The below article was posted on the gbg thread and gives us an idea of china's long term view on magnetite.
"Colin Barnett believes new life will be breathed into his dream of a deepwater port at Oakajee, north of Geraldton, by Chinese state-owned giant CITIC Group after talks with the $430 billion conglomerate's chairman in China on Saturday.
The $6 billion Oakajee project - which Mr Barnett has been trying to develop since he was resources minister in the 1990s - has languished and seemed dead since the previous proponent, Japan's Mitsubishi, withdrew from the project last June.
But after meeting CITIC Group chairman Chang Zhenming in Beijing, Mr Barnett believes the company has a mandate from the Chinese Government to pursue Oakajee and co-ordinate the efforts of other state-owned enterprises with magnetite iron ore projects in the Mid West.
The Premier believes Chinese steelmaking giant Baosteel has had a similar direction to pursue the Anketell port development in the Pilbara.
He said the Government could start negotiating State agreements with both companies within a year.
After high-level meetings in Beijing and Shanghai, Mr Barnett is convinced China sees WA's magnetite ore as strategically important to its steelmaking.
Most iron ore shipped from Australia - including Rio Tinto, BHP Billiton and Fortescue Metals Group's production in the Pilbara - is high-grade hematite ore. But China wants more lower-grade magnetite ore.
Magnetite has iron content of about 35 per cent compared with hematite's 60-plus per cent. But magnetite is processed into a concentrate of about 66 per cent purity, which many newer Chinese steel mills prefer.
Chinese officials told Mr Barnett they wanted more magnetite to use in more sophisticated and higher-value steelmaking, which consumes less energy and causes less pollution - key objectives of the Chinese Government.
China wants magnetite concentrate production to rise from 8-9 million to 50 million tonnes.
Mr Barnett believes WA could supply more than half the gap.
"I knew the concentrate was a superior product but I didn't know how strategic it was in Chinese planning for increasing the emphasis of their steel industry into these high quality, special steels," Mr Barnett said.
"Mitsubishi held the preferred developer status for Oakajee.
"They've told the State Government they don't want to continue in that role, though they will remain involved through their Jack Hills deposit.
"It's likely now China will take over that lead role and from a Chinese perspective that will be led by CITIC, a major, huge company ... that has the capacity to undertake it and co-ordinate the other state-owned enterprises, including Sinosteel and Ansteel (which have projects in the Mid West).
"So I can't speculate on timing, but I would hope both those projects (Oakajee and Anketell) will be going into detailed design in the next 12 months."
Mr Barnett said market commentary had focused on China's troubles in getting magnetite projects up in WA, including big cost blowouts at CITIC Pacific's Sino Iron project at Cape Preston and Ansteel's Karara in the Mid West.
But he was assured by Mr Chang and other officials that China was taking a longer view of its investments in WA.
Mr Barnett was dismissive of Padbury Mining's bid to build Oakajee, saying the Government had had no dealings with the company
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