From 2008 to 2010, CITIC Pacific, China Steel, Wuhan Iron and Steel, Anshan Iron and Steel, including domestic enterprises, went to Australia to carry out a number of investments, or equity participation of local mining enterprises, or to direct the development of the mining area, however, many projects have so far failed to put into production.
Steel market remains in the doldrums, this year to enjoy many years of good life mining enterprises also felt unprecedented pressure, however, the face of the ore price with steel prices rapidly diving, the most anxious not still occupy absolute market share of international three mining giants, but the domestic mining enterprises, and in recent years crazy "sea" domestic investment in overseas mining "golden master" who.
"Despite the continued downturn in China's iron and steel industry, iron and steel manufacturers the ore procurement will reduce, but we still plan to continue to implement the $ 16 billion expansion plan, which most of the investment will continue to give the iron ore." In a recent interview. " First Financial Daily "reporters interview, one of the three global mining giant Rio Tinto chief executive Tom Albanese (Tom Albanese), with high contrarian expansion plans on the future needs of the Chinese steel industry confidence .
In fact, he is not just a gamble the future demand, there is cost advantage in the market downturn, squeezing the ambitions of the small and medium-sized mining enterprises.
Today, the price of iron ore from last year's peak of $ 180 per ton, down to $ 100 per ton, which has not only made a lot of domestic mining into a cut, leaving a huge investment in Australia a few years ago mine owned enterprises have dilemma.
Giant emboldened: cost advantage
Beginning in July, pre been stiff import ore prices, there has been a significant decline, fell to its lowest level since October 2009 in early September, to 86.9 U.S. dollars / ton. In recent days, by the Development and Reform Commission approved intensive urban rail projects to launch QE3 stimulus and the United States, the ore price with steel prices rebound, but not yet to break through 100 U.S. dollars / ton.
However, not Rio Tinto to continue the expansion of the scheme have the slightest impact. "We are currently in the ore production in Western Australia's Pilbara year 230 million tons, is expected to reach 283 million tons in the second half of next year, to reach 3.5 million tons in 2015, at the same time, we also expand production at mines in Canada of 19 million to 24 million ton, a joint venture with Chinalco Guinea Simandou iron ore project also plans to put into operation in 2015. "Albanese said," According to the forecast of Rio Tinto, the next fifteen years, China's steel production will continue to about 40% growth to reach 10 million tons, and we hope to seize the opportunities of the next recovery cycle. "
Compared with the domestic mining enterprises, the international mining giant Rio Tinto's day, or much better.
Reporters learned from a number of industry insiders at, with imported ore prices fell sharply, the price of imported ore and domestic ore is very close to the low-cost advantage of domestic ore gradually disappear, while domestic mine mining costs high, and are lean ore, the general ore price at $ 110 per ton, it is already the line between life of the gain or loss of most of the mines.
Obviously, the current ore price has fallen below the national average cost of ore production line, resulting in an increasing number of domestic mines into a cut, the main ore producing areas such as Hebei Province, the operating rate has dropped to 60%.
Albanese pointed out, there is still room for profit in the current ore prices, Rio Tinto. However, he did not disclose the average cost of mining ore Rio Tinto.
According to the reporter, "two extension" mining giants in Australia and other places to find quality mining resources are mined, the production cost of only 40 to 50 U.S. dollars / ton. Therefore, the industry is expected to downlink under the current market, the foreign mining giant is likely to increase production efforts to seize the market share of the domestic mining through price cuts.
According to the latest statistics of the new route west, the domestic steel mills also have increased the proportion outside the mine, almost stopped purchasing domestic ore, some steel mills imported ore ratio even increased to nearly 100%.
Funded mine risk
Of course, not all of Australia's mining enterprises, have "two extension" so good luck.
Minerals Council of Australia has said that the international iron ore and coal prices due to the recent sharp decline, as well as rising mining costs, some Australian mines began to re-examine their investment plans, about $ 246 billion in mining investment risk is increasing, and nearly half of these projects has been put on hold, or may be postponed.
$ 246 billion in investment projects, including 33 iron ore projects, 73 coal projects. Minerals Council of Australia, said the current iron ore mining project (excluding the Pilbara have been completed and the project) costs are much higher than the global average of 75% higher than the cost of the coastal mine cost.
Above mining investment projects were shelved or postponed, many from the investment of Chinese enterprises.
As early as in 2008 to 2010, CITIC Pacific, China Steel, Wuhan Iron and Steel, Anshan Iron and Steel, including domestic enterprises to Australia a number of investments, or the shares of local mining enterprises, or to direct the development of the mining area, however, many of the projects so far failed to put into operation, such as steel Weld Range iron ore project, CITIC Pacific's Sino-Iron iron ore project, as well as Anshan Iron and Steel in Karara iron ore project.
In the second half of last year, the Steel Group announced a pause in the Weld Range iron ore project in Western Australia, the scale of investment of 20 billion Australian dollars. This project originally planned 2013 annual output of mines, is expected over the next 15 years, an annual output of 15 million tons of iron ore.
"Australia's central and western regions of the mine investment cost is relatively low, but low ore grade, and infrastructure are not perfect, which there are many uncertainties and risks." Insiders told an international mining giant enterprises in China reporters, iron ore from exploration to mining, is a long-term process to spend a lot of money, will eventually need to get a return from the ore sales. Not to mention the risk of mineral exploration, only from the construction of the mine production to full production, it normally takes 5 to 8 years.
The CITIC Pacific heavily in the acquisition of large magnetite project in Australia, the same dilemma. In March 2006, CITIC Pacific to spend $ 415 million, the entire equity interest in the company bought Western Australia two has 10 billion tonnes of magnetite resources exploitation rights Sino-Iron and Balmoral Iron project originally planned a total investment of $ 4.2 billion, put into operation in the first half of 2009.
The start of project implementation, CITIC Pacific, only to find that the original budget is not enough, and because of the greater difficulty of exploitation, commissioned repeatedly postponed. Now, this time of trial operation of the project, and from the end of August, postponed until November. And even if the project is put into production, the industry of its earnings outlook is not optimistic, because mining cost of this project is likely to be higher than $ 100 / t.
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