Reflections from the last version of the Virtual CEO Summit

The meeting, which traditionally takes place in the context of Asia Copper Week during November in the city of Shanghai, was held virtually for the second consecutive year. The event brought together the main executives of the copper mining industry with their Chinese smelter peers, and included the participation of prominent academics such as Jeffrey Sachs (USA) and Jou Miaojie (China), who analyzed the geopolitical context in which the transition to a green economy is taking place. Here we share their views.

The last COP26, which took place in Glasgow at the beginning of November, was an instance marked by the commitments of different countries to achieve carbon neutrality in the coming decades.

This declaration, to which countries such as Chile subscribed, was one of the central themes of the conversation held by more than 70 senior executives from the mining sector and their Chinese smelter peers during the latest version of the Virtual CEO Summit, a meeting held in the context of Asia Copper Week in Shanghai, but which, due to the global health situation, was held online.

This year, the meeting was attended by the academic and director of the Center for Sustainable Development at Columbia University, Jeffrey Sachs, and the academic from Peking University, Jou Miaojie

The keys to decarbonization

“Almost all countries are committed in some way to be carbon neutral. Chile by 2050, China by 2060, and perhaps the furthest behind was India, projecting it by 2070,” noted academic Jeffrey Sachs during his remarks. “But let me make a clear prediction: China is going to get this done. I am convinced, even, that it will do it before 2050. The reason for that is that China is the world champion of large-scale transformation.”

The academic explained that China is leading the development of key technologies for greener economies, such as those associated with photovoltaics and wind turbines, long-distance power transmission, electric battery supply chains, electric vehicle production, and 5G connectivity. “I think, perhaps, it’s not so simple to take an economy of China’s scale, which is perhaps 80% coal-dependent in the energy sector, and be able to say clearly that by 2050 it will decarbonize. But it will, because I think China’s technological prowess is so great and the effectiveness of large-scale transformation is very high, especially against the need for decarbonization by mid-century,” Sachs said.

For the economist, the business sector in general is ahead of the different governments in this matter, given that the private sector knows that it has to change and is reflecting on the technological change it needs, in the context that it works on a long-term scale, while governments tend to work more in the short term.

Sachs also pointed out that decarbonization starts with the electricity grid. In this regard, he highlighted the role that hydrogen will play as a fuel for large industries, including the copper mining industry, in addition to the transformation of sectors such as infrastructure and transportation.

The academic pointed out that China has emphasized the need to achieve energy interconnection between countries, which could also be done in South America, given the potential it has in terms of renewable energies. “We know that because of intermittency, a larger grid means more resilience, more reliability and lower storage costs.”

On the other hand, Sachs pointed out that copper production and mineral processing in general, must move to carbon neutral technologies, given the high volume of energy needed for the processes, and where Chile has an advantage thanks to the Atacama Desert. “This means that Chile can be the backbone of a huge amount of photovoltaics and also hydrogen.”

Likewise, for the academic, relations between the United States and China will be key to successfully achieve the goals of decarbonization. Cooperation between both powers, according to Sachs, would be the only way to solve problems such as global warming, so the approach achieved between Secretary John Kerry and the Chinese government envoy, Xie Zhenhua during COP26, where a cooperation agreement was reached between both countries, are signs that give hope.

Added to this is the meeting between President Xi and President Biden in mid-November. “This, in my opinion, is crucial, not only because I know that this specific issue of climate change is as important as it is, but also because of what it implies for the world in general. Cooperation between China and the United States will make a big difference in achieving all that we hope to achieve,” Sachs said.

Expectations for China

China’s GDP growth rate, during the first three quarters of the year, has reached 9.8%, and the growth rate for the whole year will be around eight percent, according to IMF statistics and forecast. For Peking University academic Jou Miaojie, the combination of the 2020 and 2021 figures shows a high average growth rate, which makes it possible to say that China is leading the world economy.

Jou Miaojie explained to the attendees that the principles that should accompany China’s growth for the coming years point to the need to establish an open, green and transparent, low-carbon economy going forward. “China has been continuously making efforts to reduce its carbon emissions and reduce energy consumption,” the academic said.

“In 2020, China’s parliament also made strong commitments, in which it projected that by 2050, carbon neutrality will be achieved. We believe that by 2030, we need to reduce energy consumption by 65% compared to 2005. Energy consumption and CO2 emissions per capita must be reduced by 13.5% and 18% respectively. As we can see, we are facing a very difficult situation, taking into consideration that statistics point out that fossil fuels represent 45% of the fuels used in the country, and we are trying to reduce that percentage. “.

In addition to this, the country aims to promote the development of local infrastructure, as well as to open up economically to the world, through different commercial alliances, especially with North America, Europe and the commercial circle of Asia. For the academic, the central characteristic of globalization remains the same. The main regional economic areas grouped in the North American Free Trade Agreement, the European Free Trade Association and the NAFTA-China Free Trade Area cannot be separated from each other, and these three parties must strengthen their cooperation with each other.

Regarding economic development, Jou Miaojie pointed out that “first of all, we think we should diversify our export destination with the development of the world economy. At the moment, the North American market is relatively mature. However, we still have many uncertainties within the North American market. We also believe that Chinese companies should diversify in terms of international investment.”

“Second, we need to expand our imports from the outside world. We need to import high-quality consumables,” the Peking University academic continued. “Third, in terms of China’s international trade, let me say that we need to boost the service industry in China, which compared to the United States, is of a relatively smaller scale, especially in education, healthcare and transportation.”

In closing, the academic noted the importance of China’s relations with the West. “This will help grow our economy with a healthy approach. I just hope that China and the United States can work together, to succeed in boosting the global economy.”