Baosteel Trading Co Ltd, a subsidiary of Baosteel Group
Corporation, yesterday signed an agreement with Australia Fortescue
Metals Group Ltd (FMG) to jointly explore a mine in Western
Australia that is expected to have 1 billion ton of magnetite
deposits.
The project is likely to begin this year. Baosteel will fund the
exploration of the area and the project's feasibility studies. FMG
is responsible for providing land and getting approval from the
government, Russell Scrimshaw, executive director of FMG, said
yesterday.
"The exploration and feasibility studies are expected to take 15
to 20 months. Then the two companies will set up a 50-50 joint
venture for technical investment and the entire project," said
Scrimshaw. The magnetite produced will be shared between the
two.
The exploration area is located in the Pilbara region of Western
Australia, close to the Fortescue rail corridor between FMG's Cloud
Break mine site and Port Hedland.
"Pilbara offers enormous potential for exploration of all types
of minerals," said Scrimshaw.
The area's mineralization is described as predominately banded
iron ore formation magnetite, and the annual capacity of crude mine
material is expected to be 30 million tons, with the grade expected
being 35 percent.
In March, Baosteel signed a 10-year iron ore off-take agreement
to purchase up to 20 million tons per annum from FMG.
FMG is a new force in iron ore industry, with over 2.5 billion
tons of resources, including 1.1 billion tons of reserves. The
company has only developed 10 percent of its 40,000 square
kilometers of tenements, the largest holding in Pilbara.
"The mine is expected to be put into production as early as next
year and the annual capacity is expected to be 45 million tons,"
said Liu Xiaodong, general manager of China Business in FMG.
"We have signed contracts with top 10 steelmakers in China to
sell 15 million tons of iron ore per year," he added.
"This is an important step for Baosteel to expand the company's
steel productivity by exploring the overseas market," said Zhou
Xizeng, an analyst at CITIC Securities.
(China Daily August 29 2007)
