23/04/2009 - 14:58

Approvals process "embarrassing": Jones

23/04/2009 - 14:58


Save articles for future reference.

The long wait for environmental approvals for the $1.8 billion Karara iron ore joint venture has prompted Gindalbie Metals chairman George Jones to call the situation "embarrassing".

The long wait for environmental approvals for the $1.8 billion Karara iron ore joint venture has prompted Gindalbie Metals chairman George Jones to call the situation "embarrassing".

The comment comes as AnSteel's president Zhang Xiaogang visits Perth to convince the state government to speed up approvals for the project in the Mid West region.

Ansteel is Gindalbie's project partner and major shareholder.

AnSteel, China's second largest steel maker, also awaits Foreign Investment Review Board approval to lift its stake in Gindalbie from 12.6 per cent to 36.28 per cent, and has agreed to buy iron ore from the Karara project.

Both Mr Zhang and Mr Jones believed the approvals would be received in coming weeks.

"It has been taking quite a while but we believe approval will come in very soon," Mr Zhang said.

Mr Jones went a step further, saying "by any standard, the time taken is ridiculous".

"It's an embarrassment to me, an embarrassment to Gindalbie and I believe, an embarrassment to Western Australia and Australia generally that groups trying to do valid business take so long to get an environmental approval," he said.

Mr Jones added that in the three years Gindalbie has been waiting on approvals, AnSteel had aleady completed construction of a $5 billion processing facility in China, which was waiting on ore from Karara.

Meantime, Mr Zhang said he expects China's depressed steel market to worsen following a dismal April, which saw all of the Asian superpower's steel mills post a loss, AnSteel says.

Zhang Xiaogang, both AnSteel's president and vice chairman of the China Iron and Steel Association, told reporters in Perth on Thursday the impact of the global recession on the steel sector had been extreme.

"The world's steel industry was impacted severely by this economic downturn," Mr Zhang said.

"From April, every single steel maker in China started to make a loss.

"It will (be) even going worse from now on.

"It will require the iron ore producers working together with the steel makers to go through the even tougher times."

Mr Zhang said he would meet with iron ore mining giant Rio Tinto on Friday to discuss "cooperation" during the downturn.

His comments refer to the iron ore price wrangling between Australia and China in recent years, which has seen local miners squeeze huge premiums from steel mills during boom times.

But Chinese steel mills have played hard ball since the financial crisis lowered demand for the metal and its input, iron ore.

Mr Zhang said he could not predict the result of annual iron ore price negotiations later this year but did not dismiss reports that the benchmark price could fall by 40 per cent.

"I believe iron ore price negotiations will start quite early this year.

"There is no material result coming out so far.

"Last month in America, the World International Steel Association had board meetings ... and everyone has different opinions on that (future iron ore prices)."

He said there would be widespread consolidation in China's steel making sector after being thinned out by the financial crisis.

And if losses continued to be posted by these companies, steel production levels would drop.

"If (steel makers) cannot make any profit or continue to make losses, it will definitely force them to reduce their steel making capacity.

"If a steel maker is able to survive these difficult times ... there will be a reshuffle of the whole steel industry in China."


Subscription Options