Chinese Economy/Development thread (updated regularly)

[Martian2]

Rare wealth

Rare earth metal elements

Large rare earths deposit found in central China

"Large rare earths deposit found in central China
English.news.cn 2010-10-07 14:23:53

WUHAN, Oct. 7 (Xinhua) -- Geologists have discovered a large reserve of rare earths, which are vital for production of many high-tech products ranging from iPods to hybrid cars, in central China's Hubei Province, local authorities confirmed Thursday.

The newly-found deposit sits at the foot of Mt. Laoyin in Longba Township of Zhuxi County, in Shiyan City, a spokesman with the Hubei Provincial Land and Resources Department said.

"Geologists are investigating the make-up, structure, quality, size of the reserve," the spokesman said.

Before the discovery, geologists had also found deposits of rare earths in 12 places in Zhushan, another county in Shiyan, he said.

Local authorities have yet to tap the rich geological resources.

"We are drawing up plans and measures to prevent the rare earths resources from being illegally mined," the spokesman added.

Rare earths, a class of 17 chemical elements that include minerals such as dysprosium, terbium, thulium, lutetium and yttrium, are widely used in the fields of the most sophisticated science and technologies like electronics, aviation, atomic energy, and mechanical manufacturing.

The Inner Mongolia Autonomous Region in north China has the largest reserves of rare earths in the country, or about 75 percent.

China is the world's largest rare earth producer; supplying more than 90 percent of the global demand.

China has stressed the sustainable development of rare earths mining.

"What we pursue is to satisfy not only the domestic demand but also the global demand of rare earths. We should not only stand from the present, but should also look forward to the future," Premier Wen Jiabao said Wednesday at the sixth China-EU Business Summit in Brussels.

Wen also reaffirmed that proper control and regulations were important and that China would not close the market.

"If the rare earths minerals were used up, how would the world and China deal with the problem?" he said.

Editor: Tang Danlu"

[Note: Thank you to "zoom" for the post.]

 

[Martian2]

Then why not reprocess the stuff from discarded end products, eg cellphones teles, batteries. There must be enough built up over the decades to make up for any restrictions on Chinas part?

Beyond the current 9 annual tons, I wish the Japanese the best of luck in recycling another 25,991 tons of rare metals per year.

The Japanese Dowa rare metal recycling plant processes 300 tons of materials and smelts them in a 1,400 degrees Celsius furnace to yield a paltry "150 grams of rare metals" a day per ton of material. This amounts to a total recovery of 45 Kg per day.

It requires ten days of operation to produce 450 Kg of rare metals. In one month, the Dowa recycling plant produces 1,350 Kg of rare metals. In an entire year, the Dowa plant will produce 16,200 Kg or 8 metric tons of rare metals.

The current worldwide consumption is 130,000 tons of rare metals per year. China will produce 120,000 tons of rare metals this year. China exports approximately 1/3 of its rare metals production, which is 40,000 tons. Japan consumes 65% of China's rare earth metal exports. In other words, Japan imports 26,000 tons of rare metals per year from China.

The Dowa plant produces 8 metric tons or almost 9 short tons of recycled rare metals a year. The Japanese shortfall, after recycling, is 25,991 tons of rare metals that they still need to import from China.


Mineweb.com - The world's premier mining and mining investment website China`s unofficial metals embargo of Japan may ignite global REE fire - POLITICAL ECONOMY | Mineweb

"Mineweb - Dorothy Kosich - 2 days ago
Japan's manufacturers account for 65% of China's rare earth exports. Metals analyst Christopher Ecclestone of Hallgarten & Company suggested the real ..."

The Hindu : Opinion / Op-Ed : Japan recycles minerals from used electronics

"Technically difficult process

But this form of recycling is an expensive and technically difficult process that is still being perfected.

At Dowa's plant, computer chips and other vital parts from electronics are hacked into two-centimetre squares. This feedstock then must be smelted in a furnace that reaches 1,400°Celsius before various minerals can be extracted. The factory processes 300 tons of materials a day, and each ton yields only about 150 grams of rare metals.

