Hungry for Resources

Related entries: General, Research, Trading

China’s demand for resources (including copper) has been news around the world for some time…and will be having an impact on everyone for a long time to come if the latest news is anything to go by: Iron ore imports to China rose by 22.9 percent to 161.36 million tons in the six months to June, according to Forbes, and the total for the year may be over 300 million tons.

But iron ore is only part of the China resources puzzle. Anthony Robinson, a member of China Business Services’ Advisory Board, based in Shanghai, provides some insight into the challenging world of China’s minerals in the article below.

China is rich in mineral resources, and all of the world’s known minerals can be found here. To date, geologists have confirmed reserves of 158 different minerals. These include 10 energy-related minerals, including oil, natural gas, coal, and uranium; 54 metallic minerals, including iron, manganese, copper, aluminum, lead and zinc; 91 non-metallic minerals, including graphite, phosphorus, sulfur and sylvite.

The reserves of the major mineral resources, such as coal, iron, copper, aluminum, stibium, molybdenum, manganese, tin, lead, zinc and mercury, are in the world’s front rank. China’s basic coal reserves total 331.76 billion tons, mainly distributed in northeast China and north China, with Xinjiang Uygur Autonomous Region, Shanxi Province and the Inner Mongolia Autonomous Region taking the lead. China’s 21.36 billion tons of the basic reserve of iron ore are mainly distributed in northeast, north and southwest China.

The country also abounds in petroleum, natural gas, oil shale, phosphorus and sulphur. Petroleum reserves are mainly found in the northwest, northeast and north China, as well as in the continental shelves of east China. The national reserves of rare earth metals far exceed the combined total for the rest of the world.

However, in line with China’s accession to the WTO, open door policy and break-neck growth and infrastructure development, the one commodity that is in the spot light is iron ore, the basic material of steel. Steel means building, and there is a lot of that going on in China.

Yet even with such vast reserves, China cannot keep up with demand, and must import vast amounts of iron ore to feed the ever expanding steel industry. Even in the face of government regulation, steel production is at an all-time high.

Obviously Steel is not the only material required by China, and anyone able to find reliable offshore supplies of Copper, Zinc, Urea, Tantalite and, for example, Scrap Metal to feed China’s insatiable demand can do very well financially. The key word here, however, is “reliability”. The days of mutual distrust between Chinese buyers and overseas suppliers is drawing to an end as China’s purchasing power becomes felt on the international stage, and its banking sector becomes more sophisticated.

China also supplies raw materials to other parts of the booming world, namely the Middle East. At the top of that list is Cement, and Clinker, which is shipped from North Chinese ports to far-reaching destinations like The D.R. of Congo, South Africa, Dubai, Iran and Egypt.

Face to face relationships are very important in China, as most everyone knows, so it is essential to have people on the ground who can take care of one’s interests. The need for reliability goes both ways.

China has a long way to go before its internal demand for raw minerals and metals abates since its infrastructure keeps expanding and being developed. By some estimates, 300 million people will migrate from the countryside to China’s second and third-tier cities by 2020. And that will push along a construction industry that is already the strongest in the world. The need for iron ore and other mineral imports will not go away for years to come.

China Business Services provides a range of trade services in China, and represents sellers of iron ore, and other commodities, seeking to access the China market. Please contact us for details.

See news source:

One Response to “Hungry for Resources”

  1. Archive » Thirsty for Resources| China Business Blog Says:

    […] themes/pod88/images/menu_5_on.gif’,1)”> « Hungry for Resources July 26, 2006 Thirsty for Resources Related ent […]

Leave a Reply

You must be logged in to post a comment.