200 (26.07.18)

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4. Zhanjiang, China

How iron ore in Australia is transformed into cars in Korea

In skyscraper in Singapore, over a thousand staff for Australia mining giant BHP are blasted by air-con and glued to their computers. Decorated with bamboo shoots and carved rock, the building is overlooked by a taller office where staff for Rio Tinto are also staring at their screens. The two towers are an engine room for the two largest mining companies; more iron ore flows through here than anywhere else on the planet. Both groups are producing record volumes in Australia, railing 50m tonnes to their ports last month, equal to 41 per cent of the global market and $40bn of trade. As iron ore is loaded onto ships, it is also sold by their Australian businesses to their offices in Singapore, which usher them into the South China Sea, divvying-up the cargoes between Asian steel mills. The biggest buyer is Baosteel, a vast Chinese group that has pondered buying Rio instead of its tonnage. Most ships head north to Hebei, a nightmarish province of smokestacks and coal, or they turn into Qingdao, one of China's busiest terminals. But as Beijing clamp down on old, outdated mills to boost margins and air quality, an increasing number of vessels stop early, pulling into Zhanjiang, China's southernmost deepwater port. With blue skies, a subtropical climate and papaya trees, no other city offers a brighter window into China's future. New projects include a ¥50bn ($7bn) steel mill owned by Baosteel, a ¥59bn petrochemicals plant, a ¥63bn offshore oil field and a ¥690m railway, opened in the spring. Zhanjiang is also headquarters to the South Sea fleet of China's navy, putting its patrol boats within easy reach of seven countries. The iron ore is loaded onto Baosteel's docks, melted and rolled into steel sheets. Chinese officials say they are lowering the country's steel capacity, but also boast that it is the world's greenest mill, turning out enough metal to meet the capacity of every carmaker in Southeast Asia. As iron ore piles-up in China, and as new cars pile up on docks in Korea, Indonesia and Thailand, profits also accumulate in BHP and Rio's waterfront offices in Singapore. “To be part of that ecosystem”, BHP insider Arnoud Balhuizen has said, “is absolutely critical.”

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9 days

It takes nine days to ship iron ore from Western Australia to Zhanjiang on China's southern tip; 156m tonnes is stacked on Chinese docks, enough to keep its industry going for two months if imports stopped

612 mt

BHP and Rio manage more than 400 ships in the South China Sea, tipping iron ore into Asia at a current rate of 612m tonnes per annum


At today's iron ore prices of $66 per tonne, BHP and Rio Tinto oversee over $40bn of trade from their two offices in Singapore, which also handle coal and crude oil