Challenges ahead

Apart from the impact of WTO entry described above, the mining industry also faces challenges from within China. One major challenge is that the industrialization process has put great pressure from the demand side on the development of China's mining industry. In the past ten years or so, demand for mineral products has been increasing rapidly with the fast-growing economic development, has which averaged at an annual rate of about 10 per cent. Disparities among the reserves, output level and demand have become increasingly noticeable. Take aluminium for example: the reserve has increased by only 1.1 per cent in the past 10 years , while production and demand have been growing at average annual rates of 11 and 17.3 per cent respectively. The industry's ability to supply the most needed minerals has weakened, leading to drastic increases in imports. Moreover, the proven reserves for some minerals can hardly meet the demand in the next 10 or 20 years. In the future, the demand for minerals will increase at speed along with the country's industrialization process. China will soon become the world's largest consumer of many key minerals.

The requirements for sustainable development of the mining industry are also a source of pressure. Currently, the rate of utilization of mineral resources has been low. The runaway exploration of mineral resources has inflicted both biological and environmental damage. The dilemma that the industry is facing is that resources of key minerals are in serious shortage while crude mining operations are wasting the precious resources, and the biological environments in many localities are already fragile and mining operations have further damaged them. To reverse the situation, it is imperative to increase exploration efforts to discover more reserves, improve the rate of resource utilization, promote resource- efficient production processes and technologies and, more importantly, maintain the balance of the biological environment. All of those, however, will require greatly enhanced technological input into the existing operations. Many of the local mining operations do not have the financial strength or technical capability to achieve the much needed technological advancements. It is a pressing issue for the industry to maintain a sustained mineral supply while keeping a sustainable social and economic development in the country.