'China needs to look abroad for copper''China needs to look abroad for copper resources'
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China's leading copper producers must find and develop overseas mining resources if they are to keep pace with the country's surging demand for the red metal, a leading industry official said.
Beijing should increase direct investment in major exploration projects, set up risk investment funds and enlarge credit lines for Chinese companies searching for copper in other countries, said Wang Gongmin, vice president of the China Nonferrous Metals Industry Association.
"China's copper demand is expected to keep growing at a fast rate in coming years, and copper raw materials supply will become one of the outstanding issues," Wang said in a paper prepared for the 2004 China International Copper Forum, in Haikou.
China, which consumes around a fifth of the world's copper, is hungry for the key industrial metal to feed an economy that grew 9,1% in the year through the third quarter.
China's copper consumption was seen growing more than 15%, to 3,79-million tons this year, Wang said, but refined copper output would rise by only 9%, to around two-million tons.
Based on gross domestic product growth of between 8% and 9% in the next few years, Wang said copper consumption in China could reach 4,48-million tons in 2005 and more than ten-million in 2010.
"China's copper production has largely relied on imported raw materials, and this situation will last for a long time," he said.
"In order to ease the increasing supply tightness of raw materials in China, we should gear up exploration and exploitation of resources, both at home and abroad, as soon as possible."
China's largest copper smelters, including Jiangxi Copper Co, Tongling Nonferrous Metals Group and Yunnan Copper Co, were leading China's search for overseas mining resources, Wang said.
But he said it was difficult for these companies to gain risk investment under China's current system of foreign exchange management.
He added Chinese companies' ability to invest directly in overseas projects was limited by their relatively small size in global terms.
"The government should stipulate preferential policies," said the vice president of the association, which groups more than 700 Chinese metals enterprises and acts as a consultant to the government.
Such policies could include Beijing taking a direct stake in overseas exploration projects, providing foreign exchange support and loosening credit lines to copper producers, he said.
He said the Turquoise Hill deposit in Mongolia, owned by Canada's Ivanhoe Mines and located close to the Chinese border, was an important development, but did not say whether China planned to invest directly in this project.
Other countries with large copper resources include Chile and Peru.
Wang said the Chinese government should also inject more funds and supply preferential loans to companies developing copper resources within China, which would include trying to attract foreign investors.
He said domestic smelters should pay more attention to developing their raw material supply and downstream processing facilities rather than expanding smelting capacity.
"Slowing down the expansion of smelting capacity, accelerating development of mineral resources . . . is helpful in protecting national profits, easing tight supply of energy and alleviating pollution," he said. – Reuter