A memorandum of understanding (MoU) signed this week between iron ore producer IronClad Mining and major Chinese steel maker Wuhan Steel is evidence that Chinese demand may not be slowing as much as thought, IronClad director Ian Finch told MINING DAILY.
“I think that’s very much the case,” Finch said.
“I think there is a pricing game going on between the big players.
“Our experience is that a lot of China is still looking for iron ore into the future.”
Having recently returned from spending time in China, Finch saw no reason to think that there is a slowdown.
“The question is ‘what slowdown?’” he said.
“It seems to me to be a line that the Chinese would very much like us to believe, but in China there’s no slowdown.
“I can’t see any evidence of one.”
The MoU puts into motion the co-operative development between IronClad and Wuhan of IronClad’s Wilcherry Hill and Hercules iron ore projects on the Eyre Peninsula in South Australia.
Signing with a company the size of Wuhan also means that the scale of the project will be re-examined, Finch said.
“We were in the process of designing it as a 2 million tonne per annum start up, but Wuhan is very keen that it starts up as a 4 million tonne per annum operation,” he said.
“It probably means we’ll have to involve ourselves in additional drilling to secure additional resources.”
Given the size of the reserves on the Eyre Peninsula this will not present a problem, Finch said.
“They were always there, but it’s a question of how far you go with your drilling,” he said.
According to Finch, signing the MoU with Wuhan means IronClad can be confident in the knowledge of where their product is going.
“We always knew we could sell the high grade product we have, but to actually ink in exactly where it’s going is terrifically important to us,” he said.
“It’s great going forward.”