BEIJING – Mining has positioned itself as a key element in the global trade war between Beijing and Washington, and with China becoming the world’s primary provider of quotidian materials, such as carbon and steel, as well as less common ones like gold and rare-earth metals, the Asian giant’s continued dominance now hinges on this industry.
In 2018, China’s mining sector netted 4.56 trillion yuan ($660 billion), according to government data.
A good indicator of how this sector is booming is the fact that its total profit rocketed 40.1 percent last year, the highest growth rate among the sectors analyzed by the National Statistics Office (ONE).
The Asian nation remains the world’s number one producer of coal (3.45 billion tons), crude steel (830 million tons in 2017) and gold (426.1 tons), and a set of ten non-ferruginous metals.
Within this last category, refined copper or aluminum obtained by electrolysis stand out.
A report published by the Ministry of Natural Resources reveals that, in 2017, China had large reserves of coal (1.67 trillion tons), oil (3.54 billion tons) and natural gas (5.52 trillion cubic meters).
There are also large reserves of ferruginous minerals and metals such as gold, tungsten or tin in the country.
As far as hydrocarbons are concerned, China is not only the world’s leading energy producer but also its largest consumer.
According to the World Bank, in 2014, China imported just over 15 percent of the energy it consumed.
Regarding minerals, according to World Bank data from 2017, China imports much more ($132.8 billion) than it exports ($3.9 billion).
The main export destinations are Japan, South Korea and the United States, while imports come mainly from Australia, Brazil and Peru.
REGULATION AND RARE-EARTH METALS
The 1986 Mineral Resources Law, which was last updated in 2009, is a legislative cornerstone in this sector.
The law stipulates that the ownership of mineral resources should be managed by the state.
It also outlines that state-run companies should be the main pillars of the mining sector and that its development should be guaranteed by the state.
However, private and foreign enterprises can also exploit mineral resources using a licensing process which is, in most cases, handed out and managed by the central government.
Beijing does not accept direct foreign investment in some sectors and, for oil and gas extraction, foreign companies need to work with local partners to access the market.
Within mining, foreign companies are not allowed to engage in the prospecting and extraction of tungsten, tin, fluorite, radioactive minerals or rare-earth minerals.
The latter category of metals has become one of the key protagonists of the trade war between the US and China.
Rare-earth metals comprise 17 elements that are essential in the production of modern technology. China produces around 80 percent of the US’ total tech imports and now Beijing is threatening to close the tap.
According to data from the US Government, China hosts 36.7 percent of the world’s known rare-earth reserves and produced 70.6 percent of the global total last year.
In 2016, Beijing took steps to end illegal mining and improve the industry, and since then its production has declined. Some consultants claim that it has been halved.
LOOKING TO A SUSTAINABLE FUTURE
Materials whose known reserves increased the most between 2016-2017 were shale gas (62 percent), crystalline graphite (22.6 percent), manganese ore (19.1 percent) and silver (14.8 percent), according to official data.
Authorities consider that China’s mining potential, excluding oil and gas, is gigantic and highlight the potential in the exploration of zinc, lead, manganese, lithium, gallium extracted from bauxite or indium.
However, the Ministry of Natural Resources says the trend has shifting priorities.
In 2017, oil and gas exploration expenses rose 10.8 percent year-on-year, while that of other materials fell 19.8 percent.
The technologies of the future, such as hydrogen-powered vehicles, will be key to drawing tomorrow’s mining in China.
Deloitte, a multinational services network, says that for this reason the demand for materials like platinum, essential for fuel cells, will see an uptick.
The Chinese Government, aware that economic development has led to serious pollution problems, has approved a series of plans in this regard.
It boosted the concepts of “green exploration” and “green mining,” although environmental organizations believe that mining, especially coal, still has “serious environmental impacts.”
“There is no ‘clean coal mining,’” Greenpeace activist Gan Yiwei told EFE.
“Advanced technology can help reduce its environmental impact, it cannot eliminate it.”
Another of the challenges that the Government must face is mine safety: according to the China Labor Bulletin, so far in 2019, 120 miners have died in 48 accidents.