China: Mining, Minerals and Fuel Resources

This article was updated on the 16th October 2019.

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China is located in East Asia and is surrounded by the West Philippine Sea (also called the South China Sea), Yellow Sea, Korea Bay and the East China Sea. It is the fourth largest country in the world with a total area of 9,596,961 km2. It is also the world’s most populated country, with an estimated 1.386 billion citizens as per 2018 estimates. The climatic conditions in the country vary from tropical in the southern region to subarctic in the northern region.

China is awash with natural resources such as rare earth elements, aluminum, natural gas, tungsten, copper, petroleum, iron ore, and coal.

In 2010, China’s economy was the second largest in the world. However, between mid-2010 to 2011, the country faced several economic challenges and high inflation resulting in the slowdown of GDP growth to 9%. As a response, the Chinese government established its 12th Five-Year Plan in March 2011 to introduce economic reforms and reduce the economic dependence on exports. China’s GDP has since achieved a steadfast growth, with a reported $12.24 trillion in 2017. With the state’s increased participation in the global market, China’s overall economic capability is expected to continuously rise.

Overview of Resources

China is rich in mineral resources such as rare-earths, zinc, tungsten, tin, talc, phosphate rock, magnesium, lead, iron and steel, graphite, fluorspar, coal, cement, and aluminum. Its major exports include tungsten, rare earths, indium, graphite, fluorspar, barite, and antimony. About 25% of the total trade in the country is generated through mineral trade. In 2010, 4.3% of the total workforce in the country was utilized by the mining industry. While there are no official statistics on the current total workforce in the same industry, an increased per capita remuneration of 12.08% in 2018 evidences the growth of China’s mining sector.

The global mineral market has always been influenced by China’s supply and demand for various mineral resources. While there has recently been a decrease in China’s geological exploration entities to 6.24% ($160.91 billion), China continues to be a key player in the mineral and metal products industry. It is estimated that China’s mineral imports account for over 40% of the country’s domestic consumption.

Industrial Minerals

China has abundant rare-earth reserves, which account for nearly 90% of the total rare earth production in the world. In 2010, China’s rare-earth consumption was 87,000 tons, 61% of which was utilized by the country’s new materials industries such as polishing powder, phosphors, magnets and catalysts. Japan (51.7%), United States (15.8%), Netherlands (5.1%), and France (4.4%) are the primary commercial partners of China in rare-earth production.

The Chinese Government has established 11 rare-earth mining zones in Jiangxi Province and Ganzhou. The total estimated resource available for mining in the mining zones is 760,000 tons. China also has 17 rare-earth separation producers with an output capacity of 40,000 tons per year (t/yr) and nine rare-earth smelting producers with a capacity of 18,000 tons per year. In 2010, about 8,013 tons of rare-earth concentrates (REO) were produced, and 20,000 tons of rare-earth products were separated in Jiangxi. Ganzhou has large reserves of rare earths of the ion adsorption type.

Over the last decade, the Government of Nei Mongol Autonomous Region announced has it has authorized the mining company Baotou Iron and Steel to produce and manage mining, separation and trading of rare-earth resources in that region. In 2018, the government sought to develop a new integrated technology for the efficient and environmentally-friendly extraction of rare earth ores.

Metals

The major metals produced in China are aluminum, cobalt, nickel, iron, and copper. Aluminum production in China has been highly affected by electricity shortages, the 2009 global financial crisis, and the state’s energy policy; however, the country boosted its economic growth beginning in 2010 by exporting 332,680 tons of unwrought aluminum alloy and producing about 23 million metric tons (Mt) of aluminum. The country obtained excess alumina from Greenfield and Brownfield projects, which include the following companies:

  • Shanxi Luneng Jinbei Aluminum Co. Ltd, which produces 1.4 Mt per year
  • Chalco Zunyi Alumina Co. Ltd, Chalco Chongqing Co and Guangxi Xinfa Aluminum and Power Co. Ltd, which produce 800,000 t/yr
  • Guangxi Huayin Aluminum Co, Longkou Donghai alumina Co. Ltd and Sanmenxia Yixiang Aluminum Co. Ltd, which produce 400,000 t/yr
  • Nanchuan Pioneer Alumina Co., which produces 300,000 t/yr
  • Nei Mongol Datang International Recycle Resources Co. Ltd., which produces 240,000 t/yr

China is dependent on iron ore imports due to its increased domestic demands, high impurities in domestic ores, and low iron content. By 2011, three major mining companies—Rio Tinto Plc, Vale SA, and BHP Billiton Ltd—exported 60% of iron ores to China. Because of China’s increased global presence in recent years, the country was able to further its iron ore imports from foreign miners that allows the state to expand its supply channels and become independent of major global players.

Crescent Moon Lake in Singing Sands Mountains. Image Credit: CIA factbook

As one of the world’s major mobile phone manufacturers, China requires a hefty supply of cobalt that are being used in batteries. Major cobalt producers in the country include Xinjiang Autonomous Region, Provinces of Gansu, Hainan, Jilin, Shaanxi, and Sichuan and Inchuan Nonferrous Metals Corp., the largest cobalt producer in the country. China’s cobalt production was able to increase by 2.3 percent from 672.5 thousand tons in 2016 to 687.5 thousand tons in 2017.

Fossil Fuels

Coal is a major energy source in China. Nearly two-thirds of the electricity in the country is produced using coal; hence, half of the total coal output in the country is utilized by the power industry.

The major coal-producing regions in China include Shanxi Province, Shandong Province, and the Nei Mongol Autonomous Region. Coal produced from Shanxi Province constitutes over 20% of the total coal output, while coal products from the Nei Mongol region amount to about 782 million metric tons. Coal produced from Nei Mongol has a better ash content and reduced heating value when compared to Shanxi’s coal.

Over the past decade, China has been exporting around 19 million metric tons of coal to the Republic of Korea (44%), Japan (29%), Taiwan, (22%), and other countries (5%). Since its boom, China’s coal production has achieved a steady increase over the years, supported even further both by Asian and non-Asian countries such as Australia, Indonesia, Vietnam, Russia, Mongolia, and North Korea.

Investment

Replacing Japan, China has recently become the world’s second largest economic power, only a rank below the United States. The country has been consistent in its effort to achieve a 7% total economic growth. In particular, China has increased its capacity for domestic consumption; it has also recently developed a more transparent legal and financial system in order to boost its economic growth wholly rather than solely relying on mineral exports.

Himalayas in oblique view as seen from the International Space Station. Image Credit: CIA factbook

Despite being rich in natural resources, China experiences shortages in the supply of minerals such as potash, oil, nickel, manganese, lead, iron, copper, and bauxite. As such, it is also dependent on foreign imports. To tackle this situation, the government facilitated investment initiatives in mineral-rich countries such as Mongolia, Indonesia, Chile, Burma, Brazil, and Australia.

Simultaneously, the Chinese government has taken measures to protect its mineral resources from over-exploitation. It has already employed its plans to create a suitable environment for mining and metal sectors by the reclamation of mine sites, improvement of mine safety, land protection, and air and water pollution prevention and treatment. Because of these activities, China’s economy is expected to improve further, an indication that the need for mineral resources will also increase over the next few years.

Disclaimer: The Author of this article does not imply any investment recommendation and some content is speculative in nature. The Author is not affiliated in any way with any companies mentioned and all statistical information is publically available.

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