China to launch new wave of nationwide iron ore explorations

Thursday, 02 October 2008 09:34:45 (GMT+3)   |  
       

The Chinese government and many domestic steelmakers have been giving consideration to the issue of carefully exploring domestic iron ore resources all over the country again in order to expand domestic supplies of this raw material. Since February 2008, the relevant governmental authorities and steel enterprises have held several conferences to discuss and research the possibilities and necessities regarding this issue. To date, action on the issue has in principle been approved and is expected to get under way in the near future.

As the biggest iron ore consuming country in the world, China has been importing a huge volume of iron ore from abroad in recent years. Because over 70 percent of the world's explored iron ore reserves are owned and distributed by a few big suppliers, Chinese steelmakers nearly always find it impossible to gain a good price and are obliged to passively accept price hikes each year. Furthermore, although many attempts are being made by Chinese companies to invest in overseas iron ore, no obvious change has yet been seen in the the situation of their lack of control over iron ore supplies.

In the past, China has twice carried out nationwide iron ore explorations: in the 1950s and 1980s. Most of the current big Chinese steel companies, including Angang, Bengang and Shougang, were built near iron ore deposits discovered during the said explorations.

At the present time, explored iron ore reserves in China stand at only around 50 billion metric tons, and a certain number of these mines contain low quality ores, with iron content even as low as 10 percent.

Besides the explored mines, the imminent nationwide exploration will enhance the survey of some key areas in the west and northwest of China. There is evidence that the most remote areas in Xinjiang, Qinghai and Tibet were not explored with due care in the past because of difficulty of access. Some experts even consider that over 90 percent of these provinces still remains unknown in terms of iron ore potential.

There are indications that areas in western China are rich in iron ores and also in other ores. Once the iron ore and other resources in these mountainous areas are explored, the current situation of China's serious lack of iron ore and rare metals will probably undergo a significant change. However, even if the said indications are proved to be true, economic and social backwardness combined with geographical remoteness will create difficulties for the exploitation of natural resources in the region. In the short term, the discovery of such resources is thought unlikely to contribute substantially to solving China's current problem of iron ore supply shortage.

In the current situation of such supply problems, one region known as ‘the roof of the world' is gaining increased significance.  

Characterized by extremely high altitude and inhospitable terrain, the Qinghai-Tibet Plateau attracted great interest in a recent geological survey. A huge deposit of high quality magnetite was found in the west of Tibet, with iron content said to be in the range of 50-60 percent, with estimated reserves of iron ore at over one billion metric tons and with ore body thickness of 5-13 meters.

At the end of 1996, official Chinese data indicated that the Qinghai-Tibet Plateau was not rich in iron ore. The total iron ore reserve in the region was estimated at that time at just 547 million metric tons, far behind Liaoning Province (11.18 billion tons), Hebei Province (6.24 billion tons) and Sichuang Province (5.33 billion tons). The combined iron ore reserves of the latter three provinces account for nearly 50 percent of China's total reserves.

However, the above estimate made in the 1990s is now doubted by more and more experts. A widely-held viewpoint is that the survey carried out at that time was not sufficiently scientific and wide in scope due to limitations in terms of capital, manpower and technology at the time. In particular, the severe environmental conditions on the Qinghai-Tibet Plateau created difficulties and restricted exploration to a certain degree.

Besides the indications of huge magnetite reserves, some experienced experts and miners believe that on the Qinghai-Tibet Plateau at least 400 million metric tons of high quality iron powder can be obtained by means of filtration of silt and sands from rivers in the region. A relevant figure in this context is that China imported 380 million tons of iron ore in 2007, and is suffering from continuous price hikes in imported iron ore.

Against the background of Chinese steelmakers' active steps to seek iron ore overseas, the Qinghai-Tibet Plateau has awakened great interest and expectations. The current problem is that no one really knows the extent of the iron ore reserves which this area holds? Nor do they know how to resolve the issues of transportation difficulties and high costs?


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