3.3. Investment development on overseas rights and interest mines

China's iron ore resources development of "going global" has 30 years of history. In 1987, Sinosteel Australia Limited and Australia's Morris Iron Ore Co., Ltd. formed a contractual joint venture to jointly develop and operate Chana Iron Mine, making it the first overseas iron ore investment project. A total investment of 200 million US dollars, officially put into operation in 1990, iron ore production in 2011 reached 11 million tons. Due to the still low domestic demand at that time, the increase rate of overseas investment and mine development was relatively slow. In recent years, due to the sharp increase of iron ore demand, the scale of overseas investment in iron ore in China began to gradually expand [14–16]. From 2006 to 2017, the investment in the rights and interests of overseas iron mines of various types of enterprises totaled more than 30 billion dollars and participated in the exploration, design and construction of more than 40 large-scale overseas iron ore projects [17].

rights and interests of the cost of the current spot price are very high. According to public information, it is learned that in recent years, the minimum cost for China to go overseas to acquire iron ore right and interests is the iron ore project in Liberia of WISCO, accounting for about 70 US dollars/ton at that time. However, due to the drastic drop of iron ore prices since 2014, up to the beginning of November 2015, the domestic spot price of iron ore has dropped below 50 USD/ton. For the 2 years 2014–2015, the development cost of overseas rights and interests mines are almost totally higher than the spot price, and the volume of iron ore shipped back to the China will inevitably decrease drastically. The high cost of mining, coupled with the cost of repatriation, is completely unmanageable compared to the spot price

The Chinese Iron Ore Deposits and Ore Production http://dx.doi.org/10.5772/intechopen.76729 11

Due to the continuous high output of crude steel in China for many years and the fact that more than 90% of the output is contributed by iron ore (long-flow steel), the demand for iron ore is huge. The output of domestic iron ore increased rapidly, with a compound annual growth rate of about 14%. In terms of quantity, the output of domestic ore is much higher than that of imports. Although the growth of China's own-produced iron ore is rapid, it has been found in actual research that the actual growth of China's domestic iron ore production is much lower than the statistic data. In the statistics data on iron ore production, there is no distinction between finished ore and raw ore, the low grade of raw ore without treatment was put directly into the statistics data, resulting in a sharp rise in China's domestic iron ore output data. In recent years, due to soaring iron ore prices, low grade of 10% of the iron ore is exploited; at the same time, these low grade ore will inevitably push up China iron ore

After iron balance rebound calculation, China made only 210 million tons of domestic finished iron ore in 2014. It is far from 1.5 billion tons which is from statistics data. The self-sufficiency rate of iron ore dropped from nearly 60% in 2002 to a nearly straight decline. The huge contrast between country-made ore and those data of the after iron balance rebound calculation means

Although the total reserves of iron ore resources in China are huge, the distribution of iron ore resources is more dispersed, with more lean mines, very few rich mines, and mostly polymetallic iron mines. The ores are difficult to mine, the cost of mining is high, and the actual output cannot meet the production needs of domestic steel mills, therefore domestic steel producers have to choose to import large quantities of iron ore. Since 2000, China's iron ore imports have risen sharply, except a few years. The annual import growth rate once exceeded 40% twice. With the rapid increase in iron ore imports, there is also a growing dependence on foreign iron ore (Figure 6). From only 36% in 2002, China's iron ore dependence on foreign countries has risen to more than 87% in 2016. In the coming years, the imported iron ore will remain at a

that the supply of domestic ore is approaching the end of its growth.

3.4.2. Foreign iron ore dependence is too high

of \$50–40/ton.

production data.

3.4. Problems existing in China iron ore supply

3.4.1. The actual supply of domestic ore is insufficient

China's overseas investment in iron ore is mainly concentrated in Western Australia, Quebec of Canada, Brazil, Mongolia and West Africa (Figure 5). Among them, there are 19 cooperation projects in Australia with high grade and abundant resources of iron ore, accounting for almost half of all overseas projects [17]. Canada mainly includes five projects of Wuhan Iron and Steel Group Company. There are three projects in West Africa, mainly in Guinea where invested 20 billion yuan, conducted by the Aluminum corporation of China. Due to differences in infrastructure investment, labor costs and resource conditions, the cost of projects invested in West Africa is lower than that in Australia. Up to 2013, China's overseas rights and interests iron ore production capacity of 73 million tons, accounting for about 10% of iron ore imports. However, compared with Japan's overseas rights and interests iron ore production capacity of 74 million tons, accounting for 57–70% of its annual import of iron ore, the gap between China and Japan is too large [17].

The global high-quality resources of iron ore have all been controlled by four enterprises. Oversea investment is high cost. As iron ore prices soared, Chinese enterprises have gone out to prospecting. When the spot price is as high as 130–180 US dollars/ton, the average mining cost can be sufficient for 100 US dollars. Based on this, mining enterprises go out to buy the

Figure 5. Chinese enterprises overseas iron ore investment.

rights and interests of the cost of the current spot price are very high. According to public information, it is learned that in recent years, the minimum cost for China to go overseas to acquire iron ore right and interests is the iron ore project in Liberia of WISCO, accounting for about 70 US dollars/ton at that time. However, due to the drastic drop of iron ore prices since 2014, up to the beginning of November 2015, the domestic spot price of iron ore has dropped below 50 USD/ton. For the 2 years 2014–2015, the development cost of overseas rights and interests mines are almost totally higher than the spot price, and the volume of iron ore shipped back to the China will inevitably decrease drastically. The high cost of mining, coupled with the cost of repatriation, is completely unmanageable compared to the spot price of \$50–40/ton.
