Exploration of diversified financing channels for mine ecological restoration



Due to historical reasons, China's long-term extensive mineral resources development and utilization mode not only caused serious damage and waste of mineral resources, but also brought huge negative impact on the natural environment. Under the influence of the double carbon target and the "two mountains theory", China's energy structure and consumption ratio are constantly changing. As an important work of energy reform and adjustment, mine ecological restoration will also promote the continuous development of China's ecological civilization.

First, the status quo of mine ecological restoration

Mine ecological restoration is an important connotation of ecological environment management in China. China's mineral resources development activities have a long history, long-term high-intensity, large-scale mineral mining has led to the occupation or destruction of about 3.6 million hm2 of land due to mining. However, abandoned mines will cause many negative ecological and environmental impacts such as geological disasters, land resource damage, soil erosion, water pollution, soil heavy metal pollution and air pollution in mining areas. Ecological restoration of mines has gradually become the key link to protect ecological environment in China. To this end, China has issued a series of policies to effectively promote the restoration of mine ecological environment. In December 2019, China issued the Opinions of the Ministry of Natural Resources on Exploring the Use of Market-oriented Ways to Promote Ecological Restoration in Mines, which clearly defined the mode of market-oriented operation and scientific governance to accelerate the promotion of ecological restoration in mines; In June 2022, China issued the Opinions on Supporting designated Counties to achieve the Effective connection between consolidating and expanding poverty alleviation Achievements and Rural Revitalization in 2022, clearly pointing out that it is necessary to guide and support designated counties to carry out ecological protection and restoration, and promote the marketization of ecological restoration in mines from the perspective of rural revitalization. At the same time, the Case of Social Capital Participation in Territorial Spatial Ecological Restoration issued by the Ministry of Natural Resources introduced the market-oriented restoration cases of abandoned mines in Shandong, Anhui, Yunnan, Zhejiang, Henan and other places, and also showed the enthusiasm of social capital participation in mine restoration.

However, at present, the economic value of the restored mine is not high, and the economic benefits of the project are unstable, which limits the motivation of the relevant parties to promote ecological restoration, and the restoration work lags behind seriously. Specifically, the location of abandoned mines and the degree of exploitation and utilization vary from place to place, especially in areas with insufficient government financial funds and poor transportation location, mine restoration is mostly for public service to local residents, and the final results are mainly natural environment reserves, with low value of subsequent commercial development. Other repaired mines also have contradictions such as the inability to revitalize the existing construction land and the difficulty in obtaining new construction land, resulting in the low value of the repaired construction land. On this basis, the superimposed characteristics of large investment funds, long investment cycle, and unstable income from late development of mining ecological restoration projects have led to the lack of confidence of relevant enterprises and weak investment attraction. At the same time, immature business models also pose major obstacles to the participation of financial institutions and the use of green financial instruments.

Second, the path and characteristics of mine ecological restoration

In view of the characteristics of large initial investment and uncertain benefits in mine restoration, it is difficult to cover the follow-up maintenance costs only by relying on traditional public welfare projects such as the establishment of protected areas, and the demand for actively exploring market-oriented operation means is increasing. At present, the market-oriented ecological restoration path of mines is mainly based on land index development and "ecological +" projects.

(1) Path 1: land index transfer

The Opinions of the Ministry of Natural Resources on Exploring the use of market-oriented ways to Promote the ecological restoration of mines clearly stipulates that the abandoned construction land of historical mines is restored to cultivated land, and after passing the acceptance, the construction land index can be transferred and used within the province with reference to the policy of linking the increase and decrease of urban and rural construction land. Binchuan County of Yunnan Province actively uses the policy of linking land increase and decrease to carry out land index transfer, and the 220 mu paddy field sorted out in the low level of the mining area gets 50 million yuan income; The coal mining subsidence control project of Lujin Lake in Huaibei City, Anhui province, is expected to generate more than 30 billion yuan in direct income from the transferable construction land formed around the lake. Due to the immature transaction mechanism of construction land index, the problem of difficult transactions is prominent, the involvement of commercial banks is limited, and the early restoration funds are mainly funded by the government, which requires higher requirements on the local financial foundation.

(2) Path 2: "Ecological +" model

The treatment of abandoned mines is combined with ecological construction, tourism resource development, landscape construction, ecological agriculture, etc., and certain economic, social and ecological benefits are generated through ecological transformation, industrial implantation, and overall planning, and many places have carried out market-oriented practice exploration. Jiuding Manor, Laixi City, Qingdao City, Shandong Province, built in the original mining area of grape planting, wine production, cultural tourism is one of the ecological agriculture. This type of model is generally the local government to lease or transfer the right to operate for a certain number of years to attract investment, has certain requirements for the location of the mine, and is suitable for areas with convenient transportation. Due to the implantation of the industry, it has a certain profitability, and is generally based on commercial bank loans, supplemented by local financial subsidies, which is also an EOD model explored in recent years.

