Trade Resources Economy NDRC Is Working with Relative Departments on Supports to Offshore Iron Ore Developments

NDRC Is Working with Relative Departments on Supports to Offshore Iron Ore Developments

Mr Wang Jianjun deputy director general of Department of Foreign Capital and Overseas Investment under NDRC at an industry forum on December 8th said that China's decision making body National Development and Reform Commission is working with relative departments on supports to offshore iron ore developments by Chinese businesses.

Mr Wand said that"Currently,oversea iron ore investments by Chinese businesses are mainly in West Africa,Canada and West Australia;of 60 billion tonnes resources,Chinese equities accounts for 20 billion tonnes.Of all the investments,over 10 projects own 1 billion tonnes+of resources each and 17 projects have designed capacity over 10 million tonnes each."

He said that most projects are in the construction phrase.A high proportion of Chinese oversea iron ore projects only have mining rights and exploration,feasibility study and environmental review awaiting to be accomplished.Capital in the early start is huge.

According to Mr Wang,a key problems is infrastructure deficit in water and electricity supply,railway,ports etc.In some cases,infrastructure investments are far higher than that in iron ore production.

Simandou iron ore project is an example,it needs 650 kilometers railway and 3 berths with each of 0.25 million tonnes;total investment exceeds 10 billion dollars.

Even in Quebec,Canada where have many Chinese iron ore interests,existing railway is not enough.Large scale production means new railways and port expansions.Billions of dollars is going to be needed in building a 800 kilometers railway.

With such huge investments in infrastructure,it comes to Chinese government that that home businesses are not strong players in the market.10 million tonnes designed capacity in a high fe content project needs an investment of 2 billion dollars whilst in lower fe content project,it needs 3 billion dollars.Plus,construction in railway and ports takes another billion of dollars.It asks a great deal of Chinese businesses,especially when steel making profitability is poor.

He said that"Most are low fe content or magnets projects,with cost high at USD 300 per tonne they are in a bad position completing with the big three."

Despite all problems,Chinese government does not think offshore iron ore development can stop.The pace can't slow down just because temporary economic corrections.What needs to be done is to prepare for iron ore supply in the next 5 or 10 years.

He added that to Chinese government,oversea iron ore development should increase due to urbanization.Chinese iron ore demand is estimated at 1.2 billion tonnes by 2020,of which around 7 million tonnes are imports,adding a quickened offshore development is the only way to break monopoly.

Government officials are working on policies in supporting offshore iron ore investments.According to Mr Wang,

a)Chinese businesses should unite with other large Chinese businesses,increase capital input,carry full feasibility studies and start output when products are expected to be competitive.

b)Quicken ongoing construction.China's key investment destinations will be West Africa,Canada and West Australia.

Since 2006,China's offshore iron ore investment has exceeded USD 10 billion.

Source: http://www.steelguru.com/raw_material_news/NDRC_supporting_Chinese_iron_ore_investments_overseas/294791.html
Contribute Copyright Policy
NDRC Supporting Chinese Iron Ore Investments Overseas
Topics: Metallurgy