Deep pockets
By Wang Yu (China Daily)Updated: 2006-12-18 11:08
In terms of production, Moody-Stuart contends that as a major consumption powerhouse, "it makes sense for more production to be localized in China."
In addition to mineral mining and production in China, Anglo American plans to increase sourcing expenditure in China. "China can be a larger supplier of machinery products and industrial goods for our global operation, given the country's enhanced manufacturing capability and cost-efficiency," Moody-Stuart contends.
The global sourcing investment of the mining giant is US$14 billion every year. "We expect perhaps 10 per cent of our global sourcing expenditure could be spent in China in the future, which means we will buy about US$1.4 billion in products from the Chinese market every year," Moody-Stuart stresses.
As for long-term trends, he says, "It is certainly positive news for China to attach more importance to energy efficiency and environmental protection, especially since China has become a driving force for the production of some mineral commodities."
Anglo American is committed to reducing its energy consumption in production by 15 per cent, against business as normal, by 2014.
Opportunity vs risk
Being ambitious with his investment and sourcing plans, Moody-Stuart is crystal clear that exploration involves risky and long-term investment. "It is the nature of the extractive business. That is why we aim for long-term return and benefit in China."
He appeals to the Chinese Government to address the mining business with clearer regulation and guidance.
"There are some areas that need better clarification regarding China's mining business from the perspective of law and regulation," Moody-Stuart says.
A mineral resources law amendment is under discussion and evaluation by the relevant authority in China.
Moody-Stuart says that he understands the amendment will take a couple of years to complete, but believes the new law will be more beneficial for foreign exploration and mining activities.
Anglo American was established in Johannesburg, South Africa, in 1917. It became a publicly listed company on the London Stock Exchange in 1999. The firm is mainly involved in gold, platinum, diamonds, coal, base and ferrous metals, industrial minerals, and paper manufacturing and packaging, with annual global sales of US$34.47 billion last year.
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