By Min Zhang and Mai Nguyen
(Reuters) - China should improve its capability to secure nickel and cobalt resources and set up commercial reserves for the metals, the Shanghai Securities News (SSN) reported on Thursday, citing an official with the China Nonferrous Metals Industry Association.
The world's top metals consumer still heavily relies on imported resources of the metals.
China's domestic nickel and cobalt production only accounts for 5% and 2%, respectively, of its total consumption, SSN quoted Wang Jian, the vice chairman of the association, at an industry conference this week.
Chinese firms have stepped up overseas investments, including China Molybdenum Co in the Democratic Republic of Congo as well as stainless and nickel giant Tsingshan Group and Huayou Cobalt in Indonesia.
However, the single source of imported materials leaves hidden risks of "putting all eggs in one basket", according to Wang.
He suggested the industry should "explore the establishment of commercial reserves of nickel and cobalt" and form a system that "combines strategic reserves and commercial reserves".
China has built vast reserves ranging from metals and oils to agriculture products, and releases reserves when market sees big fluctuations so as to stabilise prices and protect downstream sectors.
The amount of its stockpiles was not publicly known. Some major cobalt producers last year were asked by the authority to submit proposals to sell their metal to the state, according to sources.
(Reporting by Min Zhang in Beijing and Mai Nguyen in Hanoi; Editing by Sherry Jacob-Phillips)