China seeks to diversify iron ore sources, eyes overseas projects
Source: www.chinamining.org Citation: Platts Date: May 31, 2013
China wants to "diversify" its iron ore supply sources by investing in its own resources and mining operations overseas, Li Xinchuang, president of the China Metallurgical Industrial Planning and Research Institute, or MPI, said on Thursday.
MPI was founded in 1972 as a national consulting body engaged in the development of and planning for China`s metallurgical industry, according to its website. It is affiliated to state-owned Assets Supervision and Administration Commission of the State Council or cabinet.
So far, China has had limited success in developing overseas iron ore resources. "There have only been two projects of joint venture and acquisition," Xinchuang said at the Platts Steel Raw Materials Asia conference in Singapore. He did not, however, name them.
"We want to develop our own iron ore mines overseas with Chinese mining companies and diversify the supply," he said, adding this would be "good for the global health of the steel industry" as well as China`s own.
The target areas for overseas development were primarily Africa and South America, and the latter would not be restricted to Brazil, he said, though he did not elaborate on which countries China would look at. In Africa, China is eyeing Guinea, Sierra Leone and Liberia for iron ore resource investments, he added.
Diversifying its sources of iron ore supplies was necessary because "China will be the global center of steel supply and demand for a long time -- at least 20 years -- and India will be 20 years later," Xinchuang said. He pointed out that China had abundant iron ore reserves of its own, estimated at 74 billion mt, although only a small proportion of it -- 1.6 billion mt -- had ferrous content of 62%. Most of the ore had a ferrous content of about 30%.
Asked about the likely success of developing domestic iron ore resources in a low-priced, sub-$100/mt environment, which some analysts are predicting as a possibility, Xinchuang said there was potential for low-cost production, but conceded that several domestic mines could not operate if iron ore prices fall below $100/mt.
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