Minmetals says Iron Ore talks are deadlocked

Minmetals says iron-ore talks are deadlocked

China Minmetals Corp, the nation’s biggest metals trader, said annual iron-ore price talks between Chinese steel mills and producers remain deadlocked. “There are still discussions and there is no final result yet,” Zhou Zhongshu, president of state-owned, Beijing-based Minmetals, a Fortune Global 500 company, told reporters today in Melbourne.

“Although we are the biggest steel distributor in China, this decision will be made by the China Iron & Steel Association.” China, the world’s biggest buyer of iron ore, has rejected a benchmark price accord struck by Rio Tinto and Nippon Steel Corp for a 33 percent cut, instead calling for prices to drop as much as 45%.

Steel mills in Japan and South Korea forced the reduced prices after the worst recession since World War II slashed global demand.

China Minmetals may study acquisitions of iron-ore assets, Andrew Michelmore, chief executive of the company’s Australian unit, Minerals & Metals Group, said. “If we can find an opportunity that does add value, with good returns, then we should pursue it,” he said.

MMG this week completed a US$1.4 billion acquisition of mines from OZ Minerals Ltd, including the world’s second-biggest zinc operation and supplies of copper, lead and nickel.MMG may consider an initial share sale in Australia “if the market conditions permit in the future” Wang Lixin, president of China Minmetals Nonferrous Metals Co, told reporters in Melbourne at MMG’s official launch.

China, the world’s biggest consumer of raw materials, has been securing overseas mineral assets and investing in producers to help feed growth in the world’s third-biggest economy. Metal prices have jumped 38% this year as buyers in China replenish stockpiles of copper and aluminum needed for the country’s Yu4 trillion (US$585 billion) stimulus programme.

The recovery in metal prices in the past two months may not be an accurate indicator of rebounding demand, Mr Wang said. “That really doesn’t represent that the market has recovered,” he said. “The market will be flat in the next one or two years. It will take time to recover but once it has recovered I think the demand will be strong.”MMG acquired the Century zinc and lead mine in Queensland state, the Rosebery zinc and lead and Avebury nickel mine, both in Tasmania state, and the Golden Grove mine in Western Australia from OZ Minerals.

The company also owns the Sepon copper and gold operation in Laos as well as exploration projects in Thailand and Canada.

MMG is reviewing the outlook for the nickel market as it studies a possible restart of its Avebury mine, which was closed last year, Mr Michelmore said. The mine would “making cash” at current prices, he said.

The company has also started a review of the cost of building the Dugald River project, which is “the next best zinc mine” in the world, Mr Michelmore said. It’s also seeking to boost copper output at the Sepon mine in Laos, he added.

By Mining Journal