Finding enough electronics parts to recycle has also grown more difficult for Dowa, which procures used gadgets from around the world.

A growing number of countries, including the United States, are recognising the value of holding onto old electronics."

Rare Earth Metals – The Next Gold Rush? — Uncommon Wisdom Daily

"Reason #2: Global Supply Controlled by China. Until 1948, most of the world’s rare earth metals were sourced from placer sand deposits in India and Brazil when South Africa became the largest producer. India and South African still produce rare earth metals today, but China has zoomed past everybody since the 1980′s.

This number is almost hard to believe, but it is absolutely true: China produces and controls 95% of the world’s production of rare earth minerals. Yup, 95%!

The problem is that China currently uses about two-thirds of what it produces, but is on a consumption trajectory where it will use everything it produces in a few more years. When that happens, the U.S. and the rest of the world will be S.O.L.!

In September of last year, China announced plans to lower its export quota of rare earth metals to 35,000 tons per year in 2010-2015.

Wait, it gets worse. China’s Ministry of Industry and Information Technology is considering a total ban on exports of terbium, dysprosium, yttrium, thulium, and lutetium.

It’s part of a plan that Deng Xiaoping started almost two decades ago when he said that rare earth metals would 'Do for China what oil did for Saudi Arabia.'”

 

[中国万岁-ProsperThroughCo-]

FT
China: Relationship is deeper than merely trade

By Alec Russell
Published: October 5 2010 16:22 | Last updated: October 5 2010 16:22

For much of the first half of this year, commentators on South Africa appeared to have an obsessive interest in construction – or to be more precise in the construction of the stadiums for the football World Cup.

For many, the progress of the stadiums was a barometer of the future prospects of the Rainbow Nation.

Yet those amateur soothsayers were doubly wrong. It is not just that South Africa proved the doubters wrong and built world-class stadiums, in the process doing as we now know a considerably better job in preparing for an international tournament than India has for the Commonwealth Games. But also they were arguably assessing the wrong construction works.

For a more subtle insight, they should instead have been surveying a magnificent new building on the outskirts of Pretoria. Two years ago it was a down-at-heel whitewashed bungalow.

Now as befits the embassy of an ally whose importance to South Africa grows by the month it has a palatial feel, with marbled walkways, an ornate water garden and a phalanx of elegant reception rooms.

Much has been made of China’s accession last year to become South Africa’s largest trading partner, a development which, to be fair, reflected as much the collapse of the western economies as the increasing ties with Beijing. But the relationship is about far more than just trade.

It is also an important link in the “south south” axis. Long fostered by Thabo Mbeki, South Africa’s second post-apartheid president, as a liaison between developing nations, now in the wake of the financial crisis, it is finally starting to take shape.

In August, President Jacob Zuma led a delegation of 400 businessmen and 11 cabinet members to Beijing to entrench the relationship. This was in part a bid to cut South Africa’s bilateral trade deficit with China and change the mix of trade.

According to South African figures, its $6.7bn in exports to China were almost entirely from natural resources, while its $9.45bn imports were value-added manufactured goods.

But there is also a political dimension. China provides a “counterbalance to the dominance of the US in the world economy and will eventually hopefully counterbalance the political dominance of the US”, says one senior South African official.

As well as the geopolitical rapport with the world’s second largest economy, the left of the ruling African National Congress is inspired by China for insights into how to handle its own economy.

Some talk enthusiastically if speculatively of intervening to reduce the value of the rand. More like to debate the lessons of the success of China’s state capitalism.

This is a particularly intense subject coming when it is clear that more than 15 years after the end of apartheid, the orthodox free-market policies of the ANC have failed markedly to narrow the divide between rich and poor.

