JINCHANG – the nickel city of China – is about to get a facelift.

This remote company town on the fringe of the Gobi desert is flush with the fruits of an enviable monopoly. It supplies 90 per cent of China's nickel – and nickel is a commodity China just can't get enough of right now.

China's construction boom – national spending on infrastructure alone is estimated at more than $US200 billion ($258 billion) a year – is fuelling an insatiable demand for nickel, mainly for stainless steel. China's huge appetite has driven the international nickel price to double in the past year.

Even though its own mine marking the city's south-west boundary is said to be the world's third largest single nickel deposit, the government-owned Jinchuan Group, with assets of $750 million, has been forced to look abroad for more supplies. And its gaze has settled on Australia, which from next year will overtake Russia as China's biggest outside source of nickel.

So Jinchuan wants to buy whatever Australia can supply? "Yes, of course," said Jinchuan vice-president Wang Hai-zhou in an interview last week. He also confirmed Jinchuan, which will set up a representative office in Perth this year, was actively negotiating equity stakes in Australian nickel projects, but declined to give details just yet.

"Actually, we have no restriction for the amount of investment. We are also interested in small and middle-sized nickel projects in Australia, and for large projects we will sign co-operations with other major companies," he said.

WMC Resources and Sally Malay Mining of Western Australia are the first to sign lucrative supply contracts with Jinchuan. Others are expected to follow soon. No fewer than eight Australian delegations have made the 2000km trip from Beijing in the past six months, including one this week.

A glance around during the inevitable delays at Chinese airports on the way should provide ample motivation for their missions. Stainless steel is everywhere, from handrails and door frames to skirting boards, rubbish bins, phone booths and baggage carousels.

In the past two decades, China has put $US100 billion just into airports, with plans to build 120 more. Meanwhile, the skyline of every major city is a tangle of cranes. By night, the Jinchang city is bathed in new neon lights.

In the burgeoning bar strip, whisky is now sold to thirsty miners by the bottle, not the glass. Beyond that, conspicuous consumption is impolitic for a state enterprise during this period of official austerity under President Hu Jintao.

But, with a swath of government awards to back it up, Jinchuan is allowing itself the luxury of designers from Beijing to create a workers' paradise from the current mass of squat grey buildings and smoking chimneys.

There are plans to spend up to 50 million yuan ($7.7 million) on greening the grounds with a sculpture park and story wall to celebrate achievements dating back to 1958 when nickel was discovered here. The population of this model town has swelled from 150,000 to 250,000 in the past 15 years.

With an average annual wage of 24,000 yuan, the company's 30,000-plus workers consider themselves better off than most others in the province of Gansu, one of China's poorest. But with the smell of sulphur dioxide all around and a metallic taste to the water, health is a major concern.

"What's the use of earning a good wage when you don't live long enough to spend it?" laments a worker in his early 20s, who gave his name as Liu.

"We're used to it," says He Yanchun, when asked in the presence of the company minder about conditions down the 1km mine.

Daily output here is set to increase dramatically. Last year, the company produced 60,000 tonnes of its own nickel; this year the target is 70,000 tonnes. China's nickel demand is predicted to rise to 150,000 tonnes this year from 120,000 in 2003. By 2010, it's slated to hit 200,000 tonnes.

By then, Jinchuan expects to be processing 60 per cent imported nickel and 40 per cent of its own product, compared with last year's split of about half-half, says Wang.

Meanwhile, part of this year's production increase will come from Sally Malay Mining, which last July signed a life-of-mine agreement with a Jinchuan-Sino Mining International joint venture to ship 100 per cent of nickel/copper/cobalt concentrate from its eponymous mine to Jinchang.

Sally Malay chairman Keith Liddell said last week the deal was worth about $800 million.

WMC will supply 120,000 tonnes a year of nickel-in-matte (with 68 per cent nickel) for five years starting in 2005 in a contract worth $US1 billion. Signing the deal in the Gansu capital of Lanzhou last August, WMC chief executive Andrew Michelmore described China as a "secure and high-growth market for WMC nickel products".

Jinchuan is also looking at Titan Resources' Bio-heap bacterical heap leaching process for nickel extraction. Titan would be well placed for further co-operation with Jinchuan, suggests Kevin Tomlinson, senior resources analyst for Hartley's in Perth.

"China is No.1 in people's minds right now," he says.