National mineral reserves to be set up to meet high demand
By Wu Jiao (China Daily)
Updated: 2008-03-15 10:09

China is mulling over a national mineral resources reserve system to ensure economic security in the wake of rising global prices and blistering domestic demand, a senior government official said Friday.

Wang Min, deputy minister of land and resources, said: "The main reason for setting up the reserve is to ensure stability and sustainability, and avoid economic upheavals due to mineral supply."

"We are considering granting certain exploitation rights for high-volume industrial minerals to a limited group of people so as to ensure long-term supply," he said.

"The plan also includes surveying for new mineral areas, which would add to the reserve," Wang told a press conference on the sidelines of the ongoing NPC.

Wang said setting up the system will need cooperation from several departments, and is not just about central government funding.

"The system will be complicated and integrated, and we are attaching great importance to it," Wang said

The details will be drawn up following further talks, he said.

In the past two years, the price of minerals on the global market has soared.

Last month, several of China's leading steel companies agreed to price increases of between 65 and 71 percent for iron ore, whose supply is controlled by several global mining giants.

In response, the Ministry of Land and Resources said last month it will increase efforts to tap domestic mineral resources to feed the huge appetite of the country's economic growth.

With its goal to double GDP by 2020, China faces a shortage of about 6 billion tons of oil, 600 million cu m of natural gas, 3.5 billion tons of steel, 50 million tons of copper and 60 million tons of alumina, Wang said.

He said it was the government's plan that by 2010, the domestic market will be served by 200 new mineral bases.

The country has already set up a system for oil and natural gas reserve, he said.

The first two oil reserves in Zhenhai and Zhoushan, both in Zhejiang province, are now operational, while two others, located in Huangdao, Shandong province, and Dalian, Liaoning province, are nearing completion.

The goal is to have 12 million tons of strategic oil reserves, equivalent to 30 days of imported oil, by 2010, Wang said.

In a related development, a source with the China Coal Industry Association told China Daily earlier that the Office of the National Energy Leading Group has entrusted it to conduct "strategic research" on exploration and consumption of coal, which forms nearly 70 percent of the country's energy mix.

Meanwhile, Wang also said that the government reshuffle will help "clarify the boundaries" between the ministries currently responsible for energy.

The State Council this week unveiled plans to restructure the government to streamline policymaking.

It involves the establishment of a high-level National Energy Commission to integrate management and functions that are currently undertaken by many agencies.

Wang said he was optimistic that coordination in the energy sector will improve following the changes, despite some industry insiders expressing disappointment there is still no sign of a unified energy ministry to help eliminate jurisdictional overlaps.