Chinalco chief Xiong Weiping has this week offered some comfort to Australian miners, saying Chinese urbanisation still has decades ahead of it and will continue to drive mineral demand. Mr Weiping says urbanisation will continue to boost domestic demand in China for at least 30 years based on current data which shows that Chinese people living in urban centres is growing by about one per cent annually. Currently, 52 per cent of Chinese people live in urban areas, in 30 years at the current growth rate, that will increase to 80 per cent.
''... China will enter a key stage of accelerating industrialisation and urbanisation in the next 10 years and even longer, when the demand for mineral resources will continue to be strong.”
Speaking at a Melbourne Mining Club event in Beijing, Mr Xiong said mineral demand in China was consistently higher than overall economic growth, implying that demand for minerals and commodities should surpass the expected growth rate of 7.5 per cent in coming years. In contrast to local miner’s fears about the health of China’s growth story, Mr Xiong was quite bullish in his insistence that now is as good a time as any to seize opportunities:
''All international mining companies should grasp these rare opportunities in China's mining industry and make the best of it.''
The comments have previously been advocated by industry heavyweights such as BHP Billiton Limited
(ASX:BHP) boss Andrew Mackenzie, who has argued that Asian demand for commodities will remain strong for decades, and Australia can continue to profit from it so long as it improves productivity and its industrial relations system.
Chinese economic news The official read on Chinese manufacturing shows the sector expanded at its strongest pace in 18 months. The National Bureau of Statistics reports China's purchasing managers' index rose 0.3 points to 51.4 points last month, with a read above 50 indicating expansion.
A separate report on Chinese manufacturing hit a seven-month high. The HSBC China Manufacturing Purchasing managers' index came in at 50.9 in October, in line with the prior flash reading and rising from 50.2 the month before.
Commentary Westpac Banking Corp
(ASX:WBC) senior economist Justin Smirk offered FNN his thoughts on where China is at right now in its growth story:
“We do believe China is slowing, we believe Chinese cycles are actually much shorter than ours due to the way they operate on policy; they have very quick cycles in their housing and investor markets, last year they really stimulated to get things going and then tightened policy, and we think we’re living through that now. So we think the next couple of years will be a period of slower Chinese growth, somewhere in the vicinity of 7 per cent. Still strong investment underlying and still strong materials demand, but again a slower pace of growth.”
To watch more of the interview, click
here: Resource company headlines Downer EDI Limited
(ASX:DOW) has scored a $400 million contract for the Chevron-operated Wheatstone Project in Western Australia. The engineering company will work on two electrical and instrumentation packages for the downstream portion of the project from late 2014.
Whitehaven Coal Limited
(ASX:WHC) has flagged further cost-cutting in 2014 as the high Australian dollar and falling coal prices continue to impact the sector. At its annual general meeting, Whitehaven chairman Mark Vaile said conditions would remain challenging in the coming year, despite a modest lift in coal prices. Also this week, Whitehaven revealed that it set new records in October. The coal producer moved more than 1 million tonnes from its mines to the port of Newcastle last month and achieved monthly export sales of 1.24 million tonnes. Chairman Mark Vaile has told shareholders the company's future is assured following a difficult year in which it posted a $82 million loss and its share price more than halved. Mr Vaile said that although global coal markets had been tight and prices flat, there had been a modest improvement in thermal and metallurgical coal prices in recent months.
Paladin Energy Limited
(ASX:PDN) chairman Rick Crabb says changes to the uranium miner’s board would be counter-productive while an asset sell-down and succession planning is under way. An Asian hedge fund has been leading a group of disgruntled shareholders in pushing for the removal of Mr Crabb and Managing Director John Borshoff, both of whom have been on Paladin’s board for nearly 20 years. Mr Crabb says shareholders feeling the need for swift change need to consider the achievements of the company over the past few years. According to Mr Crabb; “Under my chairmanship, we have built two new uranium mines in Africa, no other company in the world has built any uranium mines in the last 10 years.”
Ramelius Resources Limited
(ASX:RMS) has entered into a $16 million gold pre-pay finance facility with Deutsche Bank Australia through its wholly owned subsidiary Mt Magnet Gold. Ramelius says the facility, which remains subject to conditions, will allow it to fast track the acquisition and potential pre-mining work at the Vivien gold project in Western Australia.
Mining services company Bradken Limited
(ASX:BKN)has released its earnings guidance for the first half of the financial year following the settlement of a Federal Court dispute over bid rigging claims. The company said it was expecting earnings before interest, tax, depreciation and amortisation (EBITDA) of around $85 million for the current half of the 2014 financial year, down from $105 million in the previous corresponding period. In a separate note, it also advised that the company and two of its directors, including former New South Wales premier Nick Greiner, had settled a dispute with mining parts company Norcast for an undisclosed amount.
