MAC: Mines and Communities

China Update

Published by MAC on 2007-03-09

China update

9th March 2007

Saving energy, by reducing the extent and size of buildings, is a commendable objective. (It would also inevitably lead to a reduction in demand for cement and construction materials).

Will this however become yet another worthy aim which is abandoned by the regime, in the face of urban industrialisation and overpopulation? The auguries aren't good - for the government has already abandoned its overall energy saving targets.

India's main foreign customer for its (peoples') iron ore is China. Last week we reported that the Indian government was proposing to increase export duty in order to retain value within the country. That's provoked outrage from Chinese traders who've decided to boycott Indian suppliers following this line.

In fact, the largest Chinese iron contracts are with Australia and Brazil, and there's a likelihood that the Chinese and Indian governments will come to some accomodation to safeguard their respective trading interests. After all, they are signatories to a minerals cooperation treaty concluded two years ago.

China's biggest bauxite producer has sent a team to Guyana to oversee management of a major bauxite mine, purchased from Canada's Iamgold.

ANALYSIS - China Building Blitz Holds Key to Energy Saving

PlanetArk CHINA

8th March 2007

BEIJING - Forget how much coal it burns. Forget its double-digit economic growth. Forget subsidised prices and the fact that a new car hits China's roads every six seconds.

The biggest obstacle in China's path to curbing its wasteful energy ways may be the roofs over its citizens' heads.

Facing the biggest mass urbanisation in human history, China must slow the pace of new building and persuade its increasingly well-off urbanites to live in smaller houses if policymakers hope to meet efficiency targets, analysts say.

With around 400 million people expected to flock to its cities over the next two decades, a third more than the entire population of the United States, that's no easy task.

"We can't support this kind of expansion because we don't have enough resources," said Jiang Yi, Vice Dean of the School of Architecture at prestigious Tsinghua University, referring to the increasingly large buildings going up as urban areas expand at a rate of nearly 2 billion square metres a year.

Efficiency is a top priority at this week's annual meeting of China's parliament, with Beijing chasing an ambitious goal of cutting the amount of fuel used to generate each dollar of national income by 20 percent by the end of this decade.

The number-two energy consumer's heavy industry and growing car fleet have shouldered most of the blame for the worsening pollution and increased reliance on imported oil, but analysts are now pointing to the construction and housing sector as well.

Around half the world's new buildings go up in China each year, and the construction and use of the country's houses, offices and malls accounts for around 40 percent of its energy use, said sustainable engineering expert Robert Watson.

"The increase in living space and electronic consumer goods is the biggest single contributor to growth in China's energy use," Watson, Chairman and Chief Scientist at consultancy American Sinotech, told Reuters.

"When you compare auto use to what it used to be, it is huge, but when you compare it to building, it's nothing," he said.

Construction and building materials suck up 16-18 percent of China's energy, while direct electricity use in homes and offices for everything from lights and cooling to elevators accounts for another quarter, Watson added.


To prevent a demand spike, the Construction Ministry has said new buildings should become 50 percent more efficient in the five years to 2010, and substandard projects will lose their permits.

China will also invest 1.5 trillion yuan (US$194 billion) in renovations by 2020, and Watson estimates the market for efficient buildings and upgrades will be worth over US$55 billion within five years alone.

But even if efficiency levels rise, growing affluence may still strain power supplies, as average living space climbs from around 30 square metres (323 sq ft) per person common across Asian cities such as Tokyo and Hong Kong towards 45 sq m seen in Europe.

Not only does that drive up the cost of heating and cooling the space, it requires more and more energy to produce the concrete and steel needed to build the structures.

"There are two separate problems -- we need to control the total scale of the construction industry and we must reduce energy consumption," Jiang told Reuters.

Slowing down the pace of construction would also help meet a government goal of cooling the country's economy, he added, and tie in with efforts to prevent investment from overheating amid worries about a possible real-estate bubble.

Premier Wen Jiabao on Monday told parliament, which holds sessions in a Soviet-era monolith itself scheduled for a green upgrade, that China would "resolutely control" the amount of land used for construction, singling out private houses for criticism.

But with the re-zoning of rural land for construction one of the easiest ways for local governments to make extra cash, Beijing may face an uphill struggle.

At least increasing numbers of the buildings springing up around the Chinese capital do boast green credentials, but not all projects can back up their claims.

And cheap, state-set power prices combined with a relatively low level of home ownership and a lot of speculation, mean even genuinely "green" developments are rarely driven by the economic motives needed to generate a real shift in China's habits.

Instead of saving money on utility bills, they are designed to sell luxury apartments in a crowded market.

"It is limited to more high-profile developments at the moment, clients are concerned about the environment and some kind of green label helps on the sales market," said Frederick Wong, sustainable buildings consultant at global design firm Arup.

