Chinas Metal Industry Steals A March Over India

Chinas production of non-ferrous metals during 1997 has crossed over 5.3 million tonne, five times more than that of India, and it has ambitious plans to not only to raise the capacity but also to make it profitable.

Of the above production about 1.05 million tonne would be copper, 2.05 million tonne aluminum, 600,000 tonne lead and 1.35 million tonne of zinc.

China now wants to recast the metals industry and make it efficient and world class.

Recently at the annual China National Non-ferrous Metals Industry Corp conference the president of the company called for the company to form three to four internationally competitive enterprise groups in the main sectors of copper, aluminum, lead and zinc within a span of three years time.

He said that the aim of China National Non-ferrous Metals Industry Corp would be to achieve a combined output of 3 million tonne of non-ferrous metals in 1998 to account for 60 per cent of the countrys total output.

China National Non-ferrous Metals Industry Corp has now captured a major segment of the domestic market for non-ferrous metals. It has also turned profitable. China National Non-ferrous Metals Industry Corp firms produced 2.95 million tonne of metals in 1997 an increase of 13 per cent over 1996.

Companies not under the China National Non-ferrous Metals Industry Corp reached a production level of 2.35 million tonne a drop of 10.3 per cent compared to 1996.

The China National Non-ferrous Metals Industry Corp firms want to expand and sell their shares to the public and be listed on the stock exchanges so that they are able face global competition.

There are some useful lessons for India from the Chinese experience as some of the Indian non-ferrous metal producers are reeling under the shock of liberalisation. Hindustan Copper, Bharat Aluminum are two most notable examples which may suffer due to delays and obstacles; that have been put in their way by the system.

Russias metal industry: While China is racing ahead to be the largest producer and consumer of metals in the world, Russia which ranked first in the world until the wave of liberalisation hit it, with the industry shrinking to half the size, is now emerging as the raw material and scrap supplier to the western world at dirt cheap prices.

Today CIS countries have become source of great profit for western trading houses as they can have ferro alloys, nickel, non-ferrous metals and steel at the lowest prices and export them all over the world.

Russia is now emerging as a big source of supply of ferrous scrap to Europe.

Supplies have reached a level of 600,000 tonne a month.

It is said that the metal fund of Russia is about 1,400 million tonne and until 1991 this fund was growing, but started declining thereafter.

The fund is now declining and internal scrap consumption is about 14 mtpy which includes generated scrap. However, collection of scrap in Russia is costly due to the spread of the country as also the large transport cost. This renders Russian scrap not so competitive in the world market. But its export to nearby countries like Turkey is increasing.

However, the demand for scrap in Russia is not very brisk as only 11 per cent of the steel is produced through the arc furnace route. The scrap importing countries like Turkey and Italy have large arc furnace units and will need Russian scrap for a long time to come.

Growing unemployment: Despite increasing steel production the world over the jobs in the steel industry would decline with the grim prospects of unemployment staring most in the face. The total employment in the world steel industry is about 6.5 million. China has the largest steel work force with a production of 100 million tonne which is at three million workers.

China, CIS and India account for 70 per cent of the workforce with only about 30 per cent of global steel production.

In the European Union there have been the biggest job losses with employment dropping from 991,000 to 326,000 during the period 1975-95. In India SAIL has about 250,000 workers and Tisco 75,000 to produce about 13 million tonne of steel. Essar has about 2,000 workers to produce about two million tonne.

So the biggest problem SAIL and Tisco will face is to tackle the huge labour force and remove it without causing too much human distress.

Whether this is possible remains to be seen.