China’s decision to construct a raft of new very large ore carrier (VLOC) terminals is being interpreted by some analysts as part of a bigger geopolitical play to cut the nation’s reliance on Australia for its iron ore imports amid a severe souring of diplomatic ties between the two Asia-Pacific nations.
Beijing’s National Development and Reform Commission (NDRC) has given the green light for four new VLOC terminals to be built in Rizhao, Yantai and Lanshan in Shandong province, and Sanduao in Fujian province to go alongside the existing seven VLOC terminals.
“Commentary on the move has speculated that Beijing is seeking to ensure greater ‘iron ore security’ for the future, not only by opening itself to a wider range of of markets, including Brazil, but also to countries where there is less chance of political disagreement,” Alphabulk pointed out in its most recent weekly report.
Australia, which exports 90% of its iron ore to China, has been a vocal opponent of China’s telecoms company Huawei, and also recently joined the US in opposing China’s maritime claims in the South China Sea. It was also the first country to come out and call for an international enquiry into China’s handling of Covid-19.
China has responded by restricting Australian coal and barley imports. As well as Brazilian miner Vale, Alphabulk suggested African miners could benefit from the long-haul routes made possible by the new terminals.
Vale would also have a greater operational flexibility as the new terminals would enable it to blend different ores more easily to cater for the individual needs of geographically dispersed steel mills.