A privately-run Chinese firm has acquired an iron ore mine in south America, which is reported as having one of the largest iron ore reserves in the world. The buy-out is raising hope of a breakthrough in deadlocked talks over the price of iron ore.
Privately-run company, overseas acquisition, and one of the largest iron ore reserves. The highlights of this deal have attracted much public attention.
Li Zihao, Chairman of Guangdong Shunde Rixin Dev't said "We acquired a 70 percent stake. Now we have both the right to mine and the right to set prices."
Located in Chile, this iron ore mine has a reserve of 3 billion tons. In the next five years, it is expected to provide 10 percent of China's total iron ore imports. But public attention is more focused on whether the deal will affect China's iron ore talks in the international market.
Xu Xiangchun, Chief Analyst of Mysteel.com said "If its output is only in terms of millions of tons for the next year, there will be little change to the negative situation that China is facing. That amount is not enough."
Li Zihao said "This deal will only affect price talks if the output is massive. At present, China doesn't own mining rights overseas. So prices are controlled by foreign companies. But if we hold a big reserve, we can decide on the price to sell in our market. And if foreign companies don't follow suit, they will lose part of the market share."
Xu Xiangchun said "In the long term, the deal is positive. It will help China's steel industry shake off its over reliance on the top three miners."
China's steel industry has long suffered a disadvantage in international iron ore talks, given rapid expansion and a shortage of raw materials. Recent reports of a merger between Rio Tinto and BHP Billiton, two of the world's top three miners, are sparking fears of a further barrier to Chinese steel makers. But the industry now hopes that the overseas acquisition could be a new channel to break the monopoly.
Source: CCTV
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