LME WEEK: Iron Ore Demand Seen Strong Driven By China -Bellzone

The outlook for iron ore demand remains strong, despite weakness in global financial markets and economic tightening measures in top consumer China, the finance director of Bellzone Mining PLC (BZM.LN) has told Dow Jones Newswires.

It would take a very significant reduction in Chinese growth to impact demand from the region, where appetite for iron ore, a key ingredient in steel-making, looks unlikely to slow, Terry Larkan said in an interview during the annual London Metal Exchange industry week.

"Demand for iron ore is driven out of China and will continue to be," he said.

Rio Tinto PLC's (RIO) recent prediction that the mining industry would need to produce at least another 100 million metric tons of iron ore annually over the next eight years just to meet demand growth continues to looks "achievable," Larkan added.

The U.K.-listed miner has two projects in Guinea, West Africa, and is partly funded by China International Fund Ltd., a 50:50 joint venture partner in its Forecariah iron ore project.

Larkan said that, while he couldn't speak for CIF's strategies, it would be reasonable to expect that the company has an interest in "acquiring more of a role within Bellzone."

"They respect Bellzone's project ability and are looking to leverage that relationship," he said.

Chinese investment in resources exploration and mining in Africa is burgeoning, a reflection of the country's appetite for materials like iron ore and steel to fuel its growing infrastructure. However, China's growing presence in Africa is contentious, and Chinese companies have drawn criticism from some quarters for their growing influence in the region.

The newly elected Zambian president, Michael Sata, has been a strong critic of Chinese investment in the country. He has previously accused the Chinese of paying "slave wages" at its mines and at one point even threatened to deport Chinese investors.

Larkan stressed the "mutually beneficial" relationship between Bellzone, CIF and the local community.

"Chinese entities have a reputation of exploiting the land and leaving nothing behind, and not benefiting local populace. We're really focused on keeping a good relationship with the local community and likewise with the government," he said.

The company's flagship operation, the Kalia Mine Project, is 100% owned by Bellzone. The company last week announced that, based on the results of a 18,000 meter drill program at the site, it had increased the amount of the project's magnetite iron resources by 65% to 6.16 billion tons.

-By Francesca Freeman, Dow Jones Newswires; +44 (0)20 7842 9412; francesca.freeman@dowjones.com

Bellzone Mining (LSE:BZM)
Historical Stock Chart
From Jun 2024 to Jul 2024