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Experts split on U.S. company's impending debut in China's iron ore market

English.news.cn   2011-04-12 17:31:19 FeedbackPrintRSS

BEIJING, April 12 (Xinhua) -- China's experts exhibited a mix of doubt and optimism toward a U.S. iron ore giant's impending presence in China's iron ore market.

Cliffs Natural Resources Inc., one of the biggest mining and natural resource companies in North America, said its impending acquisition of Consolidated Thompson Iron Mines Limited would provide greater access to Asia as the acquired company had strategic alliances with large Asian companies, including China's Wuhan Iron and Steel (Group) Corporation.

The Wuhan-based company is Consolidated Thompson's largest shareholder, with nearly 19 percent of the Canadian company's outstanding shares.

Once the acquisition and planned projects are complete, Ohio-based Cliffs expects that nearly half of its iron ore production in North America will be exported.

This could be a blow to the position dominated by the world's top three iron ore giants, BHP Billiton, Rio Tinto Group and Vale, according to some experts.

Wang Guoqing, an analyst with Beijing-based Lange Steel Information Center, said Cliffs' move could reduce risks for China in importing iron ore and make the country less dependent on the three giants.

But others doubt that Cliffs' move can bring change to the global iron ore market.

Zha Daojiong, a professor with Peking University, said it is too early to judge whether Cliffs' move could impact the three giants' position. Many factors can't be ignored, like the pricing mechanism and cost performance.

"The situation is still unclear as a final agreement has not been reached, and it is still possible that Cliffs could eventually join the three giants and push prices up," said Zha.

The exclusion of the top three iron ore giants in the annual international benchmark pricing mechanism in 2010 resulted in an industry shift toward shorter-term pricing arrangements linked to the spot market.

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Editor: Deng Shasha
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