China's 4-trillion-yuan ($586 billion) economic stimulus package may warm up the global mining market, easing the nerves of some mineral exporting countries, China Business News reported on Wednesday.
Speaking at the opening ceremony of the China Mining Expo Tuesday, Graeme Leslie Meehan, minister of the Australian embassy in China said that China's plan to boost domestic economy will lead to increased demand in the world mining market, thus helping to ease the drop in demand.
"The growth in China's mineral economy has driven up consumption of the world resources. As for Australia, China has become its largest iron ore market. We hope the Chinese government will take measures to boost its domestic economy," said Meehan.
Zeng Shaojin, executive vice-president of the China Mining Association told China Business News that the exceptionally high metal prices not only hurt consumers but producers as well in the mining market. The high prices resulted in weakening demand, dealing a fatal blow to some producers, and that was the last thing expected for economies with mining as one of their pillar industries.
However, the financial crisis has disturbed the global commodity flow, and the prices of some major raw materials have plummeted sharply in the past few months, leading mining giants like Rio Tinto, and Companhia Vale do Rio Doce to cut production.
Upon China's announcement of 4-trillion-yuan stimulus package, Australian mining shares soared Monday, with BHP Billiton and Rio Tinto's shares up by 7 percent and 7.9 percent respectively.
"China announced an important fiscal stimulus plan, which makes us confident. China's demand in raw material will continue to increase in the long run, owing to domestic demand, industrialization and urbanization, which would help countries like Australia to further develop their economy," said Meehan.
Together with its production cut announcement, Rio Tinto released Monday that it intended to establish joint ventures with Chinese companies like Chalco.
China's stimulus plan won praise from the world, including the ore-rich Australia. "I regard that as very good news for this economy, very good news for the regional economy, very good news for the global economy," said Australia Prime Minister Kevin Rudd.