positive iron ore market in china

http://www.smh.com.au/news/business/chinese-look-at-iron-ore-projects/2007/02/13/1171128973371.html

Chinese look at iron ore projects

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Xiao Yu and Tan Hwee Ann
February 14, 2007
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BAOSTEEL Group, China's largest steelmaker, and rival Wuhan Iron & Steel are seeking to invest in iron ore projects in Australia to secure supplies to meet rising demand.

"We are looking closely at potential iron ore projects," Zhang Yong, Baosteel's Australian investment manager, said in an interview before a mining conference that began in Perth this week. Wuhan is in talks to take a stake in a $2.6 billion iron ore project, said its manager for iron ore purchases, Dai Jianqiu.

Demand for steel in China, the world's largest producer of the alloy, is forecast to grow 8.4 per cent a year until 2010 as the nation builds more skyscrapers, cars and home appliances. Australia last quarter had about $5.95 billion of iron ore projects approved or under construction.

"Chinese steel producers are investing in Australian iron ore mines in order to secure supplies for their rapidly growing steel industry," said Rohan Kendall, an analyst at the Australian Bureau of Agriculture and Resource Economics.

Chinese companies are studying more than 15 minerals and energy projects in Australia worth $10 billion, Henry Wang, a senior investment commissioner at the Australian consulate-general in Shanghai, said last week.

The Australian Government wants Chinese companies to build ports and processing plants in Australia, not just invest in mines, Mr Wang said.

Five straight years of price increases have driven Chinese companies to seek to bankroll alternative suppliers in Australia, which shipped $7.3 billion of the ore to China last year.

Bloomberg