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China driving iron ore sales
By CNN's Geoff Hiscock, Asia Business Editor
SYDNEY, Australia (CNN) -- New production figures show global miners BHP Billiton and Rio Tinto are relying increasingly on China's surging economic growth to keep sales on track. BHP said Thursday it shipped a record 80.3 million tonnes of Western Australian iron ore in the year ended June 30, in response to strong Asian demand, particularly from China. Rio Tinto said in its own production report on Wednesday that strong demand from key markets -- primarily China -- pushed its second-quarter iron ore production 19 percent above the same period in 2002. So far this year, it has shipped 35.7 million tonnes of iron ore from its West Australian mines, with second-quarter demand from China up 43 percent over 2002. With its economy running at an annual growth rate of 8 percent-plus and its car industry targeting production of 2 million units this year, China has become a massive buyer of iron ore and coking coal -- the key metals used to make steel. Earlier this month, China's National Bureau of Statistics reported first-half growth of 8.2 percent and said that despite the second-quarter slowdown caused by the outbreak of SARS, the full-year figure would top 8 percent. At the same time, money is continuing to pour into China, with overseas direct investment in the first half of the year topping $30 billion, up 34 percent year on year. Much of that money is coming from global automakers such as Toyota, GM, VW, Nissan and Honda, who are setting up or expanding joint ventures with Chinese partners to meet the booming demand for cars. In response, Chinese steelmills are lifting their output. The demand for raw materials from China and other key Asian markets such as Japan, South Korea and Taiwan, is helping offset lower commodity prices and the generally weak economic environment prevailing in Europe and the United States. That is proving a potential lifesaver for miners such as BHP and Rio Tinto, which have seen their share prices decline about 5 percent and 7 percent respectively so far this year. Australian stockbroker JB Were on Thursday upgraded the two mining houses from "under perform" to "market perform", pointing to Chinese growth and its potential impact on commodity prices. In its production report, BHP said work on its new $213 million iron ore project in Western Australia is on track for commissioning later this year. Separately, BHP and its partner Mitsubishi Corp of Japan said their BMA joint venture will develop a new coking coal mine in the Australian state of Queensland. The mine will cost $67 million and will have annual capacity of 3.6 million tonnes. Production is due to start in the second half of 2005, BMA said.
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