China’s dependence on imports of strategic metals means that global commodity price cycles directly affect Chinese industrial costs. But as China is the largest buyer of these metals, its fluctuating levels of imports create global price shocks that affect industrial supply chains worldwide.

To mitigate risk, China stockpiles resources, purchases equity stakes and long-term contracts abroad and invests in overseas mining rights and infrastructure to secure supply chains. China still relies on only a few countries for supplies of key metals, such as iron ore (Australia), copper (Chile, Peru) and cobalt (D.R.C.), and this concentration of supply can create geopolitical complications.

Overall, China is locked in intensified resource competition with the U.S., EU, Japan and India for critical metals and minerals. China’s import dependency remains a massive opportunity for foreign mining firms, with China ensuring reliable long-term demand, regardless of global cycles.

This opportunity is not without risk, however, as China’s demand is still subject to demand cycles, policy swings and geopolitics. In order to navigate this risk, mining firms must be astute and negotiate better deals, diversify their client base and secure ample financing.