Tonghua Steel lands rights to NK iron ore mine

Tonghua Steel lands rights to NK iron ore mine

Jilin Province-based Tonghua Steel reportedly will invest RMB 7 billion ($866 million) in North Korea's Maoshan iron ore mine. Tonghua recently acquired the rights to mine 10 million metric tons of iron ore annually from Maoshan for the next 50 years. One of the major advantages of the project for Tonghua is its location. Maoshan iron ore mine is 8.5 kilometers away from Tonghua Steel, drastically decreasing transportation costs for the steelmaker. Sources report that Tonghua Steel will undertake this project in cooperation with Sinosteel Corporation and Yianbian Tianchi Industry and Trade Company. According to the agreed plan, Tonghua Steel will spend no less than RMB 7 billion ($866 million) on the project. Of the RMB 7 billion, RMB 2 billion ($248 million) will be invested in transportation infrastructure, i.e. roads and cable lines from Tonghua to Maoshan. At present, the annual output of Tonghua Steel is 2.52 million metric tons, ranking it 43rd in China. Tonghua Steel has received approval from China's National Development and Reform Commission to expand its annual capacity to 5.5 million metric tons by 2007. Tonghua now imports 1.62 million metric tons of iron ore from foreign countries. By the time it has completed its expansion in 2007, Tonghua Steel will need around four million metric tons iron ore. Further expansions that would bring Tonghua up to 10 million metric tons of annual capacity are in the works, meaning the steelmaker's demand for iron ore could reach eight million metric tons. Therefore, the Maoshan project will play a key role in Tonghua's drive to become one of China's steel giants. SteelOrbis Shanghai