“All of us in the mining industry are totally, totally dependent on the Chinese economy,” he said at the Association for Mineral Exploration’s annual conference at Vancouver. “Their demand for commodities has kept prices high. The ripple effect throughout B.C. and the rest of the country has been very, very important.”

However, he said he expects volatility in equity markets as China grows.

“There will be times when the Chinese government steps in and raises reserve ratios for banks, raises interest rates and uses other policy mechanisms and moral influence on real estate developers. All those things will make headlines and scare us,” he said.

Those headlines, he said, generated mostly from U.S. news sources, where the Chinese economy is viewed more as a threat, can be expected to hit equity markets.

“I have every faith that the long-term trend is still in place but I also suspect over the next couple of months you are going to hear lots of noise about tightening and those things that make people scared,” he said. “It will probably just create another buying opportunity.”

He also noted that the discovery of new mineral deposits is no longer meeting global demand, driving exploration into remote regions or countries where political risks are high.

“In essence, much of the low-hanging fruit has already been picked,” Lindsay said. “It’s not surprising that today we are seeing supply that cannot meet anticipated demand.”

He cited Canada’s arctic as one of the remote regions that is coming under increasing exploration. Moving into remote regions is presenting complex technical issues to resolve before mineral resources can be developed, he said. The result is a significant increase in costs.

Shortly before Lindsay spoke, Minister of State for Mining Randy Hawes told the conference that mineral exploration in B.C. hit $322 million in 2010, the third highest total in the province’s history. Spending on exploration in 2010 was up 109 per cent from 2009, when $154 million was spent.

Lindsay said the push for new mineral deposits stems from structural changes that have taken place in the mining sector over the last few years, specifically, the emergence of China as a consumer of mineral resources. He cited China’s demand for coking coal and copper, two of Teck Resources’s main products.

China is now producing seven times as much steel as the United States and its capacity is continuing to climb, Lindsay said. In 2009, China consumed 34 million tonnes, coking coal. Total global coking coal supply is only 150 million to 170 million tonnes.

“Try to picture seven U.S. economies lined up in a row. That’s what we are talking about: the significance of China,” he said. “The bottom line is pretty clear. We have growing demand from China at rates that are clearly going to steadily exceed expectations.”

The copper story, he said, is similar. It’s going to take 44 new copper mines producing 150,000 tonnes a year of copper by the year 2020 to meet anticipated global demand.

“And today in the whole world there are only 26 operations of that size,” he said. “The odds of finding 44 new projects — not just finding them but getting them developed by the year 2020 — looks pretty slim to me and that’s why you see copper prices where they are.”

ghamilton@vancouversun.com