Kobus van der Wath – Co-Founder & CEO, ANDAMAN PARTNERS

China remains one of the world’s largest producers of resources and the largest consumer; and it is typically the largest importer of commodities and hence a massive market for global producers. It dominates much of the world’s mineral processing and related supply chains. But it is also a significant investor and finance partner to the industry. And it has also become a prominent engineering, procurement and construction partner for mining projects and operations worldwide. The country’s growth may be slowing, and its demand for minerals and fuels may be peaking. But now is the time to form a comprehensive view of China’s role in the sector and to become more — not less — strategically engaged. 

In the 1990s and 2000s, the rapid growth of China’s economy and its demand for natural resources propelled global commodity prices on an extended ‘super-cycle’ above long-term averages. In 2007, China’s annual GDP growth was over 14%. But this was a turning point for the country’s headlong growth. The Global Financial Crisis occurred the following year, and China’s growth numbers started trending inexorably downward. 

By 2015, GDP growth slipped below 7%. During the COVID-19-affected years of 2020-2022 (when growth fluctuated between 2% and 8%), the number for 2023 came in at 5.2%, followed by 5.0% in 2024. The outlook for China’s economy is gradual yet continuously slowing growth, which inevitably moderates its demand for natural resources.

Nevertheless, apart from crude oil, China remains the world’s largest consumer of all the major commodities such as aluminium, copper, iron ore and steel. China consumes over half of the world’s aluminium, copper, nickel, coal, steel and iron ore, and over 40% of tin, lead and zinc.

Yet China is much more than just a consumer of commodities. The country itself produces more than half of the world’s coal, steel and cement and is the leading producer of at least 28 different commodities, from aluminium to gold and rare earth elements. China is the largest producer of many ‘critical minerals,’ i.e., those considered essential to the economy and national security, for example, gallium (98% produced in China), tungsten (81%) and bismuth (80%).

Domestic production falls far short of China’s ample requirements, so it still imports vast amounts of commodities from where they are mined worldwide, such as iron ore from Australia, bauxite from Guinea, cobalt from the DRC and nickel from Indonesia. In 2023, China accounted for over 80% of global aluminium imports, 60% of copper, 74% of tin, 73% of iron ore, 70% of manganese, 68% of nickel and 46% of cobalt.

China plays an even more crucial role in what happens to these minerals after extraction, the essential process of producing commercially valuable minerals from their ores. The country dominates processing for most minerals, especially for critical minerals. Around 90% of rare earths processing takes place in China, as does most of the processing for various other critical minerals such as graphite (100%), cobalt (74%), lithium (65%) and copper (42%). Being the centre of mineral processing means China also controls the global supply chains that distribute these resources worldwide.    

In other words, China is the leading producer of multiple critical minerals, the leading consumer and importer of almost all commodities, and where most of these minerals are processed. In addition, China is also where manufacturing and bulk material production capacity is concentrated, such as for solar and wind energy, electric vehicle batteries, steel and cement.

Beyond production, consumption and trade, China is instrumental in investment, financing and project execution in the mining and construction sectors. Chinese investments in foreign mines reached a high of USD 16 billion in 2023. Since 2000, China has provided USD 182.3 billion in loans to African governments for projects primarily focused on energy and mining infrastructure. Chinese Engineering, Procurement and Construction (EPC) firms are crucial for global infrastructure development and greenfield projects.

In short, China remains a core node in the global mining industry — even if its slowing economic growth has primarily banished the prospects for another commodity super-cycle — and should still be regarded precisely as such.

China’s government is grappling with economic restructuring and reform, with limited fiscal maneuvering space. At the same time, the mining industry is facing an increasingly complex global landscape, with geopolitical tensions rising worldwide and friction in the U.S.-China relationship. Resource extraction is becoming ever more woven into geopolitics and regional rivalries. The U.S. aims to delink its mineral supply chains from China, while China is forging closer trade relationships with Russia, India and other nations in the BRICS+ group.

Despite these difficulties, now one must recognize China’s comprehensive role and it is the time to engage China more strategically. Selling resources to China can still be highly rewarding if done correctly. This will require careful consideration of branding, putting the right marketing machinery and client engagement strategy in place — and finding the right partners. Then there is the scope to tap China’s potential to invest in equity, greenfield projects, or co-invest in projects. Also, its willingness to lend or provide supply chain finance. And the strength of its mining sector engineering, procurement and construction capabilities offers further opportunities to create value for international capex projects and operations.    

In the past, China’s super-cycle created a seller’s market for resource producers; now, you must sell resources there in a low-growth environment and compete effectively to win. But with a strategic approach, this can be achieved. It may not be the super-fast growing dynamo of previous years, but China is still China: the world’s largest resource consumer and a critical and unavoidable player in the global mining industry.    

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