The iron-ore deposit that grows with every headline
After China Newsnet Wednesday reported that China had discovered Asia’s biggest iron ore deposit at Benxi in Lioaning province, Chinese and Western media lept on the headline.
A local geological official had apparently “confirmed” the figure (estimated reserves of at least 3 billion tonnes) and told Reuters that the mine will start production next year and could be producing up to 5 million tonnes by 2015.
It sent sending the Shenzhen-listed Bengang Steel Plates (SZ:000761) up to its 10 percent upper limit and Angang Steel (SZ:000898;HK:0347), the largest steel maker in Liaoning province, 7.42 percent higher on Shenzhen trading and 5.32 percent on Hong Kong trading.
The news came as Chinese steel makers and foreign iron-ore importers still refused to reach a deal over contract iron ore prices, leading investors to speculate whether the finding would influence world iron-ore negociations.
However those with a slightly longer memory, or at least one that goes back two months, couldn’t help wondering just how many of Asia’s largest iron-ore deposits could possibly co-exist in the same small city.
On April 30th this year, Benxi had apparently already discovered Asia’s largest iron-ore deposit – however that one was just 2 billion metric tons, and being 1,000m underground certainly wouldn’t be coming on-line next year.
The story grew even further yesterday, culminating with the Guangzhou Daily writing that the government’s “most likely plan” would be to give the deposit to Bengang and Angang to exploit.
Today, however, the two companies halted trading before making announcements in response to the media reports. According to the announcements, there have in fact been no new discoveries. The only thing that has changed are the reports.
We now know that the tale of Asia’s largest iron-ore deposit has in fact been kicking around since November 2007, when a deposit of an estimate 1 billion tons was discovered at a depth of at least 1,280m below ground.
So it hasn’t grown to 2 billion tons, or 3 billion tons. It’s not coming out of the ground next year. And, according to the companies, is certainly not likely to be given to them.
Proactive Investors looks forward to the next news from Benxi but is meanwhile amused to see that even after denying any link to the iron-ore deposits and stating that there is “no way of verifying” the claims made in the reports, Bengang Steel Plates surged to another 10 percent limit today.
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