It is reported that a Chinese steel giant is expanding its investment in Canada's iron ore industry, as part of an aggressive international drive to secure supplies amid soaring prices charged by the top producers.
Mr Deng Qilin president of the Wuhan Iron & Steel Group Corporation said in an interview that negotiations with an unspecified Canadian partner will soon produce another deal, on the heels of agreements with Century Iron Mines Corporation and Adriana Resources Inc to jointly develop iron ore projects in northern Quebec.
China imports more than 80% of its iron ore, making it the world's largest importer, and last year complained mightily after the world’s three largest suppliers Vale SA, Rio Tinto Group and BHP Billiton Limited all did away with an annual pricing system in favor of regular adjustments. In January alone, China imported 68.97 million tonnes of iron ore, used in steel making. Wuhan is China's third largest steel maker by output.
China is furiously consuming iron ore and other commodities to meet industrial demand and boost exports as the country's growth continues at a rapid pace. The demand for a host of commodities has sent prices soaring, leading China to play an increasingly strategic role in the acquisition and development of resource projects.
The move by the major iron ore producers was intended to better reflect rising prices and introduce more transparency into the Chinese industry, but Chinese companies argue it amounts to price fixing by a world monopoly.
Mr Deng, who is also head of the China Iron & Steel Association, said that "This is not a diplomatic word. Currently the three largest iron ore suppliers are making a monopoly. The Chinese government asks enterprises to go global. It's good for them to have a good market, and for their enterprises to be international. For the enterprises, their resource supply is so tight that if the Chinese companies can find international resources, this is a good strategy for them."
Wuhan signed a co operation agreement with Adriana Resources last month to jointly develop the Lac Otelnuk project in northern Quebec. In January, the two corporations signed a binding framework agreement in which Wuhan would pay USD 120 million for a 60% stake in a JV including Adriana interests in Lac Otelnuk and December Lake iron ore properties.
Wuhan also recently signed an agreement with Canada's Century Iron Mines Corporation to develop unspecified mining projects; Century has three iron ore projects in Quebec. Wuhan produced 36.6 million tonnes of steel in 2010 and plans to boost its capacity to 60 million within five years. It currently has eight iron ore projects in Australia, Brazil, Liberia and Madagascar as well as Canada, though Mr Deng said Canada holds appeal for its friendly investment climate and large reserves.
Mr Deng said that "This is already a big plan. As to the railway, the port and the iron ore machinery, we are working with our partners. These projects need to be approved by the Quebec government and the Canadian government, including the environmental protection plan. If our investment on this project is successful, it will be good for the development in the eastern part of Canada."
(Sourced from www.ctv.ca)
