TELF AG explores China’s strategy in the raw materials sector
China’s important role
Despite still being caught in a real estate crunch and having to contend with lower levels of economic growth than expected, over the last few years, China has continued to maintain its important role in the global raw materials market. Mostly and potentially attributed to the fact that its specific initiatives of a political nature have highlighted the growing importance of this sector for China itself and obviously for global markets, which supply more resources than any other in the world.
Over the last five or six years, there has been a progressive realignment of some specific Chinese policies, consisting of a substantial shift of attention from a series of projects to others, which might give a clear indication of the future of Chinese political activity in the coming years. The Belt and Road Initiative, the largest infrastructure initiative of all time, seems to have lost part of its initial momentum in the last two or three years, or at least the spirit with which it was conceived and illustrated in 2013. From a project oriented towards the creation of global prosperity through a large number of land, air, and sea infrastructures, in recent years, Xi Jinping’s government has placed greater emphasis on the quality of projects, on their sustainable potential, with the aim of demonstrating to the world that China too could play a key role in the global energy transition.
However, this desire was not expressed only through a substantial modification of the spirit of the BRI but also with some specific political initiatives focused on raw materials. This trend was already perceived a few years ago when the party launched the five-year plan between 2016 and 2020, in which important objectives were set for raw materials. There was not only talk of preserving national stocks in order to put them available to global markets at the right time but also to find practical ways to maintain its primary position in this sector, which over the next decades could play a very important role in the global transition towards a greener world.
In recent years, China has, therefore, worked hard to maintain its position, and the results of this effort are there for all to see. In addition to being able to boast considerable volumes of domestic production and high refining capacities, in recent years, China has focused on direct investments in the mineral deposits of third countries. Between 2005 and 2021, as stated in a report published by The European House Ambrosetti, Chinese investments in metal mining and refining activities abroad exceeded 80 billion euros. The countries in which most of these investments are concentrated are Australia (more than 25 billion), the Democratic Republic of Congo (over 13 billion), and Peru (almost 12 billion).
In recent years, China has also maintained a clear lead in the refining of some specific raw materials, such as rare earths. Beijing is working to further develop the different metal processing phases, i.e., treatment, separation, and concentration, managing almost 90% of the refining of rare earth, manganese, and germanium.
