China’s African Iron Ore Strategy
China’s opportunity is its Africa’s giant iron ore field and its strategy may spell danger for Australia.
Australia is currently the largest source of feed for China’s steel mills, with around 60% of China’s iron ore imports originating from Australian mines. But ongoing tension between the countries have alarmed the iron ore and steel industry, with speculation over the future of the China-Australia iron ore trade.
The top focus for China’s diversification push is Guinea, an impoverished but mineral rich country in West Africa. A 110 km range of hills called Simandou is known to hold the world’s largest reserve of untapped high-quality iron ore.
This Simandou range of hills deep in the hinterland of Guinea boasts the world’s largest untapped iron ore reserves. Advocates of the site have labelled it a “Pilbara killer,” and the site is said to boast the world’s largest untapped iron ore reserves. They could reshape the global supply chain of the critical ingredient of steel, the world’s second-most traded commodity behind crude oil and has the potential to change the dynamics of the global iron ore market and put China in the driver’s seat.
With the iron ore price hovering around US$160 a tonne and Australia exporting about 20 million tonnes of ore from the Pilbara every week, the country is earning about $585 million a day from China (or around $200 billion a year).
Simandou is one great alternative, which is expected to have an estimated reserves of 2.4 billion tonnes of ore grading 65% iron metal. The project is expected to start its first production in 2025/26.
Joel Huan
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