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China's iron ore find timely
Beijing (UPI) Jun 25, 2009 China's discovery this week of a giant iron ore deposit with estimated reserves of 3 billion metric tons couldn't come at a more opportune time for the country, which is the world's largest importer of the product with an ever growing demand for it. Geologists found the deposit, claimed as Asia's largest, in Benxi city in the northwest province of Liaoning province, the state media said. The discovery comes at a time when Chinese steel mills are seeking price cuts from iron ore suppliers in Australia and Brazil, the world's largest exporters. China's main suppliers are Australia's BHP Billiton, Anglo-Australian Rio Tinto Group and Brazil's Vale. China must rely on imports as its domestic iron ore is of lower grade. Domestic production also has been affected by the closure of unprofitable mines. An offer of a 33 percent price cut from Rio already has been turned down as the Chinese press for a bigger cut. The Brazilian and Australian suppliers reportedly have already made deals with Japanese and European steelmakers at higher prices. But China has said its steel industry with looming overcapacity could see profits decline because of higher input costs, resulting in lower demand, which then would also hurt the suppliers. Now, with its new deposit discovery, China would be in a better position to reduce imports. It may also seek to invest in new mining projects in Australia to meet demand, which is expected to jump as the Chinese government implements its $586 billion economic stimulus program, some of which will go for infrastructure development. The new discovery, located underground at depths of 3,940 to 6,100 feet, covers an area about 2.5 miles long and 1.8 miles wide, Xinhua reported, quoting Yu Wenli, head of the province's bureau of geology resources. He said the iron ore is a mixture of magnetite and hematite, and the iron content is between 25 percent and 62 percent. "The deposit can be exploited for more than 50 years," he said. "Although we have exploited large amounts of iron deposits over the past several decades in the province, there are still lots of deposits underground awaiting exploration." Chinese Minister of Land and Resources Xu Shaoshi asked local authorities to start exploitation of the new deposit as soon as possible, Xinhua said. However, details of how much it would cost to develop the new find were not immediately available. Xinhua said shares prices of steel mills rose after the announcement of the discovery. Share This Article With Planet Earth
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