China Supports Australia to Produce Cleaner Iron Ore

As highlighted by Bloomberg’s news, China has assumed a new challenge to develop a $3.4 billion project on Australia’s remote Eyre Peninsula to meet increased demand for cleaner iron ore.
China Railway Group Ltd., the world’s second-largest infrastructure builder, is backing the mine, port and rail-road project that aims to supply high-quality, lower-emission ore to Chinese steel mills facing stricter environmental rules. The Chinese demand for higher quality iron ore might increase, driven by stricter environmental protection regulations and improved profitability of steel mills. Also, the expected increase on demand can be attributed to the Chinese intentions to expand its overseas metal markets by supplying premium quality products.
The company’s partnership with Iron Road Ltd. aims to bring the 24 million ton-a year mine into production till 2020 after tests showed its product can help customers meet the tougher standards. The higher-quality ore contains more of the metal and fewer impurities than dominant market rival hematite. While it costs more to process magnetite, the product commands a premium from mills producing high-quality steel.

As well as in China, demand is building for the higher-quality exports in the Middle East, Japan and South Korea, where the Australian project also seeks for investment. The Chinese early investment interest on the project shows the country’s ambition to lead the world metal market and embrace environmental production initiatives.

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