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Mineral Crisis: Potential Threat to China
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According to some of China's leading geological authorities, the considerable consumption of its mineral deposits and oil reserves in China means that in the next thirty years demand may exceed production by as much as 2-5 times, slowing China's growth rate considerably. A report released from the Global Mineral Resource Research Center and the Chinese Academy of Geological Sciences has outlined what this crisis is going to look like. Apart from coal, of which there is an abundance, there is huge demand for oil, natural gas, copper, and aluminum.

According to the experts, the dominance of China's superior minerals such as tungsten, rare earth minerals, antimony and tin have shrunk in the last ten years due to the extreme consumption. The Nandan tin mine disaster saw the over exploitation and corruption of the world's largest tin mine, that will certainly lead to resource depletion now that it has closed.

China's rare earth and tungsten resource mines are strong in world markets, competing with, and defeating, the US and Australia by using cut-priced tools. However, according to Wang Gaoshang, of the geological research centre, China has not won out entirely. He says, "though countries like Australia and the US lose out in terms of mine production, they make greater benefit than China by having imported cheaper minerals in the first place. China has wasted its resources, disrupted the market and has had heavy enterprise loses."

The fact that China needs such a quantity of minerals is affected by the fact that it cannot produce such a quantity. For example, it produced 7.838 million tons of nonferrous metals in 2000, equaling consumption. However, production of copper and aluminum does not meet demand as resources in it are depleting. Each year China must now import large amounts of copper.

Wu Rongqing, a researcher with the Institute of National Land Resources, says, "China has very large deposits of bauxite but relatively low quality and high production costs. Under the current tax policy, producers have to select a high quality bauxite mine to make a profit with usually only one ton of bauxite ore being used out of four. Producers facilitate quality ore from migrant work-teams, which has been very wasteful to the natural resource in the last decade, although costs have been cut.

The Global Mineral Resource Strategy Research Centre predicts that China needs 240 to 260 million tons of steel by 2012 2014 and will need 5.3 to 6.8 million tons of copper by 2019 - 2023. Aluminum is greatly needed in China and in the next three decades this will increase. China may well consume 13 million tons of aluminum between 2022 2028, which will account for half the world's resource.

This is only half the story, according to the experts. China's iron ore can only support the iron and steel industry for another twenty years. This means that it needs 300 million tons of ore in the next twenty years, whose iron content accounts for half of China's verified iron deposit. In addition, copper demand exceeds its deposit wealth by several times and during the same period, reaching between 50 to 60 million tons. Raw aluminum will need to be imported to the tune of 100 million tons, equal to the total domestic aluminum content of the verified bauxite deposit, Wang Gaoshang said.

However, although this is not news in China, and the theory is being revised, no big solution has been found, according to Guan Fengjun, dean of the Economic Institute of National Land Resource. Insiders say that the state attaches great importance to building up a reserve system but provides no specific measure how to do this. As it is a misconception that China is deliberately depleting its resource wealth and has mineral wealth that is has not claimed it has, state policy can be less than transparent.

Guan Fengjun also said that what China needs most of is oil, rich iron ore, manganese ore, copper ore and sylvite. As importing is an option, China has staggering import figures in this area: in 2001, 60.26 million tons of oil, 92.31 million tons of iron ore in sand form, 1.71 million tons of manganese ore, 2.26 million tons of fine copper ore and 5.43 million tons of potash fertilizer were imported. Joint development cooperation of foreign reserves is an option and venture possibilities still exist with middle Asia, south Asia, Latin America, and Africa and particularly the former.

Wang Gaoshang has said that many neighboring countries have wealthy mineral deposits that are urgently required by China. Russia and Kazakhstan are rich in oil and natural gas, copper and gold, with Kazakhstan owning chrome that China needs. Thailand and Laos have sylvite.

But the good news is that low prices in global mineral markets may stay around for ten to fifteen years and this may give China the opportunity to utilize global resources. But one truth that China must face is that its demands for minerals seriously outnumbers its verified deposit by many times. The China/Middle-asia/South-asia circle is the ideal source for satisfying many of its needs but due to the nature of international politics, a difficult prediction to qualify.

(China.org.cn translated by Li Liangdu, March 11, 2003)

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