With A$350 billion to spend in the next five years, China’s One Belt One Road – the massive push for a new ‘Silk Road’ – offers huge opportunities for the Australian resources sector. This was the key message to Australian businesses from Matt Schofield, Lead Partner of ShineWing Australia, who presented on the prospects for Australian business at Melbourne’s International Mining and Resources Conference (IMARC).
“The complexity and sheer scale of the One Belt One Road policy cannot be overstated. Over the next five years, we’re talking about projects worth more than A$350 billion which will require a projected 150 Mt of additional steel demand,” Schofield said.
One of the key take outs from the conference is that Chinese steel production will need to be sustained at a high level over the next decade, with flow-on benefits for coking coal and iron ore production. In total, there are around 900 projects underway to build what will be a vast logistics and transport network.
“Billions of dollars have already been invested in railways, bridges, roads, ports, industrial parks, oil pipelines and power grids. The 1,320 MW Sahiwal power project in the China Pakistan Economic Corridor has already been completed six months ahead of schedule. There are projects to remove transport bottlenecks, promote port infrastructure construction, gas and oil pipeline construction, road construction, trunk line and network construction will require, in addition to iron ore and coal, project planning expertise and most importantly the right talent,” he said.
Key parts of the program include a 250 km high speed railway linking China to Thailand, railways to London and Iran, an Asian gas pipeline, the Khorgos Gateway Project linking Kazakhstan to China by rail, the ‘Diamond Silk Road’ linking Antwerp and Shanghai, and port infrastructure in Gwadar Pakistan.
“This is a new economic reality spanning 50,000 miles, 60 economies and 60% of the world’s population. Current commodity forecasting isn’t yet reflecting the impact of this massive program, but the impact of China’s national semiconductor project and decoupling of reliance on the US market will need to be factored in eventually. This brings with it a complex commercial environment and the trend is not looking to pass. But this also brings opportunity. Businesses with capability and networks to navigate the bilateral relationship will gain competitive advantage,” he said.
