Hunger for natural resources in Tibet

April 26th, 2009

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Last month, in Nations will rise against nations, we mentioned that

Therefore, outwardly, the world may be at peace. But inwardly, we believe there will be jostling for power, influence and resources between the major nation blocs. Bigger nations will use smaller nations as pawns, international armed non-state groups will intensify their activities and inter-ethnic conflicts will arise.

Tibet is a political hot potato issue for China. Passions are hot on both side of the political divide. Tibetan-independence activists are present in many countries, with numerous accusations of human rights violation and holding demonstrations all over the world. The common Chinese people on the other hand, cannot see what the fuss is all about. In fact, many of them are genuinely surprised at the anti-Chinese passion regarding the Tibetan issue.

Here, we do not have any opinion regarding Tibet because we do not understand the issues enough to comment about them. But we have this to say: China is most likely to hang on to Tibet at all cost. The reason is simple- Tibet holds a vast reserve of natural resources that have yet to be exploited. Given that Tibet is one of the world’s least habitated, remotest and most untouched area in the world, it is one of the few ‘virgin’ areas on earth that can still yield massive rewards for nations who can tap into its vast natural resources. Since China is clearly going to need vast amount of natural resources in the decades to come, it will defy international opinion and hang on to Tibet.

As this article says,

In 1999, the Chinese embarked on a secret, seven-year geological survey that found 16 major deposits of copper, iron, lead, zinc and other minerals. Tibet is believed to hold as much as 30m-40m tons of copper, 40m tons of lead and zinc and more than a billion tons of high-grade iron ore.

What is the catch for China?

The commodities are there, under the ground, but to dig them up in this vast inhospitable region is not going to be easy. As we mentioned in Real economy suffers while financial markets stuff around with prices, producing metals is a highly capital-intensive activity, which include

Construction of nearby infrastructure (e.g. roads, railways, power stations, development of water supplies and townships) due to the remoteness of mining projects.

These developments will take many years. The Chinese may even need foreign expertise and investments to do so. Therefore, there is little wonder that China is developing Tibet (including the engineering feat of constructing a rail link to Tibet). Whether that’s good for Tibetans or not is not for us to say.

For us in Australia, if Tibetan natural resources are fully exploited by China, there will be less demand for our iron ore.

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