The Belt and Road Initiative (BRI) is part of Chinese masterplan to win geopolitical advantage in Eurasia. Once described by Mackinder as the Heartland, Eurasia is a crucial region for achieving international power. In China’s case, it is crucial for counterbalancing the US’ dominance. But besides politics, fueling one of the biggest infrastructure initiatives in human history will also depend on minerals, opening a huge new market for mining companies.
THE 21st CENTURY SILK ROAD: Yi dai yi lu
BRI was announced by Chinese President Xi Jinping in 2013 as an infrastructure development plan that is estimated to encompass projects in 71 countries, from South-East Asia to Africa and Eastern Europe. “The project is often described as a 21st-century silk road, made up of a “belt” of overland corridors and a maritime “road” of shipping lanes,” states The Guardian. This initiative will mark the consolidation of Chinese investment across the world and significantly enhance the country’s soft power in international relations. With a total estimated investment of over US$1 trillion, the so-called Chinese Marshall Plan will also modify the macroeconomic environment.
ONE BELT ONE ROAD AND MINING
BRI will deploy the construction of transport, power, road, rails and port infrastructure across a massive territory. According to the International Copper Association, these will require a significant amount of copper. “As building gets underway, it is expected to have a huge impact on global copper demand – both from the new projects built and the resulting economic boost they will provide,” explains Mining Technology. China’s Belt and Road Initiative is so vast that it will result in the global demand for copper rising by 22 percent by 2027, according to the International Copper Association.
For example, the increase of power and electric infrastructure will boost demand for copper as this metal is a critical input in power cables. “In the first five years of the Initiative, between 2013 and 2017, 1.25 million tons of copper was used to build a network of power generation and grids, highways and railroad, according to the research,” reports Mining Technology. “Overall, the combined direct and indirect impact of BRI is projected to account for 2.8 million tons of copper between 2023 and 2027.”
Giant international mining groups are already preparing for such demand. “BRI projects could add up to an incremental 1.6 million tons of refined copper demand, equivalent to 7 percent of annual demand in 2017,” states BHP. Steel is also expected to benefit from all the transport projects. “The positive spillover effects of this infrastructure (are) expected to provide a wider field of economic opportunity in recipient countries for decades. Additionally, increasing the international competitiveness of manufacturing in these regions may create a major lift in future demand from copper intensive sectors such as automobiles, consumer durables and machinery,” forecasts BHP.
ITS ALL ABOUT MEXICAN COPPER
The centerpiece of China’s international agenda is also good news for Mexico, not only because it will most likely drive a boom in the global economy. While Chile leads global copper production, Mexico is in the Top 10, rated as the 7th producer in 2017 and contributing with 3.8 percent, equal to FY17 production of 742,246 tons according to CAMIMEX.
In terms of state-wide impact, Sonora takes the copper crown. In 2017 the state accounted for 84.1 percent of the total national copper production. Also, Grupo Mexico is expected to benefit the most, as it is the main Mexican producer of the metal and the 7th worldwide. Buenavista del Cobre remains the main producing copper mine in Mexico, followed by la Caridad, both owned by Grupo México.