Mineral resources are a vital resource closely tied to human survival and development. They serve as the source of more than 95% of humanity’s energy, provide over 80% of industrial raw materials, and supply more than 70% of agricultural production inputs—making them the essential material foundation upon which human society depends for its survival and growth.

The overall characteristics of China's mineral resources are as follows: large total reserves but low per capita ownership; a comprehensive variety of minerals, yet with an unreasonable structural composition; relatively concentrated distribution, but mismatched with economic regions; and among certain key minerals with high consumption levels, there are many low-grade and difficult-to-process ores, making their exploration and development challenging and increasing the cost of utilization.

As of 2004, China had discovered 173 types of mineral resources, with reserves confirmed for 155 of these minerals, making China one of the countries with the most comprehensive variety of mineral resources worldwide. The total proven reserves of China’s mineral resources are substantial, accounting for approximately 12% of the global total and ranking third in the world. However, the proportion of China’s major mineral reserves relative to the global total is not particularly high—for example, iron ore accounts for less than 9%, and manganese ore for about 18%. Moreover, per capita ownership of these resources is quite low: for instance, per capita oil reserves amount to only 11% of the global average, natural gas reserves fall short of 5%, and fossil fuel resources represent just 58% of the global per capita share, placing China at 53rd in the world. In terms of resource distribution, China exhibits pronounced unevenness and regional concentration: 74% of coal reserves are concentrated in the four provinces and regions of Shanxi, Shaanxi, Inner Mongolia, and Xinjiang, while the economically developed southeastern region—where coal consumption is high—is severely short of coal, resulting in a situation where coal is transported from north to south and from west to east. Similarly, 70% of phosphate rock reserves are concentrated in the four provinces of Yunnan, Guizhou, Sichuan, and Hubei; thus, the northern regions—which rely heavily on phosphorus—must import phosphorus from the south. From the perspective of mineral resource availability, China’s iron ore has an average grade of 33.5%, with relatively few rich ores and a large proportion of low-grade ores, making beneficiation processes particularly challenging.

So far, it can be said that China is both a major producer and a major consumer of resources. However, per capita consumption of most of China’s resources is lower than the global average—and even lower when compared to that of developed countries. Given China’s enormous population, despite relatively low per capita consumption, the country’s total resource consumption remains substantial. Let’s take the consumption of iron resources as an example for analysis below.

China is rich in mineral resources, yet the reserves available for economic exploitation and development are insufficient. China’s iron ore mining and beneficiation industry has been developing rapidly, and today it has established a production system with an annual capacity of nearly 270 million tons of iron ore. In 2004, China’s iron ore production reached 310 million tons, while steel production totaled 297 million tons. In recent years, driven by the rapid growth of China’s automotive and construction industries, the country’s steel consumption has risen steadily year after year. In 2004, iron ore consumption reached 519 million tons and has continued to grow at a sustained pace. Clearly, China’s domestic iron ore supply still falls short of the needs of its steel industry, necessitating large-scale imports every year.

It is estimated that China’s steel production in 2020 will reach 250 million tons, of which 63 million tons will be produced from scrap steel. Based on this, the projected demand for iron ore (with a grade of 35%) in 2020 is 534 million tons. In 2020, China will need to import 158 million tons of iron ore (with a grade of 65%), and the steel supply gap is expected to be 30 million tons.

It is evident that there is an inevitable trend of growing demand for mineral resources in China’s future. Previous studies have shown a strong correlation between the level of economic development and the consumption of mineral products. Since the late 1990s, China has entered a period of accelerating growth in its demand for mineral resources, and this period is expected to continue for quite some time yet.

Since the late 1970s, China’s GDP has been growing rapidly at an average annual rate of about 10%. Such rapid economic growth has inevitably led to a massive consumption of mineral resources. In particular, since the 1990s, the pace of China’s mineral resource consumption has shown an accelerating trend.

At the current stage, China’s per capita GDP is approximately 1,000 U.S. dollars, roughly equivalent to the levels seen in developed countries in Europe and the U.S. during the 1930s, in Japan in the mid-1960s, and in Taiwan, China, in the mid-1970s. To reach the level of a moderately developed country within the next 30 to 50 years, the intensity of mineral resource consumption will likely remain at a relatively high level for an extended period—just as it did in the late 1990s. The “latecomer advantage” will inevitably lead to a concentrated and intensive consumption of mineral resources.

The problems China faces in conserving and making rational use of resources are extremely serious. At present, China’s energy utilization rate stands at only 30%, and the average comprehensive recovery rate of mineral resources does not exceed 50%. Moreover, China’s energy consumption coefficient is four to eight times higher than that of developed countries.

The wasteful use of mineral resources is posing a crisis to both mineral resource development and the mining industry. The inevitable outcome of resource waste will be massive imports of resources and the rapid depletion of domestic mine reserves. Over the next decade, China will face a period of concentrated mine closures among a large number of medium- and large-sized mines, coupled with an urgent need to find successors for these mines. This situation will further exacerbate the tightness in the supply of mineral resources.

The prices of mineral resources are significantly influenced by fluctuations in international market prices for mineral products. As a major consumer of mineral resources, China’s every move in the global market has a substantial impact on prices. However, we should also recognize that the international market is constrained by a variety of factors. Without sufficient strength and preparedness, this could directly lead to economic losses for China and jeopardize the security of our mineral resource supply.

Currently, “going global” in resource development has become the most important component of China’s “going global” strategy. As of the end of August 2005, the number of Chinese enterprises engaged in cross-border investment and operations had grown to over 30,000, and more than 2,000 enterprises were qualified to undertake foreign contract engineering and provide overseas labor cooperation services.

Currently, China’s overseas operations in the petroleum sector have been relatively successful. However, its efforts to “go global” in non-oil and gas mineral resources have not been as successful. With few exceptions, Chinese mining enterprises lack international competitiveness, have weak investment capabilities, even weaker capacities for overseas operations, and particularly weak risk-resistance abilities. They also lack familiarity with international practices and commonly accepted norms, and are severely short of qualified personnel for “going global.” Moreover, they are unfamiliar with a range of unique international practices and common rules prevalent in the resource-development field—especially the commercial exploration culture of Western countries—and often lack strong foreign-language skills. As a result, there is a severe shortage of versatile professionals who not only possess deep expertise in their fields but also have a thorough understanding of multinational mining operations, making it difficult for these enterprises to adapt to the complex international environment.

Based on the current situation, the author believes that China’s mining industry should prioritize the following tasks in the near term for its transnational operations.

First, conduct an assessment of the international mining investment environment to provide macro-level planning guidance for mining enterprises engaging in cross-border operations. Second, foster a favorable domestic environment and create conditions conducive to overseas investment, thereby encouraging mining enterprises to engage in cross-border operations. Third, focus on strengthening capacity-building. It is crucial for mining enterprises themselves to enhance their own capabilities.