Some analysts have liked to draw a sharp dividing line between the China policy of Mr Mbeki, who once famously warned that Africa had to beware of falling into a new “colonial” relationship with China, and Mr Zuma. That is a little simplistic. Despite his caveat, Mr Mbeki was at heart an enthusiast. Mr Zuma’s aides also are all too aware that China’s growing interest in Africa comes with strings attached.

So, for example, officials broadly salute Beijing’s close links with the oil-rich Angola on the grounds that, in accordance with the rules of a competitive market, Chinese state companies arrived offering an attractive deal. Yet they are aware that Angola has to adjust to the social and political complications of the arrival of tens of thousands of Chinese.

On his recent visit to London to an emerging markets forum, deputy President Kgalema Motlanthe talked of the need for African nations to co-ordinate their stance towards China.

His language was cloaked in diplomacy as befitted such a famously judicious politician. But it reflected a sentiment that can be heard in other African powers: namely that, notwithstanding the obvious benefits for Africa of China’s keen interest in the continent, leaders also need to be circumspect and might have more clout in Beijing if they could form a common front.

Zhong Jianhua, China’s courteous ambassador to to South Africa, says that when visiting China, ANC officials are always encouraged to travel out of the big cities to see the hard work of local officials.

As for the difference between Mr Mbeki’s and Mr Zuma’s approach to China, he says the one was more scholarly, the other more pragmatic.

So why has there been no big deal since the landmark agreement between ICBC and Standard Bank in 2007?

Mr Zhong says these are early days and Chinese businesspeople have much to learn. While the relationship has deep foundations, he says, dating back to ANC ties with Beijing in the anti-apartheid era, it is still at a fledgling phase.

That may be so, but the size and splendour of his new embassy suggests that Beijing has little doubt that the links are destined to grow and grow.

 

[Brotherhood]

Nanoscience center passes acceptance test - People's Daily OnlineSeptember 29, 2010

The National Center for Nanoscience and Technology (NCNST) of China has successfully passed the acceptance test, according to the website of National Center for Nanoscience and Technology.

The National Center for Nanoscience and Technology (NCNST) of China is co-founded by the Chinese Academy of Sciences (CAS) and the Ministry of Education. It is a subsidiary non-profit organization of CAS, which enjoys full financial allocations with the status of an independent non-profit legal entity.

The National Center for Nanoscience and Technology has invested 27.247 million yuan in construction in the past six years.

Under the guideline of "operation along with construction" by the National Development and Reform Commission, China's National Nanotechnology Center has made remarkable achievements in the research on foundation of nanotechnology and key applications. It has completed the establishment of a public technology platform and basic R&D conditions. The center also studies and formulates the standards for nanotechnology through some significant projects at state-level.

It is reported that nanotechnology is an important source of development of new technologies in the future, enhancing the core competitiveness of the country, leading the new trend of the world's economic growth development.

By Zhang Qian, People's Daily Online

 

[Brotherhood]

New highway to border city brings China closer to Russia, DPRK - People's Daily OnlineSeptember 29, 2010

Traffic was busy Tuesday, a day after its opening on a highway that runs to northeast China's Hunchun City, which borders Russia and the Democratic People's Republic of Korea (DPRK).

The new highway shortens the time, from seven to fewer than five hours, to travel from Changchun, capital city of northeast China' s Jilin Province to Hunchun, also in Jilin.

Linking Jilin's Tumen City and Hunchun, it is also a branch of a national highway that leads to Hainan Province on the southern tip of China.

Also, the new highway, which costs 3.46 billion yuan (about 517.18 million U.S. dollars), will significantly boost logistics to Hunchun where goods are exported to Russia and the DPRK, improving trading ties with the two countries, said Li Jinhao, deputy governor of the Korean Autonomous Prefecture of Yanbian in Jilin.

On Tuesday, 48 bus lines shifted their routes onto the new highway to travel from Yanji City, the seat of the Korean Autonomous Prefecture of Yanbian, to Hunchun.

