China diversifies iron ore sources amid strained ties with Australia
Australia urged to steer bilateral relations back to normal for own benefit
Published: Apr 05, 2021 06:33 PM
An iron ore mining site in Australia Photo: cnsphotos

An iron ore mining site in Australia Photo: cnsphotos

Chinese companies are diversifying their exploitation of iron ore in Africa at a record pace amid soaring prices and strained relations with Australia, which experts said signals that China is reducing reliance on "unfriendly" Australia for this key resource.

They urged Australia to correct its mistakes and steer the worst-ever relationship with China back to normal for its own long-term benefit.

A consortium of three Chinese companies signed a memorandum of understanding with Algerian National Iron and Steel Co on March 30 to exploit iron ore in the North African country, the Xinhua News Agency reported.

The consortium, composed of Metallurgical Corp of China, China International Water and Electric Corp and Hunan Heyday Solar Corp, will carry out a feasibility study on the exploitation of the Gara Djebilet iron ore deposit in western Algeria.

Apart from Algeria, it's reported that the Republic of Congo has signed two mining deals with a Chinese company named Sangha Mining to exploit iron ore on licenses that the government of Congo withdrew from Australian miners last year.

With an investment of about $10 billion, Sangha plans to start exports in 2023 and eventually produce more than 100 million tons of iron ore every year, Reuters reported.

These are just some examples of Chinese companies expanding their exploitation of iron ore in Africa, Wang Guoqing, research director at the Beijing Lange Steel Information Research Center, told the Global Times on Monday, pointing to the first shipment of iron ore from the Chinese-funded New Tonkolili Iron Ore Project in Sierra Leone in January.

She said that it usually takes two to three years or more to achieve exports of iron ore from a project in Africa, as investment in local roads, railways and ports is needed.

"Although it's more difficult and requires more investment to exploit iron ore in Africa, diversification yields long-term benefits in terms of the security of resources," Wang said.

Iron ore is an important raw material of steel. Most of the iron ore China needs comes from Australia and Brazil, accounting for about 60 percent and 20 percent of total imports, respectively.

China imported 1.17 billion tons of iron ore in 2020, an increase of 9.5 percent year-on-year, data from China's General Administration of Customs showed.

However, China's iron ore imports from Australia as a share of the market dropped about 1.3 percentage points year-on-year last year, reflecting increased purchases from other countries, Wang said.

Closely following the US' anti-China campaign, Australia launched a series of ferocious attacks on China. It took the lead to impose a blanket ban on Huawei, curbing China's technological development, while cooperating with former US president Donald Trump's blame-shifting tactics, in calling for an "independent inquiry" into the origin and spread of the COVID-19 pandemic.

Even if there was no friction between China and Australia, Chinese companies would still make the reasonable choice of diversifying their supply of the key raw material to ensure safety, Chen Hong, a professor and director of the Australian Studies Center at East China Normal University, told the Global Times.

"Australia's move of coordinating with the US to contain China and constantly politicize economic and trade problems with China - including discrimination against Chinese investment - has seriously lowered Chinese companies' favorable assessment of Australia," Chen said.

He said that Australia's erroneous remarks and actions concerning a raft of issues that involve China have shattered China's confidence in being a trade partner of Australia, and therefore China has started to look for other friendly and welcoming partners.

"The China-Australia economic and trade relationship has worsened to its lowest level in history," Chen said, urging Australia to steer the bilateral relationship back to normal and reasonable conditions, in a bid to join hands with China to contribute to regional economic recovery during the post-COVID-19 era.