EU industry threatened by Chinese operators

Date: 02/10/03

By Karen Carstens

THE EU's mining industry fears it is being hampered by new rules from Brussels which could prevent it taking on the challenge posed by China - seen as the biggest commercial threat by many European operators.

“Eventually, there could be a big crisis,” warns Corina Hebestreit, secretary-general of Brussels-based industry group Euromines.

With less onerous regulatory requirements to protect their workers and the environment, the Chinese have been dumping their goods in the EU at rock-bottom prices, she claimed.

“There have been several anti-dumping cases in the past,” she said, adding that some cases are currently “under review” by the European Commission.

As one of the world's largest mineral producers and exporters, China's mining industry accounts for roughly 6% of its industrial output and 10% of its total foreign trade.

But it has not had much direct foreign investment in the past, and the World Bank is working with the Chinese government to get more big multinationals to invest in China's abundant natural resources, with the aim of creating an economic 'win-win' situation for all.

The EU industry mines metals (mainly iron and copper) and quarries minerals such as sand, marble, kaolin and salt. These materials are vital for everyday use in construction, transport vehicles and computers.

Minerals, moreover, are essential raw materials for most manufacturing industries in the EU. The building industry, in particular, depends heavily on supplies from European quarries. However, as these materials undergo extensive processing, the needs of the industry that produces them are easily forgotten.

Hebestreit said that, although the industry welcomes proposed EU rules regulating mining waste and a new 'thematic strategy on the sustainable use of natural resources' that DG Environment is due to unveil this month, the “international dimension” is often lacking when the Commission crafts proposals in this hitherto largely unregulated sector.

“This really needs to be taken into account,” she said.

“Today, the Chinese may be importing some material,” she said. “But by the time they are exporting only, it may be too late.”

Hebestreit was referring to a worst-case scenario in which EU mining operations are forced to shut down - due to outside pressure as well as dwindling resources - earlier than they might have had it not been for cheap Chinese imports flooding the market.

But once resources start dwindling globally, the Chinese will want to use up their own, and the EU will be left wondering why it failed to introduce regulations to keep its own mining operations running for as long as possible.

This, of course, is only a possible future scenario, but one which nonetheless should be considered, industry insiders indicate, and one they would like to get across to Eurocrats.

At present, quarries producing traditional ornamental stones like granite (but not marble) are under threat in both Spain and Italy, Hebestreit said.

“They are under heavy pressure from Chinese industry,” she said, adding that some could even be “forced out of business”.

According to the Chinese government, anti-dumping charges against Chinese manufacturers by overseas countries totalled 500 by the end of 2002 and the number of anti-dumping cases against China accounts for 14% of the world's total, ranking first in the world.

In 2000, EU imports from China increased to €69.5 billion, while EU exports to China rose to over €25.3 billion. China is the EU's fourth-largest trading partner, while the EU is China's third-largest trading partner. The Union's main export is machines - 49% of Chinese hi-tech imports are from the EU.

The Chinese mining industry is threatening the European Union mining industry