Jackie Przbylowski, an industry analyst who works for Desjardins Capital Markets, expects Chinese firms will continue investing in Canadian Iron Ore projects this year due to volatile iron ore prices.
Przbylowski wrote in a recent report, “Chinese steelmakers' investment in Canadian iron ore and metallurgical coal development projects is positive as this provides firms with access to much-needed and hard-to-secure capital”
Last year, China Steel Corp in partnership with Posco, a South Korean steelmaker, acquired a 15% stake in Montreal-based Arcelor Mittal Mines Canada for $1.1billion.
Przybylowski also mentioned that investors are seeking projects that have long-term production volumes and will invest in projects if they are in their nascent stages.
Champion Iron Mines is likely to sign a joint venture partnership since it lacks available funds said Przybylowski.
Other major companies developing projects in Canada, such as Alderon Iron Ore and New Millennium, have acquired deals that are expected to provide some or all of the required capital spending this year, which allows them to not have to raise cash this year.
Przybylowski also noted that Chinese steel firms would continue to seek long-term ore supply and manage input cost despite the fact that there are volatility in iron prices that started last year.
By Baron Laudermilk