Source:Xinhua

 

[Brotherhood]

Large rare earths deposit found in central China - People's Daily OnlineOctober 07, 2010

Geologists have discovered a large reserve of rare earths, which are vital for production of many high-tech products ranging from iPods to hybrid cars, in central China's Hubei Province, local authorities confirmed Thursday.

The newly-found deposit sits at the foot of Mt. Laoyin in Longba Township of Zhuxi County, in Shiyan City, a spokesman with the Hubei Provincial Land and Resources Department said.

"Geologists are investigating the make-up, structure, quality, size of the reserve," the spokesman said.

Before the discovery, geologists had also found deposits of rare earths in 12 places in Zhushan, another county in Shiyan, he said.

Local authorities were yet to tap the rich geological resources.

"We are drawing up plans and measures to prevent the rare earths resources from being illegally mined," the spokesman added.

Rare earths, a class of 17 chemical elements that include minerals such as dysprosium, terbium, thulium, lutetium and yttrium, are widely used in the fields of the most sophisticated science and technologies like electronics, aviation, atomic energy, and mechanical manufacturing.

The Inner Mongolia Autonomous Region in north China has the largest reserves of rare earths in the country, or about 75 percent.

China is the world's largest rare earth producer, supplying more than 90 percent of the global demand.

China has stressed the sustainable development of rare earths mining.

"What we pursue is to satisfy not only the domestic demand but also the global demand of rare earths. We should not only stand from the present, but should also look forward to the future," Premier Wen Jiabao said Wednesday at the sixth China-EU Business Summit in Brussels.

Wen also reaffirmed that proper control and regulations were important and that China would not close the market.

"If the rare earths minerals were used up, how would the world and China deal with the problem?" he said.

Source:Xinhua

 

[below_freezing]

ban rare earth exports and put processing companies under state control. even if raw ore is exported it is useless to the west since they lack the technology to process it efficiently, so as long as we control processing we control the whole supply chain.

also, it's kind of shameful to compare ourselves to saudi arabia. we're a manufacturing country, not a natural resources or service one, we should be the ones hoarding our own resources while buying from others with that useless USD sitting in the bank.

 

[Martian2]

There are only two months left in this year. The IMF has entered the data for the first nine months of this year into its econometric models and they are confidently predicting a China 2010 GDP of $5.745 trillion U.S. dollars.

Now that another year is almost over, there are only five left until 2015. The IMF has updated its sophisticated computerized model with the latest economic data and they project China will have a $9.982 trillion GDP by 2015. If you're willing to round up then China's GDP in 2015 will be $10 trillion dollars!

If you're willing to loosen the definition of GDP a little bit and consider foreign exchange earnings from China's $2.43 trillion dollar hoard or foreign remittances then China's GDP in 2015 will be $10 trillion dollars! If China's 2015 GDP comes in at exactly $9.982 trillion then you only have to wait until the first quarter of 2016 for China's GDP to be $10 trillion dollars!

Pick your option. The IMF guarantees a $10 trillion dollar GDP for China by 2015 or Q1 2016!

Click on this link: List of countries by GDP (nominal) - Wikipedia, the free encyclopedia and near the page bottom, click on "Nominal...Future"

Nominal GDP table (sortable; amounts in billions of US$)
Country ↓ 2010 ↓ 2011 ↓ 2012 ↓ 2013 ↓ 2014 ↓ 2015 ↓

China 5,745.133 6,422.276 7,169.679 8,000.516 8,935.686 9,982.076

 

[Carnivore]

There are only two months left in this year. The IMF has entered the data for the first nine months of this year into its econometric models and they are confidently predicting a China 2010 GDP of $5.745 trillion U.S. dollars.

Now that another year is almost over, there are only five left until 2015. The IMF has updated its sophisticated computerized model with the latest economic data and they project China will have a $9.982 trillion GDP by 2015. If you're willing to round up then China's GDP in 2015 will be $10 trillion dollars!

