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China 'to slow mineral imports'
Updated: 2005-06-01 19:15

BAOJI, China -- China will put the brakes on its booming metals sector and encourage producers to invest in mining to reduce its need for high-priced raw material imports, a top state planning official said on Wednesday.

Xiao Chunquan, a director at the State Development and Reform Commission, said China's fast-growing metals capacity had pushed up world prices of raw materials, making imports more expensive.

"I believe the era of large-scale expansions is over. The government will strengthen its controls," Xiao said.

Chinese metal producers have expanded rapidly in the last few years to feed an economy that grew 9.4 percent in the year through the first quarter of 2005.

But the country's mines had not kept pace, and China's economic development would be threatened should it continue to rely on imported raw materials, Xiao told a conference.

Xiao said China last year spent over $1 billion more importing alumina than it did in 2002. Some iron ore suppliers had raised their prices 71.5 percent this year, he said.

The world's top suppliers of iron ore, used to make steel, are Brazil's Companhia Vale do Rio Doce, and Anglo-Australian miners BHP Billiton and Rio Tinto.

Xiao said Beijing would provide preferential policies and help finance Chinese companies searching overseas for resources, with iron ore and copper the top priority.

He said the government was also encouraging Chinese companies to seek new resources and develop existing mines in the country's central and western provinces. Those that mine low-grade ore could be given tax breaks, he added.

China is the world's top steel producer. Last year, it also churned out 14.3 million tonnes of 10 major industrial metals, including copper, aluminium, nickel and zinc, making it the world's largest combined producer of these metals.

Since 2003, Beijing has imposed measures, including credit curbs, higher power fees and export taxes, to limit growth in energy-intensive sectors like aluminium, steel and ferro-alloys.

Although China's metals industry is growing rapidly, industry officials noted the measures had slowed the rate of expansion.

Cao Baokui, a director at the China Nonferrous Metals Industry Association, which organised the conference, said China invested 60.8 billion yuan ($7.3 billion) in its base metals sector last year, up 27 percent from a year earlier.

But Cao noted the rate of growth last year was 44 percent lower than the rate seen in 2003.

By 2010, China might need to import 57 percent of its iron ore, 70 percent of copper concentrate, and 80 percent of alumina, said Zhang Jian, president of China Nonferrous Metal Mining Corp., the country's top investor in overseas mining projects.

Zhang said his company held overseas reserves of 5 million tonnes of copper, 150,000 tonnes of cobalt, 1.03 million tonnes of zinc and 800,000 tonnes of nickel.

By 2020, it aimed to control reserves totalling 40 million tonnes of copper, nickel, cobalt, lead and zinc, he said, and 300 million tonnes of bauxite, the ore from which alumina is made.

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