China to source iron ore from Guinea

[Song Hong]

Guinea set to supply iron ore from 2026 | Hellenic Shipping News Worldwide

www.hellenicshippingnews.com

Development of the Simandou blocks in Guinea will not only increase the country’s iron ore exports but will also prompt Chinese importers to shift some iron ore imports away from Australia to Guinea, which will add to dry bulk shipping demand.

Guinea has already become the world’s largest supplier of bauxite and is now striving to register its presence in the global iron ore market. In 2019, a consortium of SMB and Winning International won the tender to develop block 1 and block 2 of the Simandou project, one of the world’s biggest untapped deposits of iron ore based in Guinea. The first phase of operations is likely to start in 2026, enabling Guinea to export 60 mtpa of iron ore. The second phase of the project could add a further 50 mtpa to the annual iron ore production capacity.

As part of the tender, the company will invest in associated infrastructure, including building a deep water port and railway system to connect the mining region to the port. In turn, this is expected to prompt other iron pre producers to explore mining options in the region, with the most viable candidates thought to be block 3 and block 4. Currently, Rio Tinto, Chinalco and the Guinean government own these blocks which are believed to hold a similar quantity of reserve as block 1 and block 2. If block 3 and 4 are developed along with block 1and 2, then Guinea’s annual iron ore production capacity will surge to 220 mtpa, equivalent to approximately 14.5% of global seaborne iron ore trade in 2019.

China’s iron ore imports to shift away from Australia

Australia and Brazil are currently the major suppliers of iron ore to China, accounting for 65% and 20% respectively in China’s iron ore imports. In Brazil, Vale supplies more than 80% of the country’s iron ore and it already has long-term shipping arrangements with the Chinese Shipping company, COSCO. Therefore, an increase in iron ore imports from Guinea is unlikely to cause any decline in iron ore trade on the Brazil-China route. Meanwhile, China’s political relations with Australia have been under strain for a few years. In 1Q19, port authorities in China delayed the discharge of Australian coal amid deteriorating relations with Australia over the ban of Huawei Technologies. In such a scenario, it seems more probable that a rise in Guinea’s iron ore supply will prompt Chinese importers to source iron ore from Guinea instead of Australia. This, in turn, would lead to additional demand for dry bulk shipping.

 

[Beast]

Guinea set to supply iron ore from 2026 | Hellenic Shipping News Worldwide

www.hellenicshippingnews.com

Development of the Simandou blocks in Guinea will not only increase the country’s iron ore exports but will also prompt Chinese importers to shift some iron ore imports away from Australia to Guinea, which will add to dry bulk shipping demand.

Guinea has already become the world’s largest supplier of bauxite and is now striving to register its presence in the global iron ore market. In 2019, a consortium of SMB and Winning International won the tender to develop block 1 and block 2 of the Simandou project, one of the world’s biggest untapped deposits of iron ore based in Guinea. The first phase of operations is likely to start in 2026, enabling Guinea to export 60 mtpa of iron ore. The second phase of the project could add a further 50 mtpa to the annual iron ore production capacity.

As part of the tender, the company will invest in associated infrastructure, including building a deep water port and railway system to connect the mining region to the port. In turn, this is expected to prompt other iron pre producers to explore mining options in the region, with the most viable candidates thought to be block 3 and block 4. Currently, Rio Tinto, Chinalco and the Guinean government own these blocks which are believed to hold a similar quantity of reserve as block 1 and block 2. If block 3 and 4 are developed along with block 1and 2, then Guinea’s annual iron ore production capacity will surge to 220 mtpa, equivalent to approximately 14.5% of global seaborne iron ore trade in 2019.

China’s iron ore imports to shift away from Australia

Australia and Brazil are currently the major suppliers of iron ore to China, accounting for 65% and 20% respectively in China’s iron ore imports. In Brazil, Vale supplies more than 80% of the country’s iron ore and it already has long-term shipping arrangements with the Chinese Shipping company, COSCO. Therefore, an increase in iron ore imports from Guinea is unlikely to cause any decline in iron ore trade on the Brazil-China route. Meanwhile, China’s political relations with Australia have been under strain for a few years. In 1Q19, port authorities in China delayed the discharge of Australian coal amid deteriorating relations with Australia over the ban of Huawei Technologies. In such a scenario, it seems more probable that a rise in Guinea’s iron ore supply will prompt Chinese importers to source iron ore from Guinea instead of Australia. This, in turn, would lead to additional demand for dry bulk shipping.

China need to be aware of Australian NGO. I am sure, they are already on the way to spread democracy in Guinea.

 

[hualushui]

China's purchase of Australian iron ore will not pollute Australia's environment, is not neo-colonialism, and will not lead to a debt trap.
However, China’s purchase of iron ore from Guinea will inevitably lead to environmental pollution. It is neo-colonialism and will lead to debt traps.

 

[hualushui]

I predict that many Western media will criticize China for this investment.