If you're willing to loosen the definition of GDP a little bit and consider foreign exchange earnings from China's $2.43 trillion dollar hoard or foreign remittances then China's GDP in 2015 will be $10 trillion dollars! If China's 2015 GDP comes in at exactly $9.982 trillion then you only have to wait until the first quarter of 2016 for China's GDP to be $10 trillion dollars!

Pick your option. The IMF guarantees a $10 trillion dollar GDP for China by 2015 or Q1 2016!

Click on this link: List of countries by GDP (nominal) - Wikipedia, the free encyclopedia and near the page bottom, click on "Nominal...Future"

Nominal GDP table (sortable; amounts in billions of US$)
Country ↓ 2010 ↓ 2011 ↓ 2012 ↓ 2013 ↓ 2014 ↓ 2015 ↓

China 5,745.133 6,422.276 7,169.679 8,000.516 8,935.686 9,982.076

This prediction doesn't calculate the effect of RMB's appreciation. Some rumors in Chinese forum say RMB's exchange rate against USD may rise to 6 by the 18th National Congress of CCP.
China is the first country whose GDP rises more than 1trillion USD in one year. This happened in 2008. We may see it happen again in 2011 or 2012.

 

[no_name]

So probably by 2020 China will have GDP value comparable to US. Per capita wise will take longer.

Chinese government are starting to encouraging people moving into cities so they can focus development on these super city areas. This way development can be more focused. The HSR project is just the beginning. If you earn money in cities you can still provide better livings when you go back to countryside. The big cities are the locomotives for now, similar to how the SEZs were the locomotives before.

 

[Brotherhood]

Body of China Southern Airlines' first Airbus A380 assembled - People's Daily OnlineOctober 08, 2010

Body of China Southern Airlines' first Airbus A380 assembled (Xinhua/Li Ming)

The picture taken on Oct. 5 shows an Airbus A380. Its main body structure was assembled on the China Southern Airlines Co. Ltd. Airbus A380 assembly line in Toulouse, France. Airbus headquarters said that the Airbus A380 ordered by China Southern Airlines will soon enter the phase of flight system assembly and testing.

 

[Martian2]

The facade of the Colosseum is bathed in red light and decorated with Chinese words during an economic summit in Rome on October 8, 2010.

The words on the Colosseum read, "Sino-Italian friendship."

China seals 2.25 bln euro business deals with Italy - Yahoo! News

"China seals 2.25 bln euro business deals with Italy
by Dario Thuburn Dario Thuburn – Thu Oct 7, 9:26 am ET

AFP – Italy's Prime Minister Silvio Berlusconi and China's counterpart Wen Jibao shake hands at Palazzo.

ROME (AFP) – Chinese Premier Wen Jiabao sealed Sino-Italian business deals worth 2.25 billion euros (3.15 billion dollars) on Thursday, after fending off European pressure to raise the value of the yuan.

The contracts included solar power and broadband Internet projects and were signed in the presence of Wen and Italian Prime Minister Silvio Berlusconi.

The two leaders also agreed to boost annual bilateral trade to 100 billion dollars by 2015 from around 40 billion dollars this year.

"Every year there will be more and more Chinese companies investing in Italy," Wen told business leaders after the talks.

He said that Italian entrepreneurs were the "Marco Polos of today" -- a reference to the famous 13th century Venetian merchant who travelled to Asia.

He also stressed that China was clamping down on intellectual property theft and would no longer tolerate "piracy" against Italian businesses.

Berlusconi said China was "a huge market" for Italian companies.

Wen also met Italian President Giorgio Napolitano on the third leg of his week-long trip across Europe. He will leave for Turkey later on Thursday.

Wen came to Italy after stormy talks in Brussels, where he told a Europe-China business forum on Wednesday: "I say to Europe's leaders -- don't join the chorus pressing (China) to revalue the yuan."

He warned such a move would bankrupt many Chinese companies and create social unrest, ultimately increasing global economic instability.

European and US leaders have said China should allow its currency to appreciate in value in order to right global trade imbalances.

