 6, 5, 5, 4, 3, and 2 key aggregate production lines, respectively; Sichuan, Chongqing, Hubei, Shaanxi, and Shandong each added one.

In 2021, 805 new sand and gravel mining rights were established nationwide, with Yunnan and Xinjiang ranking first and second with 166 and 156, respectively. Heilongjiang and Guizhou provinces added between 50 and 100 new sand and gravel mining rights; Jilin, Guangxi, Gansu, Hubei, Sichuan, Chongqing, Guangdong, Zhejiang, Shaanxi, Anhui, and Shandong added fewer than 10.

In 2021, newly established sand and gravel mining rights nationwide covered 12 mineral types: limestone for construction, sand for construction, granite for construction, sandstone for construction, tuff for construction, basalt for construction, andesite for construction, dolomite for construction, diorite for construction, diabase for construction, marble for construction, and limestone for construction. Limestone for construction and sand for construction had the largest number of mining rights, at 345 and 215, respectively. Granite for construction was second with 86 mining rights, while sandstone for construction, tuff for construction, basalt for construction, andesite for construction, and dolomite for construction ranged from 10 to 50. Finally, the number of mining rights for diorite for construction, diabase for construction, marble for construction, and limestone for construction was less than five each.

The large-scale development of the sand and gravel industry has achieved certain success in 2021. Mining rights covering 0-0.1 square kilometers have become the mainstream of newly established mining rights, replacing those covering 0-0.1 square kilometers. Among the newly established sand and gravel mining rights in 2021, 365, or 45.3%, had mining areas between 0-0.1 square kilometers. This proportion has decreased compared to the 62.5% of sand and gravel mining rights already covering 0-0.1 square kilometers in 2020. 422, or over half, of the newly established sand and gravel mining rights were between 0.1-1 square kilometers. Eighteen, or 2.2%, were between 1-10 square kilometers.

4. Key Regional Analysis

Eastern Region: There are approximately 1,200 sand and gravel mines, with a demand of 6.7 billion tons. Currently, strong demand and insufficient supply in eastern my country necessitate an urgent expansion of sand and gravel mining rights. Shandong, Jiangsu, and Guangdong provinces face significant gaps in sand and gravel, reaching 65.5%, 40%, and 17.1% respectively. Hebei, a province rich in sand and gravel resources and a key region in the coordinated development of the Beijing-Tianjin-Hebei region, not only meets its own needs but also shoulders the responsibility of ensuring supply to Beijing and Tianjin.

Among the key provinces in eastern China, Guangdong faces a severe supply shortage, with 350 million tons of self-produced gravel and approximately 100 million tons of manufactured sand annually, while demand for 1.5 billion tons is high. Shandong faces a general shortage of high-quality sand and gravel, with an annual demand of approximately 1.2 billion tons. Jiangsu faces a 40% overall gap in sand and gravel, with an annual demand of approximately 1.15 billion tons. Hebei guarantees 40% of Beijing's supply, providing nearly 1 billion tons of construction sand and gravel materials to the market annually, while its own annual demand is 650 million tons.

In central China, there are 2,107 sand and gravel mines, with demand exceeding 5 billion tons. In Hunan, the overall sand and gravel supply gap reaches 200 million tons, with annual sand and gravel aggregate consumption remaining stable at around 900 million tons. The province's actual total sand and gravel mine production is approximately 700 million tons.

Henan Province's sand and gravel supply and demand are essentially balanced. The province's demand for sand and gravel ranges between 900 and 1 billion tons. Overall, Henan's sand and gravel mining rights can basically meet Henan's overall demand.

In the western region, there are 6,288 sand and gravel mines, with demand exceeding 7 billion tons. Guizhou currently has a planned production capacity of over 1.5 billion tons, indicating widespread overcapacity across the province. Gansu's demand for sand and gravel is approximately 300 million tons, with annual domestic production (including river sand and sand-and-gravel) reaching approximately 340 million tons, ensuring a balanced supply and demand. Chongqing's current demand for sand and gravel is approximately 400 million tons, with a similar balance.

In the northeastern region, there are 789 sand and gravel mines, with demand exceeding 800 million tons. Liaoning's current annual demand for sand and gravel is approximately 240 million tons, while domestically produced sand and gravel output is around 400 million tons, meeting market demand. However, the oversupply is becoming increasingly evident. The ex-factory price of gravel ranges from 22 to 28 yuan per ton, while the ex-factory price of manufactured sand is between 30 and 36 yuan per ton.

With rising prices, the "north-sand southward transportation" strategy has emerged. Liaoning's sand and gravel are primarily transported north to the south, with a small amount shipped north to Jilin and Inner Mongolia.

Sand and Gravel Industry Development Trends

Since the 18th National Congress of the Communist Party of China, the sand and gravel industry has received high attention from the Party Central Committee and the State Council. On June 22, 2018, the Ministry of Natural Resources issued the "Green Mine Construction Specifications for the Sand and Gravel Industry," elevating sand and gravel to one of China's nine major mining industries. On November 4, 2019, ten national departments jointly issued the "Several Opinions on Promoting the High-Quality Development of the Manufactured Sand and Gravel Industry." On March 25, 2020, fifteen national departments jointly issued the "Guiding Opinions on Promoting the Healthy and Orderly Development of the Sand and Gravel Industry." The 2021 "National Mineral Resources Plan (2021-2025)" was completed. In accordance with these relevant industrial policies and planning requirements, the future development trends of the sand and gravel industry are intelligent, green, high-quality, well-managed, profitable, and scaled. The sand and gravel industry has fully entered a new stage of high-quality development characterized by green and low-carbon development.

2022 Development Outlook

Supply: Supply may contract. Carbon peak, dual energy consumption controls, continued emphasis on environmental protection and energy efficiency, the normalization of epidemic prevention and control, and the trend toward scale and green development in the sand and gravel mining industry will all lead to a contraction in sand and gravel supply in 2022. The annual supply of sand and gravel for construction is expected to be around 19.5 billion tons.

Demand: Demand for sand and gravel will be generally stable in 2022, with a steady downward trend. Infrastructure and real estate construction, the two major demand sources for the sand and gravel industry, are expected to see continued contraction in overall demand. Infrastructure investment plans for 2022 are expected to be advanced, and special bond issuance will be forward-planned, driving a vibrant infrastructure market and stimulating demand for sand and gravel. Real estate investment is expected to develop steadily and healthily. However, increased demand in the infrastructure sector will not offset the decline in real estate demand for sand and gravel. Sand and gravel demand is expected to remain stable with a slight decline throughout the year, with a decrease of approximately 1% to 2%.

Price: Overall, there will be a slight increase. Against the backdrop of a potentially slight contraction in both sand and gravel supply and demand in 2022, transportation factors, which have a significant impact on sand and gravel price fluctuations, will also improve to some extent in 2022, alleviating supply constraints in some areas and achieving a near-balanced supply and demand situation. The supply and demand for construction sand and gravel will continue to trend downward in 2022. Based on industry data, the average price for the entire year is expected to increase by 1% to 2% compared to 2021.

(Special thanks to the sand and gravel associations and member organizations across China who provided relevant information for this report.)

Reprinted from: China Mining News