Flood of Exploration ?? China Seeks Mongolia's Copper, Ore as Imports Rise (Update2)
March 3 (Bloomberg) -- Dairy farming and steel dominate the economy of China's Baotou County, about 12 hours' drive west of Beijing in Inner Mongolia. The cows are about to be demoted.
Next to a 1950s Chinese government-built steel foundry in the main city, also called Baotou, is a year-old steel mill --and the foundations of another mill. Nearby is phase one of what will be China's biggest aluminum smelter and the beginnings of its second-biggest copper smelter.
This activity follows discoveries of an estimated 50 million tons of iron ore, 6 billion tons of coal and what might be the world's biggest deposit of copper and gold in the Gobi Desert of neighboring Mongolia, an independent state.
Mining companies such as AngloGold Ltd., BHP Billiton, Ivanhoe Mines Ltd. and Cia. Vale do Rio Doce are betting China and Mongolia will agree to build a rail link from the southern Gobi Desert to Baotou. That would place Mongolia's bounty, still being explored, among the world's most profitable strikes.
Minerals in southern Mongolia ``are probably one of the largest stories in the metals and mining industry right now,'' said Pierre Martin, a fund manager with DWS Investment GmbH in Frankfurt. ``It puts China in a better position.''
DWS Investment holds 8 million shares in Ivanhoe Mines, a Vancouver-based company that owns the rights to explore 111,000 square kilometers (43,000 square miles) in Mongolia -- an area the size of Honduras.
Mongolia says it expects to sign an agreement with China this month for a $300 million loan, offered through China's Export-Import Bank, to build the transport and power infrastructure needed to mine its minerals and get them to Baotou.
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