An Italian government source told AFP that the currency dispute was not mentioned in the talks between Berlusconi and Wen.

"The tone of his visit to Rome is different," La Repubblica daily said.

"Relations between China and Paris, London and Berlin have cooled in recent months. Italy has not raised its voice over human rights or over the commercial and currency expansion of the Asian locomotive," it added.

The Italy-China business forum was attended by industry leaders and officials from both countries including Emma Marcegaglia, the head of Italy's employers federation Confindustria.

A document released by Confindustria listed the projects signed on Thursday, including an 800-million-euro solar energy project in southern Italy signed by China Development Bank and Italy's Global Solar Fund.

Chinese telecoms giant Huawei also signed a deal worth 700 million euros with Vodafone Italia to build broadband Internet infrastructure.

Shanghai Electric Group and China Development Bank also signed a 500-million-euro water desalination project with Italy's Impregilo.

"China is crucial for any future Italian business strategy," Marcegaglia said, adding: "We need greater protection of intellectual property rights in China. I think it's important to work on this."

Several speakers emphasised that Italy was lagging behind other European countries such as Germany in building business ties with China.

Chinese Commerce Minister Chen Deming said: 'Cooperation between Italy and China is very important ... We can help each other.'"

 

[Martian2]

Thanks for the info Martin, However with the impending shortages, why dont the scientists/engineers, develop methods to improve the recovery rate?
Costs may have been a inpediment in the past, but prices could go crazy in the next few yrs.

It is a hopeless task.

1. The new Japanese Dowa rare metals recycling plant embodies current known technology. It is extremely energy intensive and requires a 1,400 degrees Celsius furnace. There are additional factors such as the complexity of separating the elements, purity issues, transportation costs from global sourcing, and waste disposal. Additionally, many residents may not appreciate the blight of a "200-foot-tall furnace" on their landscape.

2. The Dowa plant is currently capable of only recovering indium and antimony. The Dowa plant is unable to reclaim rare metals such as "neodymium, a vital element in industrial batteries used in electric motors, and dysprosium, used in laser materials." See http://www.nytimes.com/2010/10/05/business/global/05recycle.html

3. Dowa is already encountering problems in securing the raw materials (e.g. discarded electronics products) for its recycling plant. Furthermore, the emerging scarcity of raw materials/"discarded electronics products" indicates that the cost of recycling is about to soar.

Finding enough electronics parts to recycle has also grown more difficult for Dowa, which procures used gadgets from around the world.

4. For this hypothetical scenario, let's pretend that the Japanese have achieved a quantum leap in recycling technology and their rare metals recovery rate increases by 100%. Instead of recovering 9 tons per year, the Dowa plant will now recover 18 tons per year. That still leaves a mind-boggling shortfall of 25,982 tons of rare earth metals that Japanese industries desperately need.

5. Rare earth metals possess special physics properties. The rare metals are used in electronics and high-tech products because it is necessary. While it may be possible to replace a few rare earth metals in limited areas, the trade-off for the substitution is performance, cost, and expected lifetime of the electronics or high-tech product.

Rare Earth Properties

In a way, the rare earths are special transition metals, possessing many of the properties of these ... Alkaline Earth Metals - Properties of Element Groups ...

Anybody with common sense can see that recycling is a dead end. The technology does not yet exist to economically recover many rare earth metals. There is no foreseeable technology that will sufficiently boost Dowa's current annual 9 ton recovery rate of only a few select rare metals.

The Japanese picked this fight. They insisted on imprisoning a Chinese fisherman for trying to make a living near Chinese islands that the Japanese stole, through force of arms around 1895, from China.

It is only through China's largesse that Japan is able to profit from Chinese rare earth metals, used in Japan's electronics and high-tech exports.

By the way, this armchair general is still boycotting the prickly and evil Japanese. I haven't eaten a Japanese apple-pear or Meiji chocolate almond since the fracas began.

