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Four Chinese steel mills Monday signed up with Australian firm BHP Billiton, the world's biggest diversified resources firm, to build an iron ore joint venture.
According to the agreement, which was signed in Beijing, BHP Billiton will have a 51 percent stake in the joint venture in Newman, Western Australia.
Each of four Chinese steel producers Wuhan Iron and Steel Corp, Ma'anshan Iron and Steel Co Ltd, Jiangsu Shagang Group and Tangshan Iron and Steel Co Ltd will have a 10 percent share in the joint venture, named Wheelarra.
Japan's Itochu CI Minerals Australia and Mitsui Iron Ore Corp will also hold 4.8 and 4.2 percent stakes in the joint venture.
BHP Billiton Chief Executive Officer Chip Goodyear said the joint venture's iron ore sales are expected to total US$9 billion over the next 25 years, although he did not reveal total investment in the joint venture.
Wheelarra will supply around 12 million tons of iron ore annually to the four Chinese steel producers during the period, he said.
"We will submit the joint venture project to the Chinese and Australian Governments for approval soon and it is expected to start operations during the first half of this year," said Liu Benren, president of Wuhan Iron and Steel Corp from Central China's Hubei Province.
"The joint venture will give us a stable long-term iron ore supply and will help BHP Billiton to further expand in the Chinese market," Liu said.
The agreement came as China called on domestic steel companies to import more iron ores in order to compensate for a domestic shortage.
Shanghai-based Baosteel, China's biggest steel maker, clinched a deal last month with its Brazilian counterpart CVRD to build a steel plant with a total investment of US$1.5 billion in the iron ore-rich South American country.
The plant will use Brazillian iron ores to produce 3.7 million tons of steel annually.
China has been the world's largest steel producing nation for more than 10 years, with total steel output reaching 220 million tons last year.
But Wu Xichun, president of the China Iron and Steel Association, warned that China's dependence on imported iron ore will mount due to insufficient domestic supplies.
"China will import 182 million tons of iron ore in 2005, up from 111 million tons in 2000," Wu said.
Liu said the Wuhan steel company imported 8 million tons of iron ore last year, accounting for 60 percent of its total demand.
"We are also likely to build steel plants abroad in order to use more foreign iron ore," Liu said.
"China's market is very competitive and growing rapidly, and BHP Billiton will continue to maintain our market share," Goodyear said.
Last year, BHP Billiton controlled around 15 percent of China's total iron ore imports by supplying 19 million tons.
(China Daily March 2, 2004)
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