Choking China Backs Australia in Race for Cleaner Iron Ore – by David Stringer (Bloomberg News – February 8, 2017)

Chinese engineers who carved a railway through the Tibetan plateau and built the world’s longest sea-bridge across Hangzhou Bay have a new challenge: developing a $3.4 billion project on Australia’s remote Eyre Peninsula to meet increased demand for cleaner iron ore.

China Railway Group Ltd., the world’s second-largest infrastructure builder, is backing the mine, port and rail-road project that aims to supply high-quality, lower-emission ore to Chinese steel mills facing stricter environmental rules.

The project would be a major step toward South Australia’s goal of securing A$10 billion ($7.6 billion) of investments to fund a stable of new iron ore mines by 2021. China Railway’s partner Iron Road Ltd. aims to bring the 24 million ton-a year mine into production in late 2020 after tests showed its product can help customers meet the tougher standards.

“China’s demand for higher quality iron ore will increase, driven by stricter environmental protection regulations and improved profitability of steel mills,” said Yi Zhu, an analyst at Bloomberg Intelligence in Hong Kong. A restructuring of China’s steel sector will also boost demand for premium quality imports, according to researcher CRU Group.

China, the world’s biggest carbon emitter, plans to invest 2.5 trillion yuan ($360 billion) in renewable energy through 2020 to reduce greenhouse gases and is seeking to curb emissions by iron and steel producers. Mills are being compelled to upgrade their plants or cease operations if they fall short of standards, according to Bloomberg Intelligence.

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