China increasingly looking to Africa for iron-ore supply

A decrease in the grades of iron-ore produced in China and reduced Indian exports as a result of high taxes and mining bans were providing an opportunity for new iron-ore supply to come on line to fuel China¡¯s urbanisation, minerals industry consultancy Kai Batla geologist Anika Solanki said at the Geological Society of South Africa¡¯s Geoforum, held in Johannesburg earlier this month.

China had a significant demand for iron-ore and would need one-billion tons of the metal by the end of this year, most of which would be sourced from mining majors BHP Billiton, Vale and Rio Tinto, she said.

"However, China would like to own 50% of its iron-ore supply through China-owned foreign assets by 2015 and, therefore, it is increasingly looking to Africa,¡± said Solanki.

Potentially, there are 35-billion tons of direct-shipping iron-ore available in Africa, which amounts to a production potential of between 400-million tons and 600-million tons a year in the region.

However, while there were about 30 projects being under- taken in countries such as Sierra Leone, Guinea, Liberia, Cameroon, the Democratic Republic of Congo and Mauri-tania, there were only about six producing mines operating at low volumes, Solanki pointed out.

Another concern in terms of location was site accessibility and sustainability, Solanki said, adding that this was the main reason why the region¡¯s iron-ore potential was still untapped.

Climate was also an important factor. Many of the iron-ore-rich areas were located in the subtropical or tropical monsoon belt, where wetness and moisture would definitely affect mining operations in those areas, as wet ore could not be shipped, she explained.

In terms of market conditions, she said: ¡°New age geologists will have to add value to their geological offering ¨C you have to take into account what the market is looking for and whether this can be found.¡±

Profitability also had to be considered. ¡°The key factors that impact on profitability are the quality of the ore, factors of access and infrastructure and the global market,¡± Solanki concluded.