China Update

China update

24th August 2007

It goes almost with saying that Chinese demand has been the prime driver of high global market prices for the majority of ferrous and non-ferrous metals over the past few years. Chinese mining and metallurgical companies have moved into dozens of joint mining, refining and smelting ventures overseas and some inter-governmental agreements (see "Men of Steel", below).

The negative impacts of this "rush" are being felt by communities and workforces in many countries (including Burma, India, Peru, Papua New Guinea, the Philippines and Zambia). The jury is still out, however, on whether this denotes a pattern of systemic "lower standards", compared with those observed by companies from other countries.

What seems undeniable is that the Chinese regime has opted for an increase in raw material imports in order to feed its downstream industries. This puts enormous pressures on those whose land and labour serves new, or expanded mining operations, and detracting from the economic value which could be added, by processing the minerals in their regions of origin.

(NB: China's imports of refined nickel and copper also increased (copper by 122%) between January and July 2007. The amount of refined metals exported from China varied: copper, aluminium. zinc and lead exports fell on last year, but exports of nickel and tin increased.)

According to figures released by the General Administration of Customs in late August, for the first seven months of this year:

* Imports of COPPER ore and concentrates increased 27%. This was mainly due to supplies from PERU and the US, although the biggest single supplier was CHILE. ZAMBIA was the largest supplier of copper anode, followed by ZAIRE

* BAUXITE imports galloped nearly 160%, mainly due to the rapid expansion of alumina capacity

The key providers of bauxite ore were INDONESIA (more than two thirds of the total), followed by INDIA (around a fifth), then AUSTRALIA

* Imports of ZINC ore and concentrate galloped by no less than 201% over the same period in 2006, while refined zinc exports increased by 76%. The main supplier of zinc ore and concentrate was DPRK, followed by AUSTRALIA and INDIA

* Imports of LEAD increased by more than a quarter, with the main supplier being PERU

* Nickel ore imports skyrocketed no less than eightfold (by 827%) - the main providers being the PHILIPPINES (around half the total), then INDONESIA and NEW CALEDONIA.

Meanwhile, last week at least fourteen workers were confirmed dead when an aluminium foundry exploded, with many left injured.