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China will invest in iron ore mines overseas

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China to build coal and iron ore reserves, says CISAChinaIron & Steel Association announces China aims to invest in moremines overseas to reduce dependency on global miners. Iron ore supplyseen staying tight in H1.

Author: Ruby Lian, Judy Hua and Tom Miles
Posted: Thursday , 24 Feb 2011



BEIJING (REUTERS) -
Chinawill study plans to create reserves this year for iron ore and coal asnational strategic resources, the China Iron & Steel Association(CISA) said on Thursday.
As the world's top buyer, China will invest more in iron ore mines overseas in a move to reduce its heavy reliance on imports from global iron ore miners Rio Tinto, Vale and BHP Billiton, it said.
"Chinashould change its vast foreign exchange reserves into state reserves ofresources that we rarely have but badly need," said Luo Bingsheng, whothis month stepped down as vice-chairman of CISA and is now a specialadvisor for the association.
China is expected to raise crude steel output by 5 percent to a new record of 660 million tonnes this year, suggesting a larger appetite for the raw material, the industry ministry said earlier.
CISAalso suggested it would boost domestic iron ore production to meetrising demand, despite a decline in iron ore grades over the past fewyears.
China's iron ore import prices hit around $200 per tonnedelivered, or $168 per tonne free on board Australia, in mid February,the highest since early 2008.
"Personally, I think this price is at the highest level. These are astronomical figures," Luo said.
Luosaid if China's domestic iron ore production maintained last year'sgrowth rate, imports this year would probably remain steady or evendecline slightly from 2010.
However, a Reuters poll in December showed that China is likely to import a record 670 million tonnes of iron ore this year.
Luoalso expected iron ore supply to be tight in the first half of thisyear, which would support prices, but the tightness to ease in thesecond half.
(Reporting by Ruby Lian, Judy Hua and Tom Miles; Editing by Ken Wills and Jonathan Hopfner)https://www.stockhouse.com/RadControls/Editor/Dialog.aspx?dialog=LinkManager&editorID=r