Mining Giants Hold Various Reactions to China's Cooling Demand

Wednesday, 28 March 2012 |
Chinese demand for iron ore has been the driving force behind years of expansion work by the world's biggest mining companies and has pushed up prices of the steel-making ingredient on global markets. But earlier this month, China cut its 2012 growth target to an eight-year low of 7.5 percent. Under such circumstances, four major ore suppliers have various reactions.

BHP adjusted investment plans on slower China growth

Jacques Nasser, Chairman of BHP Billiton Limited and BHP Billiton Plc told investors on March 20, 2012, BHP is re-evaluating huge investment plans due to slowdown in China's economic growth. He showed his concern for the US$ 80 billion capital expenditure project.

BHP will study when the Chinese demand will reach to the peak point before earmarking over US$ 20 billion to develop its Pilbara mine and associated infrastructure.

Rio Tinto says iron ore expansion plans on track

Rio Tinto, the world's second-largest iron ore producer, said in mid March that its plans to expand production were well advanced for completion next year despite concerns over cooling demand in China.

"Although the rate of GDP growth in China is more immediately slowing, we remain confident on the basis of the figures we have seen, of a soft landing, with solid growth for this year," David Joyce, managing director of expansion projects, said in a speech.

Rio Tinto plans to boost output from its mines in Australia 's western Pilbara iron belt to 283 million tonnes a year by the second half of 2013, up from the current 225 million tonnes. That would represent about a fifth of current world trade in the key steel making ingredient.

Vale has a big stake in China's market

Murilo Ferreira, president of Vale said on March 13 that Vale has a big stake on China . If Chinese economic growth dropped to 7% as the government expected then its output value will amount to US$ 250,000 by 2020.

Murilo Ferreira pointed out that China's growth is astonishing. He also highlighted that 52.8% of Vale's exported products go to Aisa, 32.4% of which go to China, while the rest 19.9% and 18% go to South Africa and Europe.

FMG joins CBMX iron ore spot trading platform

Fortescue Metals Group, Australia's third largest iron ore producer, has become a member of China Beijing International Mining Exchange (CBMX)'s iron ore spot trading platform.

FMG is the first major seaborne iron ore supplier to join the platform, which was launched on January 16 and is intended to help the world's largest iron ore buyer gain more influence in global pricing.

"The platform aims to prevent monopoly practices and price manipulation in iron ore trading, and we welcome more domestic and global suppliers, mills and traders to join," Wang Xiaoqi, vice-chairman of CISA.

FMG, the world's fourth largest iron ore producer by capacity, has been more active in cooperating with CBMX than the top three iron ore miners, as it aims to triple its annual output to 155 million tonnes by 2015 and boost sales mainly in the Chinese market.

Source: Steel Home