 

[Martian2]

China's mineral resource exploration

China reveals major geological findings over past 12 years - People's Daily Online

"China reveals major geological findings over past 12 years
21:53, October 09, 2010

During the past 12 years, Chinese scientists have discovered more than 900 locations containing mineral deposits which are estimated to hold 5 billion tonnes of iron ore, as well as a vast array of other resources, the country's geological authorities said Saturday.

The large number of discoveries, including newly found reserves of iron and copper ores, coal, gas, and other types of raw minerals, came after a major geological mapping was launched in 1999, officials with the China Geological Survey (CGS) said at a press conference held in Beijing Saturday.

The CGS is a government-owned non-profit entity directly under the Ministry of Land and Resources.

Among the discoveries, 152 locations were identified as holding huge amounts of deposits. These findings would pave the way for future development and reduce the risks for commercial prospecting for resources, a statement from the CGS website said.

Five deposits in the provinces of Liaoning, Hebei, Henan, Shandong and Shanxi in east and north China could potentially hold reserves of 5 billion tonnes of iron ore, according to officials.

Meanwhile, up to 38.5 million tonnes of copper ore reserves were also discovered in Tibet, Xinjiang and Yunnan. CGS Director and Vice Minister of the Land and Resources, Wang Min, said these findings would "effectively change" China's over-reliance on imports of copper ores.

Further, 450 million tonnes of bauxite deposits were discovered in China's Shanxi, Henan, Guizhou and Guangxi. Also, the Qaidam Basin in northwest China's Qinghai Province was estimated to hold up to 214 million tonnes of sylvite reserves.

Source: Xinhua"

 

[中国万岁-ProsperThroughCo-]

China sits on up to $1.5bn in copper profits

By Javier Blas in London
Published: October 10 2010 22:20 | Last updated: October 10 2010 22:20
China is sitting on a profit of nearly $1.5bn from a bold trading strategy in copper based on expectations of an emerging markets-led boom.

Beijing’s bet that a “super-cycle” in metals markets would keep copper prices high, despite the financial crisis, has paid off, according to dealers’ calculations. The substantial paper profits come after China’s State Reserves Bureau, the official body in charge of the country’s strategic commodities reserves, mopped up copper surpluses last year when the crisis was at its worst and prices had tumbled.

As demand for metals has recovered, copper markets have tightened dramatically and prices have soared.

Metals traders estimate that the SRB bought between 250,000 and 300,000 tonnes of copper, equal to nearly 2 per cent of global annual production, in early 2009 at a price of less than $3,500 a tonne. The SRB does not disclose its purchases. As copper prices rose last week to a two-year high of $8,349 a tonne, traders and industry executives calculated Beijing’s paper profits to be about $1.2bn-$1.5bn.

Traders and analysts believe China is preparing to cash in on its paper gains soon. Joshua Crumb, metals analyst at Goldman Sachs, said China’s SRB was likely to “prudently sell or lend metal” to keep a “lid on price spikes over the next few quarters”. The gains are a coup for the SRB after big losses in 2005, when an executive working for its trading arm, Liu Qibing, built a short position in copper – or bet on falling prices – equal to between 100,000 and 200,000 tonnes. The losses prompted the SRB to overhaul its trading “to avoid more huge losses on investments”.

China has never explained, or acknowledged publicly, its buying. But mining executives and traders familiar with the SRB said it had bet that a “super-cycle” of high metals prices, powered by urbanisation and industrialisation of emerging economies, would survive the effects of the financial crisis.

Copper prices have risen to within 6.6 per cent of their all-time high of $8,940 a tonne, set in July 2008, as demand from emerging countries and disappointing mine supplies have tightened the market. Analysts believe prices will reach a fresh all-time high, with banks and consultants forecasting prices of $9,000-$11,000 in 2011. The rise in copper and other base metals prices will dominate this week’s London Metal Exchange Week, the metals and mining industry’s annual gathering. The LME index, a basket tracking lead, aluminium, copper, nickel, tin and zinc prices, last week hit its highest level in two years.