BEIJING:
Chinahas found a one-billion tonne iron ore deposit, which is the biggest discovery of the mineral since 1980s. This is bound to cause
some worries in India as iron ore
accounts for nearly half of Indian exports to China.
This is another jolt after China stepped up efforts to enter into more long-term supply contracts and reduce its dependence on spot market buying from
India. Last November, Wuhan Iron & Steel Group, China's third largest steelmaker, inked a long-term supply contract with Venezuela's Corporacion Venezolana de Guayana in order to diversify its raw material sources.
The latest discovery is a 6-km long deposit with thickness ranging between 41.43 and 108.95 meters. It lies 100 to 600 meters deep underground in Luannan County in the northern province of Hebei, Zhang Shaolian, head of Hebei Provincial Bureau of Land and Resources, said.
It will be some time before the new deposit will begin to yield iron ore, but the discovery will definitely enable China to make
long-term plans
on steel production and strengthen its hands in price negotiations. The discovery gives a new boost to China’s ongoing efforts to reduce its dependence on major world suppliers and avoid getting caught in price fluctuations of the spot market. Indian suppliers mostly deal in the spot market and refuse to enter into long-term supply contracts.
Besides proven reserves of 1.04-billion-tonne iron ore, the deposit has an estimated unproved reserve of 500 million tones. It is shallow and comparatively easy for mining, Zhang said.
The discovery is the result of prospecting efforts by No.1 Geological Exploration Institute of China Metallurgical Geology Bureau, which has released details of the deposit including its reserves. Its report was vetted and approved by the central and provincial land and resources reserve evaluation authorities, he added.
The
deal with the Venezuelan mine was aimed at reducing China’s dependence on three international suppliers Rio Tinto Group, BHP Billiton Ltd and Cia Vale do Rio Doce, which tend to dominate worth pricing.
"This is the first contract to be implemented using the separate pricing mechanism, signaling that Chinese iron ore purchase prices will not be restricted by the three top iron ore producers," Wuhan Iron & Steel Group said the statement after signing the contract.
