Australia should not bank on China to fuel its resources boom for more than the next 15 years, said former economic advisor to the White House, Todd Buchholz, at the annual Diggers and Dealers conference that ended Wednesday in the Western Australia mining town of Kalgoorlie.
According to Buchholz, an aging population and softening growth could curb the world’s second-largest economy’s appetite for commodities.
Australia should not be putting all its eggs in one basket (that is China), but instead should try and further growth in other areas, he said, adding that a slowdown in China’s economy will put pressure on commodity prices.
China is Australia’s number one export destination. Australia now provides about 40 percent of the iron ore used in China’s ever-expanding steel industry.
Australia’s fourth-largest iron ore miner Atlas Iron, however, was not too concerned about slowing demand from China.
Its Managing Director David Flanagan told CNBC that demand from China for its products was consistently increasing. He added that he did not see any real short to medium term impact even if there was a slowdown in China.
However, Atlas was making sure costs are kept low and the company is currently debt free to help navigate through any potential hard landing.
Likewise, pure-play nickel producer Western Areas still expects demand from China to be strong. The company’s Director of Operations, Dan Lougher, told CNBC that the country’s growing wealth will propel demand for stainless steel products, which has nickel as a key component.