Deal to secure iron ore supply
By Pan Xiaoyi |
December 29, 2009, Tuesday
|
Print Edition
Print Edition
GUANGDONG Shunde Rixin Development Co, a privately-owned company, has agreed to buy majority ownership in one of the world's top five iron ore mines in South America as it bids to secure a stable iron ore supply.
Rixin Development inked a deal over the weekend to acquire 70 percent in a Chilean iron ore mine, which has at least 3 billion tons of confirmed reserves.
The mine is expected to operate from the second half of 2010 and is capable of sending 50 million tons of iron ore annually to China, according to Li Zihao, president of Rixin.
This was Rixin's first attempt to enter the resources and energy business.
Company officials said financial details would be disclosed later. Earlier media reports said the investment could be as much as 15 billion yuan (US$2.2 billion), including funds invested in the iron ore mine, shipments and transport system.
"We will have more say in iron ore talks (as we boost our own supply) and see clearly the impact in two years after it comes into full operations," Li said in a telephone interview televised by Shenzhen Satellite TV.
More than half of China's iron ore, a key ingredient in steel making, comes from overseas suppliers, including Australian and Brazilian miners.
But analysts were not as optimistic as the company.
Xu Xiangchun, an analyst with Mysteel Consultancy, said the amount of shipments is not big enough to trim China's reliance on global mining giants or to influence iron ore contract prices.
On the same day, Rixin also signed a deal with state-owned China Minmetals Crop, a leading trader and operator of metals and minerals, to import and distribute the resources.
"China Minmetals will sign a long-term contract with Rixin to secure iron ore at a price much lower than the contract price China signed with major global miners," Liu Weidong, general manager of the Zhuhai branch of China Minmetals, was cited by Guangzhou Daily as saying. But Liu didn't release any specific price for the contract.
Rixin Development inked a deal over the weekend to acquire 70 percent in a Chilean iron ore mine, which has at least 3 billion tons of confirmed reserves.
The mine is expected to operate from the second half of 2010 and is capable of sending 50 million tons of iron ore annually to China, according to Li Zihao, president of Rixin.
This was Rixin's first attempt to enter the resources and energy business.
Company officials said financial details would be disclosed later. Earlier media reports said the investment could be as much as 15 billion yuan (US$2.2 billion), including funds invested in the iron ore mine, shipments and transport system.
"We will have more say in iron ore talks (as we boost our own supply) and see clearly the impact in two years after it comes into full operations," Li said in a telephone interview televised by Shenzhen Satellite TV.
More than half of China's iron ore, a key ingredient in steel making, comes from overseas suppliers, including Australian and Brazilian miners.
But analysts were not as optimistic as the company.
Xu Xiangchun, an analyst with Mysteel Consultancy, said the amount of shipments is not big enough to trim China's reliance on global mining giants or to influence iron ore contract prices.
On the same day, Rixin also signed a deal with state-owned China Minmetals Crop, a leading trader and operator of metals and minerals, to import and distribute the resources.
"China Minmetals will sign a long-term contract with Rixin to secure iron ore at a price much lower than the contract price China signed with major global miners," Liu Weidong, general manager of the Zhuhai branch of China Minmetals, was cited by Guangzhou Daily as saying. But Liu didn't release any specific price for the contract.
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