Shanghai: Asia’s biggest iron ore deposit, with reserves of at least 3 billion tonnes, has been found in China’s northern province of Liaoning, the China News Agency reported, citing the local government.
Big find: A Rio Tinto mine in Robe Valley, Australia. The latest discovery may reduce China’s dependence on imports from global mining companies such as Vale SA, Rio Tinto Group and BHP Billiton Ltd. Bloomberg
The Dataigou deposit, located near Benxi city, has both magnetite and hematite material with iron content of between 25% and 62%, the report said.
Benxi government officials were not immediately available for comment.
The discovery may reduce China’s dependence on imports from Vale SA, Rio Tinto Group and BHP Billiton Ltd. China, the biggest buyer of iron ore, has rejected a 33% price cut accord offered by Rio this year and called for prices to drop as much as 45% because of losses by its steel makers.
This could be a low-cost operation for Chinese supply, Mark Pervan, a senior commodity strategist at Australia and New Zealand Banking Group Ltd, said in Melbourne. If they can reduce their reliance on high-cost iron ore imports and look for very low-cost domestic supply, that’s very positive for domestic steel mills.
The find is very long term good news for Angang Steel Co., China’s second largest listed steelmaker, Cazenove Asia Ltd said in a note to clients. Its parent already has the largest iron ore reserves in China, and this potentially doubles it. The mine could start in four years, the note said.
The reserves at Dataigou are equivalent to the combination of all the iron ore reserves in Liaoning’s Anshan and Benxi areas, the report said.
Angang board secretary Fu Jihui and Benxi Iron and Steel Group’s spokesman Liu Dahong said they didn’t have any information regarding the new deposit.
The cited iron content figures for the deposit suggest it’s a high grade discovery for China, ANZ’s Pervan said. In global terms, that’s not very high grade. Brazilian ore has a grade of between 65% and 70%.
Mines in China typically have iron content of 20-40%, compared with at least 60% for production by Vale, Rio Tinto and BHP Billiton at their projects in Brazil and Australia. Rio and BHP each have about 5 billion tonnes of iron ore reserves at their mines, Pervan said.
China’s reliance on iron ore imports may rise to 70% this year from about half in previous years, the Shanghai Securities News reported on Tuesday, citing Sinosteel Corp., the nation’s biggest iron ore trader.
Imports have jumped because of the closure of high-cost domestic mines, Vale said in April. Mines that started after 2005 are mostly unprofitable, Zou Jian, former chairman of the China Metallurgical Mining Enterprise Association, had said on 29 April. About one-quarter to one-third of mines in the country started before that period.