Hanlong Mining to invest $5 billion in Australian iron ore miners
China's Hanlong Mining has outlined a plan to invest $5 billion in Australian miners as part of a strategy to become a fourth force in the country's iron ore sector that would rival BHP Billiton (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue Metals Group (ASX: FMG).
The Australian subsidiary of Chengdu-based conglomerate Sichuan Hanlong said that it had financing from China Development Bank and Export-Import Bank of China to make investments in Australian iron ore assets.
Last week, Hanlong completed the acquisition of a 57 per cent shareholding in Moly Mines (ASX: MOL), an iron ore and molybdenum miner in Western Australia's Pilbara region that was worth in the region of A$200 million.
Hanlong said it has spoken to about 12 companies in the Pilbara and South Australia about making strategic investments in iron ore and iron alloys, a person familiar with the discussions said.
Hanlong has also acquired a controlling interest in General Moly, an AMEX listed US molybdenum miner.
Molybdenum is commonly used as a steel alloy and to remove sulphur impurities from petroleum products.
The interests in both miners will make Hanlong a major player in the global market for molybdenum, which is commonly used in steel alloys and to remove sulfur impurities from petroleum products.
Supply of the metal is currently dominated by around half a dozen companies.
Whether Moly Mines becomes an international mining house with Hanlong backing is the question.
"Hanlong has said they want to use Moly Mines to become an international mining house specialising in iron ore, molybdenum and ferroalloys," said Derek Fisher, chief executive of Moly Mines.
The model for Hanlong is Fortescue, the miner created by entrepreneur Andrew Forrest in 2003 that has become one of Australia's top 50 companies since it built its own rail and port facilities to get assets out of the iron-rich Pilbara region to market.
"Infrastructure is part of the equation and Moly Mines and Hanlong are currently in discussion on that," he said.
The seaborne trade in iron ore is currently dominated by BHP, Rio Tinto, and Brazil's Vale SA.
