10/14/2008 9:02:00 AM
Urban Migration In China To Keep Commodity Prices High
MANILA (Dow Jones)--Urban migration will continue to drive demand for resources in China and keep the pressure on global prices of commodities, a partner at Ernst & Young in China said Tuesday.
Peter Markey, head of energy, chemicals, utilities industry practice at Ernst & Young-China, told the Asia Pacific Mining conference that the eventual migration of 600 million Chinese now in rural areas to urban areas would easily keep demand for commodities elevated for the next century.
"The challenge for China is to build a new city the size of Sydney every year," said Markey, noting the recent aggressive overseas push of Chinese firms to acquire and secure mining companies. "The message is clear: go out and find new resources around the world."
He noted that China has also sharply limited foreign investments in the country's mining industry in recent years to help ensure that local exploitation will help to meet its future requirements.
Markey said after initial failures, Chinese companies have become more savvy in their acquisition drives - paying multiple billions of dollars for projects around the world, and have shown an improved appetite for risk.
Aside from the requirements of China's expanding economy, commodity prices will get support from the growing demand in India and the requirements of multinational companies, Markey said.
"While there has been a recent easing in prices, (upward commodities price) pressure will continue," he said.
-By Cris Larano, Dow Jones Newswires
