China update

China update

24th August 2007

It goes almost with saying that Chinese demand has been the prime driver of high global market prices for the majority of ferrous and non-ferrous metals over the past few years. Chinese mining and metallurgical companies have moved into dozens of joint mining, refining and smelting ventures overseas and some inter-governmental agreements (see "Men of Steel", below).

The negative impacts of this "rush" are being felt by communities and workforces in many countries (including Burma, India, Peru, Papua New Guinea, the Philippines and Zambia). The jury is still out, however, on whether this denotes a pattern of systemic "lower standards", compared with those observed by companies from other countries.

What seems undeniable is that the Chinese regime has opted for an increase in raw material imports in order to feed its downstream industries. This puts enormous pressures on those whose land and labour serves new, or expanded mining operations, and detracting from the economic value which could be added, by processing the minerals in their regions of origin.

(NB: China's imports of refined nickel and copper also increased (copper by 122%) between January and July 2007. The amount of refined metals exported from China varied: copper, aluminium. zinc and lead exports fell on last year, but exports of nickel and tin increased.)

According to figures released by the General Administration of Customs in late August, for the first seven months of this year:

* Imports of COPPER ore and concentrates increased 27%. This was mainly due to supplies from PERU and the US, although the biggest single supplier was CHILE. ZAMBIA was the largest supplier of copper anode, followed by ZAIRE

* BAUXITE imports galloped nearly 160%, mainly due to the rapid expansion of alumina capacity

The key providers of bauxite ore were INDONESIA (more than two thirds of the total), followed by INDIA (around a fifth), then AUSTRALIA

* Imports of ZINC ore and concentrate galloped by no less than 201% over the same period in 2006, while refined zinc exports increased by 76%. The main supplier of zinc ore and concentrate was DPRK, followed by AUSTRALIA and INDIA

* Imports of LEAD increased by more than a quarter, with the main supplier being PERU

* Nickel ore imports skyrocketed no less than eightfold (by 827%) - the main providers being the PHILIPPINES (around half the total), then INDONESIA and NEW CALEDONIA.

Meanwhile, last week at least fourteen workers were confirmed dead when an aluminium foundry exploded, with many left injured.

Men of steel: Dutch, British iron-steel alliance promulgated with Chinese company

Jiuquan Steel may be restructured through a JV deal with the Kazakhstan-based Europe-Asia Industry Association (EAIA), which will effectively restructure the Chinese company.

According to the agreement, Jiuquan Steel will acquire a 51 percent stake in the joint venture by injecting all its iron and steel assets, land and mines, as well as its stake in Jiu Steel Hongxing and Jiuquan Steel Yuzhong Iron and Steel Co. Ltd. The two EAIA subsidiary companies, Netherlands-based International Mineral Resources BV, and UK-based Eurasian Natural Resources Corp., will invest cash in return for the remaining 49 percent stake in the joint venture.

International Mineral Resources has said it will provide Jiuquan Steel and the joint venture with a stable supply of iron ore concentrate and pellet at fair market prices and, if possible, grant the joint venture access to development programs for iron mines in Kazakhstan, as well as other overseas mineral resources.
But, under the current framework agreement, EAIA will not invest any mining assets into the joint venture, relying instead on cash financing. However, the agreement is currently awaiting National Development and Reform Commission approval.

International Resources is one of the world's largest private mining and metals investment groups, specialising in the production and sale of nickel, chrome, ferrochrome and copper resources. The company's controlled subsidiaries are capable of producing a combined total of 1.1 million tons of ferrochrome and 30,000 tons of nickel per annum. Eurasian Resources owns 3.41 billion tons of proven iron ore reserves and has an annual production capacity of 15 million tons of iron ore concentrate and pellet, 1.5 million tons of alumina, 1.5 million tons of ferroalloy and 3.3 million tons of chrome ore.

In addition to the EAIA agreement, Shanghai Baoshan Iron and Steel Group (Baosteel Group), China's largest steelmaker, has also showed an interest taking part in Jiuquan Steel's restructuring.

[source: Interfax China Metals, 24 August 2007]

Dozens injured and 14 killed from molten aluminum lead in Shandong foundry

An accident involving a molten aluminium leak at an aluminum foundry in Shandong Province's Zouping city left 14 workers dead and 59 injured, as of 10:00 a.m. on August 20,according to a report by the state-run Xinhua news agency.

The molten aluminium leak began at 8:10 p.m.the previous day, at Weiqiao Pioneering Group's Zouping aluminum foundry. Harmful vapour, created as the 900 degrees Celsius molten aluminium came into contact with water coolant, exploded through the plant ceiling and windows, injuring workers in the foundry and in an adjacent workshop.

By 6:30 a.m., the accident had left nine workers dead and 64 injured. However, five of the injured workers subsequently died in hospital from their injuries.

"Rescue work has been underway since last night, and all injured workers have been sent to hospital. The cause of the accident is still under investigation," a company official, surnamed Chen, told Interfax.

Officials from the Zouping Municipal Administration of Work Safety were not available for comment at the time.

Weiqiao Pioneering Group is a privately owned aluminum producer in Shandong Province, and has an annual capacity of 150,000 tons of electrolytic aluminum and 1.6 million tons of alumina.

[soruce: Interfax China Metals, 24 August 2007]