The Liaoning Provincial Bureau of Geology and Mineral Resources say their geologist have found an iron ore deposit with an estimated resource of more than three billion tonnes.
Yu Wenli, head of the bureau, told official state news agency Xinhua that "the deposit can be exploited for more than 50 years."
He said the iron ore is a mixture of magnetite and hematite and estimated the iron ore content is between 25% and 62%. "We found high-grade iron ore even at a depth of 2,015 meters."
A news release posted on the Benxi municipal government official website claimed it was Asia's largest new iron ore deposit for now. The deposit is at the Qiaotou Township, Pingshan District, Benxi City, Yu told Xinhua.
Reuters quoted a "local geological official" who estimated the mine would require 2.5 billion yuan (US$366 million) of investment. The main investor is an unidentified Shenzhen-based company with local government and the Benxi Iron & Steel both holding 20% stakes.
The official told Reuters the deposit could be as big as 7.6 billion tonnes, which would make it the world's largest iron ore deposit. "The mine will help steelmakers reduce costs because they wouldn't need to import so many raw materials," said Zhang Ling, a fund manager at ICBC Credit Suisse Asset Management, told China Daily.
Ma Zhongpu of ChinaCCM market research told Reuters, "I think the discovery will not have any impact on current iron ore price talks as the production won't come to the market until 2015."
The Liaoning Provincial Bureau of Geology and Mineral Resources estimate the province's iron ore resources comprise one-fourth of China domestic iron ore resources. "Although we have exploited large amounts of iron deposits over the past several decades, there are still lots of deposits awaiting underground exploration," Yu noted.
The UN Conference on Trade and Development (UNCTAD) published a report last week which predicted "between one third of one half of Chinese iron ore capacity will close over the next three years, with 40%, or 130-150m tonnes, being the most likely reduction figure."
China is currently the world's largest iron ore producer at 366 million tonnes or roughly 20% of the world's total production of 1.7 billion tonnes. But, UNCTAD forecast that small and medium-sized iron ore producers will be forced to substantially reduce their output since they are no longer protected by high freight costs for imported iron.
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