Yes we are paying provisional iron ore prices - Baosteel
The global clout of China’s big mining companies should surge as a result of the financial crisis while leaving foreign firms desperate for funding, a Chinese mining executive said at the Reuters China Investment Summit.With world capital markets in the doldrums since last year, the global mining sector has faced severe capital shortages, but self-reliant Chinese mining companies have emerged relatively unscathed and are in a strong position to take advantage -- despite well-publicized political setbacks, said Yang Junmin, vice-general manager of Beijing Sinodrill."Since world metals prices collapsed, a large number of Chinese firms have acquired overseas mining projects -- including private companies -- and this has given us a great business opportunity," he said at the Reuters office in Beijing.Sinodrill was spun off from the state-owned China Non-Ferrous Metals Corp to provide services for foreign companies looking to develop resources within China.Although its core business has shrunk as cash-strapped foreign firms have withdrawn from domestic projects, Sinodrill is currently riding a wave of Chinese investment in hundreds of underfunded foreign mining concessions, providing exploration and drilling services in Australia, Southeast Asia, Africa and the Americas, Yang said."Foreign projects now make up about 20% of our total income, but I estimate that to rise to over 30 percent by the end of the year," he said."I hope that figure will rise to 50% (within two years), but the domestic market will still have a certain share."Despite setbacks abroad -- including Rio Tinto’s (RIO.L) decision to reject a $19.5 billion equity tie-up with Chinese metals conglomerate Chinalco -- smaller and lower-profile deals have proceeded apace across the world.Sinodrill itself is providing services to a number of overseas mining projects, including a massive 4-6 million tonne per annum copper mine launched by the China Railway Group (0390.HK) (601390.SS) in the Congo.Yang said it has also been discussing long-term joint venture agreements with miners in Australia, Indonesia and the Philippines, with Sinodrill offering significantly lower labor and equipment costs than its competitors.However, progress has not been smooth, with government restrictions on foreign drilling teams far tougher abroad than in China."Foreigners reject Chinese projects more than China rejects foreign projects," he said.Fears that China’s growing economic might would give it greater control over the world’s mineral resources were unfair, he said, especially when Chinese companies were the only ones prepared to take investment risks."Chinese companies have been investing in areas where there is more risk, where there are threats of war. Chinese workers can endure more difficult situations."Yang said the company was planning to list on the domestic stock exchange, but he could not give any specific timetable.He said Sinodrill has also been involved in discussions with potential foreign strategic investors, including Switzerland’s Sandvik.