China to spawn next mining boomBy Barry FitzGeraldJune 14 2002...

China to spawn next mining boom
By Barry FitzGerald
June 14 2002




Upbeat ... Mr Morgan sees `great opportunities' ahead. Photo: James Davies


WMC chief Hugh Morgan believes a new boom is dawning for the Australian resources industry, thanks to runaway metals demand in China and, to a lesser extent, India.

The boom could rival the investment boom of the 1960s, which established Australia as a major force in the world's alumina/aluminium, iron ore, nickel and coal industries.

That boom was underpinned by huge demand from Japan plus the first-time ability to finance new developments against long-term supply contracts.

Speaking at a Melbourne Mining Club luncheon, Mr Morgan said the high-growth markets to Australia's north represented an "unparalleled opportunity for the future".

Both China and India would look to meet the "quite dramatic" increases in their per capita consumption of metals from internal supplies but would be forced to look beyond their shores if their present high compound [economic] growth rates were maintained, he said.


"We will see great opportunities in the next couple of years," he said.

Apart from the consumption drive forecast to come from the northern markets, WMC and the rest of the industry are banking on supply constraint and a sharper focus on return on capital to provide increased leverage to the predicted demand upturn.

Supply constraint is the major rub-off from the wave of consolidation in the industry while the focus on improved returns is a response to decades of value destruction by the industry.

Mr Morgan said the industry was marginalised by investors during the dot com bubble and had responded by becoming more sober and reflective in how it made investments.

Mr Morgan warned that the mining industry continued to face serious challenges, notwithstanding the looming boom in demand for its products.

A key challenge was to ensure that the industry met community expectations across a range of environmental and indigenous people issues.

Another challenge was to overcome the short-term focus of the investment markets, highlighted by the average 4.2-year tenure of Australian chief executives, compared with the 10-year-plus time frame needed to turn a discovery into a long-life operation. Mr Morgan said that, at present, the end result was a lack of incentive to build anything.

---------------------------------------------------


Interesting that China will look to "internal sources first" !
Jinchuan are already searching here because their internal sources are zip compared to demand.
Jinchuan supply 80% of Chinas nickel.
And this comment is all in Wingellinas favour :
"A key challenge was to ensure that the industry met community expectations across a range of environmental and indigenous people issues"