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B Y DAV I D V I N N I KOV ( W ‘ 13) A N D A L A N S O S T E K ( W ‘ 14)

CHINESE COPPER:

SURGE OR STOCKPILE? W hether it was used in ancient

for

plumbing or decorative works

westerners have long taken for granted.

of art, copper has always been a

the

many

These

electronic

types

of

appliances activities

that need

staple of civilization. The metal’s malleability,

telecommunications and power grids on a

electro-conductivity, and ability to combine

massive scale. Even with China’s slowdown

China’s State Reserve Bureau made a

with other metals made it a staple of the 20th

from 2007’s construction frenzy, China still

pivotal decision last year to stockpile

century, used prevalently in fields like wiring,

consumed an astonishing 5,198 thousand

copper.

household products, electrical appliances,

tonnes of copper, more than two and a half

construction,

transmission

times what the United States consumed.

networks. But while copper’s uses have

This gap will widen as China maintains a

long been known, its users are growing at a

9% GDP growth rate relative to the United

breakneck speed. One country in particular,

States’ anemic recovery.

and

electric

China, is reshaping world copper markets.

consumption total is the low amount of

lay well behind that of the western world’s

copper that China can produce internally.

for many centuries, this sleeping giant has

Even at 4th place in the world, China had a

awoken to an economic renaissance. The

shortfall of over 4,000 tonnes in 2009. In

industrialization practices that took decades

order to make up this domestic shortage,

to complete in the United States are being

China has resorted to more dynamic options

built in the span of a few short years in China,

than simple imports. Using its massive foreign

creating a natural resource starved consumer

reserves, China is making aggressive deals

ready to fill its needs at any cost. While China

around the world to secure supplies at their

gets a great deal of attention for its oil and

source. Chinalco purchased 9% of Rio Tinto

steel consumption, its demand for copper may

for over $14 bn in 2008. 40% of all Australian

outstretch anything else.

mining deals in 2009 were done by Chinese

Its use of one third of the world’s copper supply is driven by a 1.3 billion person

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What complicates this already astronomic

Although China’s economic development

acquirers. Shandong Group announced the $1.5 bn buyout of African Minerals Ltd.

population rapidly entering the information

But unlike 5 years ago, when conservative

age. In June alone, 8.5 million new customers

Chinese investors would only purchase fully

purchased telephones, increasing the amount

established mines, there is now a major drive

of telephones in China to 1.1 billion. Industries

for opening new sources. For instance, China

like LCD TVs grew at over 40%, while the

is spending $1.5 bn on the Toromocho mine

growing middle class has developed a craving

fi eld in Peru, which may increase the 3rd

I N T E R N AT I O N A L B U S I N E S S R E V I E W

FA L L 2 0 1 0

11/27/2010 3:13:22 PM

Profile for Daniel Hellwig

International Business Review - Fall 2015  

Fall edition of the IBR magazine at the Wharton School.

International Business Review - Fall 2015  

Fall edition of the IBR magazine at the Wharton School.

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