Chinese steelmaker Anshan Iron and Steel Group has decided to abandon its plan to build a pellet plant and a steel mill near Geraldton in Western Australia over concerns about high manufacturing costs and steel demand in Australia, an executive of Anshan Steel's raw materials department said Thursday.
In 2009, Anshan Steel entered into an agreement with the Western Australian government for a joint feasibility into the planned pellet plant and steel plant. The plant was to have a design steelmaking capacity of about 2 million mt/year.
"Anshan Steel originally planned to locally consume the iron ore output from its captive Karara iron ore mine and sell finished steel products on the Australian market," the Anshan Steel source said.
But considering the relatively weak steel demand in Western Australia and high transport costs from Australia to steel markets overseas, Anshan Steel later became less interested in the steelmaking project, according to the source.
"It would be more profitable to use/sell WA iron ore in China than to process the ore into finished steel and sell on the Australian market," he added