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China wants to break dependency on Australia for iron ore

Published: (Updated: ) in Australian News by .

China – which imports 60 per cent of its iron ore from Australia – is looking at sourcing supplies of the steel-making material from other markets.

China - which imports 60 per cent of its iron ore from Australia - is looking at sourcing supplies of the steel-making material from other markets.

Iron ore is Australia's largest global export and China -the world's biggest steel producer - is our biggest trading partner.

China aims to build one or two major overseas iron ore mines by 2025 under a five-year government plan, Reuters reports.

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While the blue print included speeding up investment in Australia, it also flagged other potential markets for the steel-making material.

"China will accelerate construction of large iron ore projects in West Africa and Western Australia," the Ministry of Industry and Information Technology said.

The plan also added that cooperation would also be strengthened with resource-rich Russia, Kazakhstan, Mongolia, Cambodia and other nations.

Professor Heng Wang, of the University of New South Wales, told Nine.com.au that China had been looking at diversifying its iron ore supply before trade tensions with Australia last year.

"China has been exploring alternative markets for some time," Professor Wang said.

"It wants to reduce reliance on specific markets and increase control by investing in overseas mines."

Professor Wang said if China was successful in its diversification, there would be consequences for global trade.

"In the long term, it would give China a better negotiating position. And there would be an impact on the world price of iron ore."

Australian iron ore exports have to date been spared the trade sanctions by China that were slapped on other products, such as the tariffs on barley and wine. Analysts suggested this is because there are few alternatives at the moment.

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Australia is the biggest exporter of iron ore and exported a record $11 billion worth of the mineral last October.

Brazil is next largest, but supplies have been disrupted by an environmental disaster two years ago that affected 10 mines.

But China is looking at other iron markets. Its state enterprises signed a deal with the West African nation of Guinea involving the world's largest untapped iron ore deposit – the massive Simandou mine, the South China Morning Post reports.

Source: 9News https://www.9news.com.au/national/trade-china-seeking-alternative-iron-ore-markets-to-australia/10b5c952-0d5c-4a2e-ac44-3894a1c2bb00

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