MAC: Mines and Communities

Ironing out the price: China collaborates with Ukraine

Published by MAC on 2009-11-02
Source: Chins, Ukraine (2009-10-30)

China relies for 50% of its iron ore imports on three main producers: Vale, Rio Tinto and BHP Billiton.

Over the past year, the three global giants have battled to maintain high prices for their exports, while the PRC authorities have striven to drive prices down - and Chinese steelmakers have been urgently searching for alternative suppliers.

After a top-level meeting between Chinese diplomats and Ukraine's prime minister last week, a production sharing agreement between the two states looked likely. The deal would put China in a stronger bargaining position with the Big Three.

During the year ending October 2009, China imported 197 million tonnes of iron ore from Australia and 102 million tonnes from Brazil. Smaller, but significant, amounts came from South Africa and India; Ukraine sold just over 11 million tonnes. Currently ranking as seventh among global iron ore producers, Ukraine almost doubled its iron output over the past year.

Ukraine looks for Chinese miners to help develop mineral resources

Interfax China Metals & Mining

30 October 2009

Ukraine is to propose a production sharing agreement with Chinese miners in exchange for their expertise in exploiting the country's mineral resources, Ukrainian Prime Minister Yulia Tymoshenko said during a meeting with Zhang Dejiang, vice premier of the State Council of the People's Republic of China, in Kyiv on October 26.

Tymoshenko told Zhang that Ukraine needs to complete the construction of an enterprise for iron ore production.

The Chinese vice premier, in turn, said that China is also interested in joint research projects in the space, military and technical fields, aircraft construction, as well as the purchase of Ukrainian aircraft engines.

Interfax commentary: Cooperation on iron ore development between Ukraine and China will have significant benefits for both sides.

Traditional consumers of Ukrainian iron ore in Central and Eastern Europe wound down steel production during the economic downturn, while China has maintained its demand. Supply to China has increased significantly this year and Ukraine's total iron ore exports increased by 9.1 percent year-on-year in the first nine months of 2009, according to Ukrrudprom, the country's association of mining enterprises.

Ukraine will be eager to see this figure rise and China will be aiming to get the lion's share of the iron ore output. Just this week, China Minmetals Corp., the country's largest metals trader, called on industry leaders to diversify iron ore supplies from only three main suppliers, so as to gain a stronger bargaining position in long-term iron ore price negotiations.

The Kryvyi Rih region of Ukraine contains rich iron ore deposits and may offer a viable alternative for potential investment from Chinese companies in the future.

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