China's exhausting its gold reserves at 5 times the global rate

China is the leader in extracting gold, zinc, lead, molybdenum, coal, tin, tungsten, rare earths, graphite, vanadium, antimony and phosphate, and holds second place in mine production of copper, silver, cobalt, bauxite and manganese.

At the same time the country is the number one consumer of metals and minerals – in iron ore its imports constitute nearly 80% of use and in copper it’s approaching 50% and for nickel it’s already above that.

The gap between China's domestic mineral capacity and demand is what is driving the country's push to acquire overseas mines

China’s reserves-to-production ratio represents the “burn rate” of domestic reserves and it’s not surprising that the country’s elevated consumption levels and increasing dependency on imports are raising alarm bells in Beijing.

A new report by BMI Research says this gap between China's domestic mineral capacity and demand is what is driving the country's push to acquire overseas mines:

Notably, China's production-to-reserves ratios for gold and iron ore are 23.5% and 19.2% respectively. In comparison, global usage rates for gold and iron ore are at just 4.9% and 3.8% respectively.

China surpassed South Africa as top gold producer almost a decade ago and last year produced 490 tonnes of the metal, nearly 200 tonnes more than number two Australia. China in 2013 become the world's top gold market at 1,132 tonnes and although consumption has shrank since then it's holding around the 1,000 tonne level.

Domestic Chinese iron ore miners in 2010 supplied 36% of the raw material to the country's blast furnaces which forge nearly halve the world's steel. Beijing's stated goal is to keep domestic mines' share to around a quarter of the total, but despite tax breaks and other incentives low grades and high costs have seen steelmakers opt for imports.

China's exhausting its gold reserves at 5 times the global rate

Source: BMI Research