China: Mineral Acquisitions

Lord Anderson of Swansea Excerpts

Thursday 12th July 2012 Lords Chamber

[Lord Howell of Guildford]

My Lords, the motives behind the enormous expansion of Chinese investment across the whole globe—not just in Asia, Africa and South America—are mixed. In some cases the motives are purely commercial. At the head of the list, I think, one would put the Chinese authorities’ desire to acquire access to resources—minerals and particularly hydrocarbons—around the world to meet their enormous and very rapidly growing needs. There are also some direct concerns in investment to promote the welfare of the recipient countries. The British Government have in fact signed a memorandum of understanding with the Chinese Government on poverty reduction in the low-income countries. This is one of many dialogues that we conduct all the time with the Chinese on these matters.

[Lord Anderson of Swansea]

What assessment have our own strategic planners and those of our allies made of the dangers of China over a longer term gaining such a monopoly of scarce mineral resources that it will be in a position to manipulate prices and possibly to manipulate other users of those scarce materials?

[Lord Howell of Guildford]

Of course, these dangers of monopoly control exist in all extractive industries, particularly for scarce resources. We have to watch those matters very carefully. What might be behind the noble Lord’s question is the issue of rare earths, the use of which is essential in practically every mobile telephone and the production of which was very much under Chinese control until recently. However, any attempt to limit the export of rare earths and thereby to manipulate price has been met by the discovery and development of rare earths elsewhere. Therefore, provided that we watch these matters carefully, competition can usually weaken the monopolies. I am not saying that it is a Chinese aim to monopolise these resources, but in the case of rare earths that was a danger.