PERTH (miningweekly.com) – Diversified major BHP CEO Andrew Mackenzie says that the success of China’s Belt and Road initiative will hinge on cooperation within the international community.
Speaking in Beijing at the weekend, he noted that the ambitious infrastructure initiative, which, like the ancient Silk Road trade route aims to link China to Europe, would bring a host of opportunities and challenges to its host nations.
“Inevitably a project of this scale, its complexity, its risk, is going to suffer the odd setback and criticism, but I have a sense that China, as the main architect of the Belt and Road, along with many of the other participants, are learning from this, as they translate it into reality,” Mackenzie stated.
His comments come as Italy on Saturday became the first Group of Seven nation to joint the Belt and Road Initiative. The country’s European Union allies and the US have their reservations about China’s growing influence.
But Mackenzie defended the initiative, which is set to boost demand for steel and iron-ore.
“Host countries are going to have to have their opportunities, their right to evaluate the risks and the benefits of participation. They're going to have to have a say in projects and to ensure that they will meet the immediate and long-term needs of its people. They're going to require a long-term sustainable form of project financing. They'll be required to be able to offset some of the risks of debt traps that have, I think, been talked about in some of other contexts.
“The development is going to have to be inclusive of local economies, and it has to be very supportive of imperatives like employment and improving livelihood and environmental performance,” Mackenzie said.
He noted that China had shown a willingness to listen, to adapt, and partner with many of the multilateral institutions, including the financing companies in order to help the large-scale projects, which were now emerging and under way to succeed.
“I think the Belt and Road initiatives will absolutely hinge on that same spirit of cooperation with the international community. And in doing so, it will have the potential to make a direct and indirect contribution of huge economic significance and a prosperous legacy for many decades to come.”
BHP’s analysis of the Belt and Road initiative has shown that it could generate up to 150-million tonnes of incremental growth in steel demand, equating to a 9% increase in yearly demand for steel, over a ten-year period.
The company’s research also indicates that about 30% of the Belt and Road related investment will flow into new economic zones, industrial parks, manufacturing facilities and public buildings, all across economies that are emerging in the wake of China’s rise, providing an important ladder of economic development.