Shoei Kisen Kaisha’s cargo ship Mineral Shikoku bound for Tianjin, China loaded with iron ore at the ship loading facility at Fortescue Metals Group’s berth in Port Hedland in the Pilbara region of Western Australia.
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BO’AO, China – China’s post-pandemic reopening will boost demand for commodities more significantly than it did when the country emerged from the 2008 financial crisis, according to Andrew Forrest, executive chairman of Fortescue.
The Australian iron ore giant started its business in China with a shipment of 180,000 tons of iron ore in 2008, according to the company’s website.
Back then, China managed to avoid a prolonged recession with a massive stimulus package that supported infrastructure development – which spurred demand for commodities.
“It is, but this time it’s just going to be bigger in volume,” Forrest told CNBC on Wednesday when asked how China’s demand for Covid might compare.
“Probably about the same or a little less in percentage terms,” he said on the sidelines of the Boao Forum for Asia. Government and business leaders attend the high-profile conference, held annually in Hainan province and sometimes compared to the Asian version of the World Economic Forum’s annual event in Davos, Switzerland.
What we are seeing now is consistent demand across China.
Andrew Forest
Chairman of the Board, Fortescue
China’s economy is much larger today than it was during the 2008 global financial crisis. In 2010, China overtook Japan to become the second largest economy in the world.
Forrest pointed out that the volume represented by a percentage is larger when the “pie” is larger.
“What we’re seeing now is consistent demand across China,” Forrest said, “and consistent demand but fortunately increasing in the supply chain, the ecosystem that will emerge.” [for the] renewable energy sector.”
Forrest did not specify which goods he was referring to. In the six months ended December 31, Fortescue said it shipped a record 96.9 million tons of iron ore, up 4% from a year ago.
The Australian miner expects to maintain a similar pace of deliveries in the first half of this year, according to the forecast published in February.
This year’s Boao Forum is the first since China ended its Covid-era border controls, allowing more foreign companies to visit the country.
Renewable energies: Enormous need
Forrest told CNBC on Wednesday that one of the big changes during the pandemic is the acceleration of global warming. The other is accelerating China’s technological development, especially in automation.
The renewable energy ecosystem — including manufacturing, automation and robotics — is “the most exciting investment sector in the world right now,” he added.
“The demand is absolutely enormous,” he said.
China has the “most advanced” technology in this industry, Forrest said, citing his travels to more than 70 countries during the pandemic.
Fortescue has announced a goal of net-zero emissions from operations by 2040. The company said in February it had $1 billion in unused capital commitments for Fortescue Future Industries, its subsidiary founded in 2020 to develop renewable energy projects.
More specifically, Forrest said, “Wind is a bit overinvested,” but there is a need for solar around the world. He added that there are more ways to tap water for energy.
Fortescue will enter into joint ventures with Chinese companies and is working with Hunan and two other Chinese provinces, he said, declining to elaborate.
“So we encourage Chinese companies to join forces with Western companies to invest overseas with Western companies, collaborate, get started, bring your technology and expertise,” he said.
“There are huge business opportunities in North America and Europe, Australia and Asia for Chinese companies to bring their technology.”
Source : www.cnbc.com