China to boost exploration efforts as mineral demand grows

China will spend 30 billion yuan （$ 4.5 billion） in the next five years to expand exploration of mineral deposits within the country, even as the government announced new measures to curb exports of crucial rare earth minerals.

An official said on Sunday the government would launch a number of mineral exploration projects in 21 provinces, part of a wider effort to reduce China’s reliance on imports.

China currently imports large quantities of copper and iron ores to sustain the high growth rates of its economy. Increasing iron ore imports have been a major factor in driving India’s trade with China – iron ore is India’s biggest export to the country. Brazil and Australia are two other major suppliers.

But China’s demand has driven up iron ore prices in recent years. Wang Min, a vice minister of the Land and Resources Ministry, said on Sunday the government wanted to reduce its reliance on these markets, as well as boost domestic resources to strengthen the hand of Chinese producers in global iron ore price negotiations.

The government now plans to invest $ 4.5 billion in new exploratory projects.

The China Geological Survey （CGS） said last month five iron ore deposits, holding 5 billion tonnes, had been discovered in Liaoning, Hebei, Henan, Shandong and Shanxi provinces last year. However, as many of these discoveries were of low grade iron ore, China would still need to import large quantities of higher quality ores, from countries such as Brazil and India.

According to the Land and Resources Ministry, China discovered 621 orefields of both copper, gold and iron last year. The CGS said up to 38.5 million tonnes of copper ore reserves were found in Tibet and Xinjiang in the west, and in southwestern Yunnan province, which borders Myanmar. Chen Renyi of the Department of Mineral Resources Assessment at the CGS told the official Xinhua news agency the government wanted to limit imports of iron ore to 50 per cent of consumption in China in the next five years, and copper ore to 75 per cent.

The moves come amid increased attention on China’s new regulations for rare earths – minerals which are crucial to high-technology industries, from mobile phones to missiles. China accounts for 97 per cent of their global supply.

The government is planning to tighten pollution standards for rare earth miners, Xinhua reported on Sunday. The moves are expected to limit exports of the in-demand minerals, as well as significantly raise their prices. A number of countries recently expressed concern over reports that China blocked exports of rare earths to Japan last month, following a territorial dispute in the East China Sea.

“We heard the new standards will be strict, which will force uncompetitive miners out of the industry,” said Zhang Zhong, general manager of the Inner Mongolia Baotou Steel Rare-earth Hi-tech Company, which is China’s biggest rare earths producer.

Xinhua quoted a government official involved in drafting the new regulations as saying the moves were aimed to upgrade production standards. Mining rare earths causes significant environmental damage. He said the government would close down producers whose capacity fell below 8,000 tonnes, to better regulate the industry.

The government has tightened its control over rare earths production in recent years, by closing down a number of smaller producers. China has also stopped issuing mining licences for rare earths since 2006.