The ASIA Miner News Service17 February, 2009
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The world, and China, still need resources
Although the short term fear that has gripped global economies is understandable, the reality is that people around the world still need resources.This is particularly the case in China and other emerging economies where, although growth has slowed, the desire for westernization and urbanization will not disappear. People still have to be fed and housed, and emerging economies will continue to grow solidly.Until about six months ago most investors had never heard of a 'sub-prime mortgage’ and the resource sector was getting on with the job of finding and developing new mineral deposits and raising capital for this to occur.
The world, and China, still need resources
Although the short term fear that has gripped global economies is understandable, the reality is that people around the world still need resources.This is particularly the case in China and other emerging economies where, although growth has slowed, the desire for westernization and urbanization will not disappear. People still have to be fed and housed, and emerging economies will continue to grow solidly.Until about six months ago most investors had never heard of a 'sub-prime mortgage’ and the resource sector was getting on with the job of finding and developing new mineral deposits and raising capital for this to occur.
Resource companies and resources investors were focused mainly on China and seeking ways to best take advantage of the China boom, which continues today despite slowing growth. Most just did not recognize the strength of the financial wave approaching from the United States.
The resource sector has experienced tough times before and in all of these situations the tough times, recessions and economic crises have ended, just as they will this time around.
With demand for resources to continue and world resources becoming increasingly scarce, the medium to long term prospects of the resources sector remain bullish.
At the moment markets, fed by many doom and gloom merchants in the media, seem to be preoccupied with fear and concerns and there seems to be little thought about the future beyond the next few months.
There are also those who predict that the Chinese economy will fall from its heights in a spectacular fashion but they don’t consider the population’s desire for continued improvement.
Although the Chinese economy has slowed to single digit figures, sustaining growth of 11% year after year is unheard of on a long-term basis. China’s economy now appears to be running at a more sustainable level of growth and there is no way that it is going to grind to a complete halt.
Emerging economies like India and China will continue to use commodities at a healthy rate. China is now also in a position where it does not have to rely on the US or other western nations to fund its development. Its trade surplus and foreign reserves built up over the last 10 years or so ensure it can fund its own development.
It appears extremely likely that when the credit crisis is over and most economies resume their growth path, the demand for resources will be stronger than ever, placing resources companies in a very strong position.
The ASIA Miner will continue to champion mining resource developments around the Asia Pacific.Yolanda TorrisiManaging editor
The ASIA Miner
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