Shougang Group Starts High-Phosphorous Iron Ore Project in West Hubei

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Researched by Industrial Info Resources (Sugar Land, Texas)--Shougang Group, one of China’s biggest steelmakers, began its high-phosphorous iron ore project last month in Yichang in west Hubei Province. The company will invest $1.07 billion on the project. Construction will cost $40 million and be completed in June 2008 with a mining and processing capacity of 600,000 tons per year.

High-phosphorous iron ore is hard to exploit because of high-phosphor content and complex crystallite structure. Shougang Group, however, successfully developed the de-phosphorous technology by years of scientific research. It is the first steel mill in the world to put the technology into industrialization on a trial basis through the project in Yichang.

China has the largest steel-producing capacity in the world and imports 50% of its iron ore from countries such as Brazil and Australia. In 2006, China produced more than 400 million tons of pig iron while importing 326 million tons of iron ore. As China’s demand for iron ore has been growing, international mining companies have also been raising iron ore prices: the Free on Board price of China’s imported iron ore increased 71.5%,19% and 9.5% in 2005, 2006 and 2007, respectively. As a result, China’s steelmakers eagerly searched for cheaper iron ore supplies to reduce the dependence on imports.

Among those steelmakers, Shougang Group is looking at the high-phosphorous iron ore mine in west Hubei Province, where the proven iron ore reserve reaches 2 billion tons with a potential economic value of $100 billion. “The project will be an important event for China’s steel industry. If the iron ore reserve in west Hubei Province is fully exploited, the pricing power on iron ore in international market may partly be shifted to China,” Shougang Group Chairman Zhu Jimin said.

Shougang Group (Beijing, China) is a top 10 steelmaker in China, boasting a sales volume of $11.7 billion in 2006. As Beijing successfully won the bid to host the 2008 summer Olympic Games and requires a cleaner environment, Shougang Group began to remove its major production facilities to the port city of Tangshan 200 kilometers away from Beijing.

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