China's booming economy is feeling the pinch as a result of shortages of key mineral resources such as oil and iron ore, prompting the government to step up the exploitation of domestic mineral resources.

"We should stick to the principle of utilizing both domestic and overseas resources with priority on the domestic ones," said Wang Min, vice-minister of Land and Resources.

The strategy is feasible considering the vast untapped resources in China, especially in its western regions, he said.

He cited a number of policies supporting the development of the mining industry in the country, including facilitating foreign investment, commercializing mining activities, more financial input and publicizing geoscience data.

During the past two decades, China's economy has grown by 9 percent annually on average, and rapid growth is expected to continue in the next two decades.

Currently, about 92 percent of the country's energy, 80 percent of its industrial raw materials and 70 percent of agricultural production materials comes from its mineral resources.

Meanwhile, China's imports of mineral products continue to rise. Last year, they amounted to more than US$102 billion.

And it is predicted that China's oil imports will jump by nearly 10 percent this year to 100 million tons, accounting for 40 percent of the total consumed. This figure contrasts sharply with the 1990s level when the country supplied all of its needs from its domestic oilfields.
 
Despite that the total demand for mineral resources in China is huge, the average consumption of resources per capita is far less than the world's average, Wang noted.

He said China's imports will cover no more than 5 percent of China's energy needs, because coal remains China major source of energy.

Energy pressures could be eased with the improvement of coal mining and utilization technologies, more mining of oil shale and the promising prospects of finding more oil and gas reserves at sea and in the nation's vast western regions, he said.

Figures released in a government document on China's mineral resources late last year also showed that China has abundant mineral resources.

Of the more than 200,000 mineral deposits and mineralized formations found in China, only 20,000 have been explored and assessed so far, said the White Paper on China's Policy on Mineral Resources.

Since the 1980s, 72,000 mineral abnormalities have been discovered, 25,000 of which have been checked, resulting in the discovery of 217 mineral deposits. The unchecked ones hold good prospects for mineral find, said the document.

The paper says geological work is still at a low level in the vast western regions and the outlying zones in the eastern regions and the maritime areas under Chinese jurisdiction, and there are many unknown areas.

Vice-Premier Zeng Peiyan also gave the green light to speeding up the development of the country's mining industry.

At the opening ceremony of the on-going international symposium on the mining industry, Zeng outlined four major tasks for the country's mining sector, including saving resources, strengthening domestic resources prospecting and mining, establishing the market system for the mining industry and expanding international co-operation.

China encourages venture prospecting and exploration of oil and natural gas through co-operation, said Wang, adding that such activity is also welcome in the coal industry.

Wang also listed a number of other sectors that the government encourages foreign investment to go to such as the prospecting and mining of iron ores, manganese ores, copper lead, zinc and bauxite.

He said that foreign capital could establish wholly-owned mining enterprises for some minerals in the western regions.

A document released by the State Council on western development has clearly stated preferential policies of tax reduction and tax exemption for mining companies in West China.

"We shall ensure the national treatment for the mining investment from foreign investors in line with commitments to the World Trade Organization," said Wang.

Official statistics indicate that in 2003, the number of foreign-invested mining projects was 211, an increase of 28.66 percent from a year before. The sector attracted a total volume of contracted foreign investment of US$656 million, up 72.14 percent year-on-year.
 
In 2003, China issued 108 exploration licences and 332 mining licences to foreign companies which have invested a total of 1.45 billion yuan (US$175.3 million) in geological prospecting mainly for offshore oil, coal bed gas, gold, lead and bentonite.

Last year, TVI Pacific Co Ltd, a Canadian company, set up China's first foreign independent prospecting company in Changning, Central China's Hunan Province.

"We have seen a tremendous increase in interest in investing in mineral exploration and development in China on the part of the global mining industry," said Irwin Itzkovitch, Canada's assistant deputy minister of Natural Resources, at the symposium.

However, he pointed to the fact that there are still some factors hampering foreign investment in the country's mining sector, including lack of geological database.

The availability of regional geoscience information has been one of the obstacles to foreign investment in mineral exploration in China, he said.

"The good news is that China is working hard to address the issue," he said.

Also speaking at the symposium, De Zhan, an official from the China's Ministry of Commerce, said that compared with other industries, foreign investment in China's mining sector has remained relatively small.

De pledged that his ministry will adopt a series of measures to facilitate foreign investment in the country's mining sector including the improvement of legal environment.

(China Daily November 20, 2004)