China continues to diversify its raw materials needs away from traditional supplier Australia with news of a big iron ore tie-up in North Africa, something that were it to materialise would be a huge boost for dry bulk tonne-miles.
A consortium composed of Metallurgacal Corporation of China, China International Water and Electric Corporation and Hunan Heyday Solar Corporation has signed up to carry out a feasibility study on the exploitation of Gara Djebilet iron ore in western Algeria. The project could cost in excess of $2bn, according to preliminary estimates.
The move does not come as a big surprise, considering Beijing had been 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, such as in Africa.
Politically, Australia has not seen eye to eye with its most important iron ore customer for a while. Weakened bilateral ties have also led to restricted imports of Australian coal and barley last year.
As for Algeria, the project in Tindouf Province could help its bid to diversify from oil, following struggles in attracting foreign investors.
“This important strategic project aims to ensure and secure the supply of the national steel and iron mills with raw materials, and to export large quantities, but also, thanks to its structural nature, aims to develop the entire southwest of Algeria and contribute significantly and decisively to the development of the mining sector,” said the Algerian ministry of energy and mines.
The Gara Djebilet mine is one of the largest iron ore reserves in Algeria, and in the world, with estimated reserves of 1.7bn tonnes of ore grading 30% iron metal.