Fortescue optimistic on China demand
KALGOORLIE (miningweekly.com) – Australia has the potential to become the largest iron-ore producer in the world, despite the drop in commodity prices, Fortescue Metals CEO Nev Power said on the sidelines of the Diggers and Dealers conference, in Kalgoorlie.
“I believe Australia is very well placed to be the major iron-ore producer in the world. We are ideally placed with reference to China, as some 90% of the country’s steel mills are located on the eastern seaboard.”
Power pointed out that Australian iron-ore projects were competitive against South American and African counterparts, considering the distance for exports to China, and with Chinese counterparts, as production from coastal mines in China was considered the most expensive domestically.
“The door is certainly not closed [for new Australian projects] and it comes down very much to individual projects and what their capital development costs and operating costs are,” Power said.
He noted that Fortescue’s projects have been exemplified by low capital intensity and innovative ways to drive down capital intensity on its expansion projects.
The iron-ore miner was currently working to expand its Pilbara production profile to 155-million tonnes a year, and was hoping to reach this milestone by the end of the 2014 wet season.
Despite the concerns over China’s continued growth, Power remains positive that demand would be sufficient to take up Fortescue’s output.
“China is a phenomenal economy and it is growing strongly. At 7.5% growth for the next year, it will be the highest value growth in the economy of all time. It's higher than the 14.2% that occurred in 2007,” Power said.
He noted that while the urbanisation of China might bring up some planning challenges, steel demand to support this growth would continue.
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