Story by Emma Graham-Harrison


China Abandons Annual Energy Saving Targets

PlanetArk CHINA

8th March 2007

BEIJING - China has abandoned annual energy saving targets because not all its efforts to boost efficiency will bear fruit immediately, but it is still sticking to a five-year goal, a top official said on Wednesday.

Ma Kai, head of the energy policy setting National Development and Reform Commission, said growing pressure on resources as pollution and energy demand rise meant China had no choice but to follow a path of greener growth.

Beijing has pledged to reduce the amount of energy it uses to generate each dollar of national income by 20 percent between 2006 and the end of the decade, and last year aimed for a 4 percent improvement -- but only managed just over 1 percent.

"This year the government did not set a target," Ma told a news conference during the annual session of the National People's Congress, China's parliament.

"We feel that energy saving and emissions reduction are determined by a number of factors. Some of the measures will have an immediate impact while in the case of some others they will take time to become effective."

Premier Wen Jiabao made environmentally friendly growth a central theme of his speech to the meeting's opening session, as policy makers fret about a growing dependence on imported oil and social unrest sparked by pollution.

"Our determination is unchangeable in the face of the constraints imposed by the shortage of resources and the environment problems...there will be no other choice for the Chinese nation," Ma said.

He dismissed claims that China's growing demand was a threat to global energy security, pointing to high domestic coal production and overall per capita fuel use far below that of industrialised nations.


Bosai Mining assumes management of South American bauxite mine

Bosai Mining Co. Ltd., China's largest bauxite processor and exporter, dispatched a management team to Guyana on Feb. 26 to oversee the Omai Bauxite Mining Inc., a company official said on March 5

Bosai Mining has purchased a controlling 70 percent stake in the mine from the Toronto-based mining company Iamgold for $28 million, and has also taken on Iamgold's $18 million debt. The Guyana government holds the additional 30 percent stake, according to the official surnamed Cao.

The purchase received approval from the National Development and Reform Commission on Jan. 31, and was approved by the Guyana government on Feb .12, the NDRC announced on March 2.

Omar Bauxite currently produces 400,000 tons of calcined bauxite per year, Bosai Mining plans to further exploit Omai's bauxite reserves to 2.5 million tons per year.

Bosai will inject RMB 10 billion ($1.29 billion) over the next five years to construct a production base, annual production of alumina will be 800,000 tons, and electrolytic aluminum 400,000 tons, Cao said.

Bosai Mining is a privately-owned bauxite miner and alumina producer in southwestern China's Chongqing Municipality. It can produce 200,000 tons of alumina and nearly 20,000 tons of aluminum per year.

[Source: Interfax China, 9 March 2007]

China's iron ore traders reject India's new export duty

China's iron ore importers have rejected India's new iron ore concentrate export duty of Rs.300 ($6.74) per ton, an anonymous Beijing source told Interfax on March 7.

The China Chamber of Commerce of Metals, Minerals, Chemicals Importers and Exporters (CCCMC) convened a meeting yesterday of more than 100 iron ore traders in Beijing, they discussed the implications of the Indian government's iron ore export duty that came into effect on March 1.

An iron ore trader from Shandong province who participated in the meeting but wished to remain anonymous, said that the attending companies all agreed to reject the price hike caused by the new export duty, and will insist that contracts signed before March 1 be honored at their original price.

"Moreover, we have decided to blacklist Indian iron ore suppliers who are taking advantage of this policy to increase iron ore prices by an exorbitant amount. Blacklisted companies will be banned from any future iron ore exports to China," he said.

According to the iron ore trader, the CCCMC has reported the traders' requests to the Ministry of Commerce, and hopes that Chinese government intervention will bring about a more appropriate policy from the Indian government.

The policy has not yet been officially approved by the Indian Parliament, and major local iron ore miners are scheduled to meet with Indian authorities today in an attempt to persuade them to reconsider the new export duty.

"We now have to wait for a reaction from India, apart from halting Indian iron ore business since the duty came into effect, there is little more we can do," he said.

The CCCMC confirmed to Interfax that Chinese iron ore traders have decided on countermeasures to this sudden policy, but refused to disclose any further information.

Zhang Dongliang, an analyst with Shanghai Mysteel, said the Chinese traders might be willing to accept an increase of $5 per ton, if the cost is shared equally by both suppliers and importers.

"Both sides have to make a compromise somewhere, and there is little chance that the Indian government will scrap the policy," he said.

Nearly 80 percent of all Indian iron ore is exported China. In 2006, Indian iron ore exports to China surged by 9 percent to 74.75 million tons, a total value of $ 4.83 billion, according to statistics released by the General Administration of Customs.

[source: Interfax China, 9 March 2007]


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