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Ag Metal Miner

Ag Metal Miner

MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends,…

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How Will China’s Belt And Road Impact Global Critical Metal Supplies?

  • China’s aggressive mining policies have not gone unnoticed by the rest of the world. 
  • China continues to import metals and minerals to shore up its own reserves which have raised accusations of “weaponizing trade” from other countries.

In 1953, China spelled out its 1st “Five-Year Plan”.  The strategy involved maximizing the nation’s control over exploration, production, and exports of natural resources. Based upon all available indicators, the country seems to have succeeded in “extending” that plan around the globe. News out of China earlier this week confirmed this fact. Ecuadorean President Guillermo Lasso said that it would conclude trade negotiations with China later this year. From all indications, the new trade deal between China and Ecuador may include more exports of Ecuadorean minerals to China.

In the last 10 years or so, China has already “come to the aid” of Ecuador. China extended long-term credit running into millions of dollars for trade that’s tied in with crude oil, minerals and other projects.

Ecuador does not stand alone in Latin America. China has arrangements with other countries to exploit natural resources such as iron ore, copper, nickel and rare earth elements (REE). Earlier this month, Xi announced a further “deepening of ties” between his country and Argentina. This came after Zijin Mining Group announced that it would invest US $380 million to build a lithium carbonate plant in Argentina. Incidentally, Argentina, Chile and Bolivia make up South America’s lithium triangle.

China and imports: accusations of weaponizing trade

In addition to its traditional trading partners like the US and Australia, China has extended its expansionist trade tentacles across another continent. In Africa, China’s aggressive mining policies have not gone unnoticed by the rest of the world. Afghanistan serves as another example.

For example, after Congo had emerged from civil war in the early 2000s, China had seized the opening to buy mines. From those early years in this relationship, the China-Congo alliance has come a long way. Beijing has its hands in copper and cobalt projects worth billions.

The way China has managed its foreign and trade policies from the 1950s underlines that its “expansionist” strategy drawn up in those early years still guides its actions.

Iron ore – the big score

Iron ore likely represents where the Chinese have scored the most as compared to other countries. Beijing largely depends on Australia and Brazil for the same. Ore imports from these two countries have accounted for about 80% of all imports since 2015. Of course, with diplomatic ties between China and Australia souring in recent years, it has dampened trade between the two. In 2022, analysts expect Australian ore imports to fall below the 60% mark.

To tackle the drop perhaps, China said on Feb. 7 that it aimed to step up mines’ iron ore production and use steel scrap to develop a more efficient, greener ferrous industry. According to the South China Morning Post, a joint statement with state planners and environmental regulators, the Ministry of Industry and Information Technology (MIIT) vowed to consolidate and restructure the steel industry. MetalMiner previously covered that topic in this month’s Raw Steels MMI report.

China and Rare Earth policy

Of course, no report or analysis of China’s trade policies can avoid the country’s REE strategy. According to some estimates, the country mines over 70% of the world’s rare earths. In addition, China accounts for over 90% cent of rare earth refining and production. Rare earths remain essential inputs to various technologies, including defense systems and satellites.

The US also relies on China for at least 80% of its rare earths. That has long raised the hackles of the US administration and lawmakers. For years now, the US has worked to explore alternatives to reduce this reliance.

Related: Colombia’s Oil Industry Is Finally Showing Signs Of Life

In the Democratic Republic of Congo, China already has access to the largest untapped reserves of cobalt. Of the 14 large cobalt mines, as many as eight have tie-ups with Chinese companies.

A few days ago, China’s Zijin Mining had announced that its first lithium exploration project launched in the Democratic Republic of the Congo (DRC) through Katamba Mining, a joint venture between Zijin and Congolaise d’Exploitation Minière (COMINIERE) of the DRC.

Elsewhere, in Australia, another Chinese firm recently acquired a 51% stake in the world’s largest lithium mine there.

According to another news report, in January of this year, another Chinese mining financier had bought equity in a junior mining company exploring cesium and lithium in northeastern Ontario, Canada. According to this report, Sinomine Rare Metals Resources would provide $3 million to Power Metals Corp. through a financing agreement to give the company a 5.7% interest in the Vancouver and Arizona-based junior miner.

In 2021, China, the largest producer in the world of primary and hollow aluminum, imported a record amount of the same for the second consecutive year. Imports of refined nickel and copper continue at the same speed. Refined nickel imports in 2021 doubled year-on-year. So have purchases of a wide range of nickel raw materials.

Strategic stockpiling

Furthermore, China continues to import metals and minerals to shore up its own reserves. This has raised accusations of “weaponizing trade” from other countries.

Once, former Australian prime minister Tony Abbott had said so in so many words. While calling for Britain and its allies to stop technology sales to China, he had called for the world to reorient essential supply chains away from China. An adviser to the UK Board of Trade, Abbott had said Beijing viewed trade as a strategic weapon that can be turned on and off.

By AG Metal Miner

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  • Mamdouh Salameh on February 12 2022 said:
    The appropriate question to be asked is how will China’s Belt and Road Initiative (BRI) impact the global economy because in answering this very question one gets the answers not only to how it impacts critical metal supplies but also other commodities.

    What determines China’s quest for critical metal supplies, raw materials and energy products is the growth and needs of its economy.

    For instance, as China’s economy grew fast in the late 1990’s and 2000’s its demand for crude oil became so big that by 2013 China overtook the United States to become the world’s largest importer of oil. China is now the driver of global oil demand.

    The very same needs and growth of China’s economy will impact critical metal supplies.
    China’s economy is the world’s largest with a projected GDP of $29.4 trillion in 2022 based on purchasing power parity (PPP). As expected, it will be the biggest single beneficiary of the BRI. The BRI has undeniably helped China integrate its economy deeper into the global trade system and deepen its economic and political ties with emerging nations across Asia, Africa and South America.

    The BRI is a transformative economic project that will reshape the world’s geography by linking places that were previously unconnected. It will give a huge boost to global economy not only through creating new infrastructure but more importantly by boosting trade. It is estimated that the BRI is likely to boost world GDP by 2040 by $7.1 trillion per annum. This raises world GDP by 4.2% in 2040.

    Launched in 2013 China’s BRI was initially intended to revive the ancient Silk Road trade routes between Eurasia and China but it grew to become a far-reaching plan for transnational infrastructure development, linking countries and continents through land and sea corridors and industrial clusters and encompassing Africa, Latin America, the Arctic and even a spin-off in space.

    Since its launch, more than 100 countries have signed on to its projects. By the middle of 2020 more than 2,600 projects valued at $3.7 trillion could be linked to it. It has become a pillar of Chinese foreign policy and a strategic tool for Beijing as it has deepened its partnerships and boosted its influence in the process.

    From the moment of its inception, the BRI has caused consternation among G7 countries. This was due in part to the fact that it was widely seen as a way to expand Chinese geopolitical influence.

    While Western leaders decry the BRI’s failings in public, in private they envy China’s success and worry about its rising global influence.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

Leave a comment




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