Resource News

Chinese ore find may affect exports

AS negotiations between Chinese steel mills and Australian iron ore producers become increasingly fractious, China claims to have uncovered a giant iron ore deposit that may reduce its reliance on imports.

China News Agency reported a deposit with reserves of more than 3 billion tonnes of iron ore, the biggest in Asia, had been found in the country’s northeastern province of Liaoning.

Crucially, the Dataigou deposit, located near Benxi city, could reduce China’s dependence on imports from Rio Tinto, BHP Billiton and Brazil’s Vale. China, the world’s biggest buyer of iron ore, has rejected a 33 per cent price cut in contract iron ore prices offered by Rio this year and called for prices to drop by as much as 45 per cent.

At the reported three billion tonnes, the deposit is better than the reserves of either BHP or Rio in the Pilbara region of Western Australia. Earlier this month, BHP and Rio announced a $US116 billion merger of their Pilbara operations — a deal attacked by Chinese steel mills as “monopolistic”.

ANZ senior commodity strategist Mark Pervan said the new discovery could become “a low-cost operation for Chinese supply”. He said reported iron contents grades of 25-62 per cent were high by Chinese standards, which typically produces mines with 20-40 per cent ore.

But, in global terms, “that’s not very high grade. Brazilian ore has a grade of between 65 per cent and 70 per cent,” Mr Pervan said.

BHP and Rio operations also boast grades above 60 per cent...read more at The Australian.