New management models such as agro-light complementarity, forest-light complementarity and fish-light complementarity, which combine photovoltaic, wind power with tourism and characteristic industries, have been emerging in many coal mining subsidence areas and tailings ponds. The construction of photovoltaic power generation projects on abandoned mines can not only create stable economic benefits by relying on electricity costs, but also play a role in blocking wind and fixing sand to a certain extent. Different from the photovoltaic economy, wind power generation is more aesthetically superior, and the local characteristics of the natural landscape, creating wind power characteristics of the town has become a new starting point for rural revitalization. For example, Tianhua Sunshine New Energy Investment Co., Ltd. invested 450 million yuan in Pingyuan County, Guangdong Province, leasing 109.7 km2 of the former Jianshan mining area to build 50 MW photovoltaic power generation projects, with an annual output value of more than 52 million yuan. This mode of investment is mainly based on the common financing methods of new energy, and it is still in the early stage of exploration.

Third, the exploration of diversified financing channels for mine ecological restoration

Although the early investment and financing mode of mine ecological restoration in China is single, it is only a government-funded mode in which the central government subsidizes the local government, but its role has laid the foundation for today's mine ecological restoration. This investment pattern has continued for a long time, with the completion of more than 2,000 exemplary remediation and governance projects. Starting from tens of millions of yuan per year, the central government gradually expanded its input and once reached more than 5 billion yuan per year. According to the investigation and calculation of the relevant agencies of the China Geological Survey, the cost of environmental problems of historical mines in the country still needs 608.2 billion yuan, of which 59.1 billion yuan is spent on environmental problems of historical mines in resource-depleted cities, and 549.1 billion yuan is spent on other historical problems. Only the government funding for the total amount of mine restoration funds is in a drop in the water state, even if the expected restoration effect is achieved, it is difficult to ensure the later operation and maintenance management, in the face of complex and diverse and huge coverage of abandoned mining areas caused by ecological environmental problems, to the mining area ecological restoration work has brought greater obstacles. It is urgent to actively explore the marketization of mine ecological restoration, and it is a new exploration of ecological restoration to gradually shift from the ecological + ecological restoration concept to EOD project financing.

EOD projects mainly have two modes: PPP and ABO. In areas where the amount of government financial expenditure is large, but the amount of expenditure does not exceed the upper limit stipulated by the Ministry of Finance, and the project implementation is not urgent, EOD mode can adopt PPP mode to implement the project; In areas where the amount of government expenditure is large but the amount of expenditure does not exceed the upper limit stipulated by the Ministry of Finance, but the project implementation is urgent, EOD mode can implement the project in ABO mode, that is, Authorize - Build - Operate mode. This model achieves project benefits through the way of "ecological restoration and protection + improvement of infrastructure + construction of green new industries", thus solving the problem of financing repayment sources.

The government bond model is the investment and financing model with low implementation difficulty and the strongest landing at this stage. Revenue from government-managed funds can be used as a source of repayment for special bonds, thus maximizing investment returns. Low cost, long financing cycle, high success rate of raising funds. However, the amount of issuance is limited, and it is difficult to meet the total investment amount of ecological environment projects (or other projects) in a certain region due to the overall regulation of the province. For example, the first phase of the comprehensive treatment of coal mining subsidence area in Lishan District issued government special bonds to raise 90 million yuan.

The mode of government investment fund and investment operation company, whether it is the mode of setting up fund or the mode of setting up company with direct equity contribution, is established on the premise of the cooperation form of investment subjects and the project capital. When social capital is not directly involved, the local government and local state-owned enterprises set up funds or directly set up companies, which have higher requirements for the return on investment mechanism; In the case of direct participation of social capital in joint investment, usually in cooperation with state-owned enterprises, the comprehensive income exceeding the project is usually used as a supplement to the insufficient investment income. For example, Shaanxi Provincial Department of Natural Resources and Shaanxi Provincial Department of Finance as the main sponsors, together with Shaanxi Geology and Mining Group Co., LTD., Shaanxi Changjiang Capital Management Co., LTD., and Shaanxi Investment Fund Management Co., LTD., jointly initiated the establishment of Shaanxi Qinling Mine ecological restoration Fund (limited partnership), with a total scale of 303 million yuan.

Innovative finance and environmental loan models are applied in the form of innovative loans to innovate projects. For example, the Zixi County branch of China Construction Bank was approved with a loan of 120 million yuan for mine restoration projects to support the construction of ecological restoration projects for abandoned mines in Zixi County. This model is usually used in cooperation with the government investment fund and investment operation company model. The main body of the loan is local state-owned enterprises, and the local state-owned enterprises are guaranteed by themselves.

Using the policy funds of multilateral banks, the main investment model is "unified loan and repayment, who uses who returns, mortgage guarantee, contract management, inspection and acceptance". The AIIB, the European Investment Bank and other multilateral banks have a large amount of targeted investment in green environmental protection every year, and the loan cycle is long, the fee is generally about 2.5%, and the financing cost is much lower than that of domestic commercial bank loans. However, the acceptance requirements are high, and the quality of the project completion has high requirements, which is generally coordinated by the province. For example, the Ministry of Finance and the Asian Development Bank (ADB) officially signed the loan agreement for the ecological restoration and sustainable development project of Keda Mountain mining area in Hezhou, Guangxi, using the ADB sovereign loan of about 84 million euros, with a loan term of 25 years.