Chonggang to build an iron ore transit station in Jiangsu with 1.3bln yuan

November 23 MetalBiz--Following initial acquisition of Australian iron ore, Chonggang launched another major resource strategy. Chongqing Stated Assets Administration Commission (SASAC) announced on November 22 that Chonggang Group signed agreement with the people’ s government of Jingjiang, Jiangsu Province, investing 1.3bln yuan in building iron ore and steel transit base.

Donglin, chairman from Chonggang Group said the international transit base for iron ore and steel of Chonggang is located in Xingang Park of Jingjiang City, Jiangsu Province, with a total investment of 1.3bln yuan. It is reported that Chonggang planned to set up a new company with a registered capital of 500mln yuan.

It is learnt that before shifting eyes to Jiangsu, Chonggang has an investigation on the port cities from Zhenjiang to Nantong, Jiangsu Province. Donglin said that the favorable shoreline of Jinjiang’s shoreline as well as the supports of departments, so Chonggang chose Jingjiang as the final location. From now on, Chonggang’s iron ore from countries such as Australia, Brazil and South Africa can be piled and transited via Jingjiang and then shipped to Chongqing by sea.

Earlier this month, Chonggang finalized the iron ore development plan in Western Australia, presently the project has been submitted to National Development and Reform Commission (NDRC) for approval. After the implementation of the project, it can be put into production in 2012 earliest, and it is estimated to produce 10mln tons of magnetite concentrates annually in the first period.

Sources noted that Group’s logistics base in Jiangsu is in a larger scale and will cover about 688m of shoreline of Yangtze River. After the completion, it will transit 12mln tons of iron ore and 30mln tons of steel plate per year, satisfying Chonggang’s development demand of the new plant in Changshou Region.

“The increasing reserve of the raw materials can help cope with the price fluctuation of raw materials.” Donglin said, “supply and the price of the imported iron ore raw materials are always difficult issues for domestic steel mills”. After promoting acquisition of ore mines overseas and construction of the transit station simultaneously, Chonggang can avoid the risks of rising price of iron ore and meet its own demand for raw materials in the future.

Recently source claimed that global three major iron ore suppliers, Vale, Rio Tinto and BHP Billiton will require the iron ore price advancing 30%~35% for 2010-2011, reversing 33% price cut. If the price lift is finally realized, the manufacturing cost of domestic steel mills will soar.