China's non-ferrous metal producers have been called on to strengthen their investment in research and development (R&D) to lift the international competitiveness of the sector over the next 5 to 15 years.

Kang Yi, president of the China Non-Ferrous Metal Association, a government-backed industry organization based in Beijing, said that the sector's overall R&D input should exceed 1.5 per cent of its annual sales revenue by 2010.

In the longer term, the ratio is expected to grow to over 2.5 per cent by 2020, Kang said.

Last year, the proportion stood at less than 1 per cent.

"Manufacturers should spare no effort to raise money to ensure the growth of R&D expenditure outpaces that of sales revenue," he said.

China has been the world's biggest non-ferrous manufacturing nation, but it is not a strong one due to weak independent innovation capabilities, Kang said.

The country's combined output of the main non-ferrous metals aluminium, copper, lead, zinc, nickel, stannum, mercury, magnesium, sponge, titanium and antimony rose by 18.1 per cent to 16.3 million tons last year from 2004, ranking it No 1 in the world for a fourth consecutive year, according to the association's statistics.

"We can buy advanced equipment (from foreigners), but we can't buy real core technologies. Therefore, it is a pressing task for the sector to enhance independent innovation capabilities to raise international competitiveness," Kang said.

He urged all key non-ferrous metal groups in China to set up their own technical centres and establish associations with outside research institutions and universities to forge stronger R&D capabilities.

The Aluminium Corporation of China Limited, the nation's biggest aluminium producer listed in Hong Kong and New York, said it would establish a world-level R&D centre during the next five years. The company, aiming to be one of the world's top 500 multinationals in that period, has invested almost 3 billion yuan (US$370 million) in R&D over the past five years.

The non-ferrous metal industry's output, sales revenue and profits are expected to grow rapidly this year as a result of strong demand and bullish metal prices, according to Kang and other officials from the metal association.

Combined production of the main non-ferrous metals will reach 18 million tons this year, they said.

The sector's sales revenue will jump to 1.1 trillion yuan (US$137.5 billion) this year from 809 billion yuan (US$101.1 billion) in 2005.

Meanwhile, the sector's profits are expected to rise to 80 billion yuan (US$10 billion) from 54.4 billion yuan (US$6.8 billion).

Wang Feihong, an analyst with the Antaike Information Development Co Ltd, a Beijing-based metal consultancy, blamed the sector's weak R&D for its fragmentation.

"There are too many small non-ferrous metal producers in China. They can't afford expansive R&D activities alone," Wang told China Daily.

It is imperative for domestic metal manufacturers to speed up mergers and acquisitions to pool money into R&D, he said.

For example, there are more than 90 aluminium producers and hundreds of aluminium processors in China, according to Wang.

The metal association predicted that China's combined demand for the main non-ferrous metals would increase to 30 million tons a year by 2010, up from more than 17 million last year boosted by the nation's rapid economic growth.

The future demand will include 14.4 million tons for aluminium, 6.5 million tons for copper and 5 million tons for zinc, the metal association said.

Source: China Daily