Baosteel Resources Australia Co., Ltd. and Australian partner Aurizon Co., Ltd. jointly acquired the equity of Aquila Resources Co., Ltd., which will become the largest deal that Chinese investors have made in entering the undeveloped iron ore project in Australia in the past two to three years, helping to break the force. BHP Billiton’s monopoly in the Australian iron ore export market.

If this acquisition is successful and can prove that Aquila Resources holds 50% of the $7 billion worth of West Pilbara Iron Ore Project (WPIO) for commercial viability, Baosteel may open a new one in Australia. In the iron ore export area, iron ore is supplied to Asian steel mills and iron ore production is expected to begin in 2017-2018.

The WPIO project reserves more than 2 billion tons, second only to the Roy Hill project reserves owned by Australian billionaire Gina Rinehart. The latter is also located in the Pilbara region, with reserves of 2.4 billion tons, and is expected to start production in 2015.

According to the plan, the annual output of the WPIO project will be 30 million tons in the first phase. Although dwarfed by Rio Tinto's and BHP Billiton's forecast of 620 million tons of iron ore in 2017, it is even more important for Asian steel producers that the WPIO project partners plan to build a new railway line at Anketell Point. A port. Unlike Rio Tinto’s railways and ports, these railroads and ports will be open to other miners, providing a way out for projects that have so far been suspended due to the lack of transport channels. According to reports, Anketell Port has a designed annual handling capacity of 300 million tons.

The remaining equity of the WPIO project is held by AMCI and South Korea’s Posco. Based on the price of Posco’s acquisition of 24.5% of the project in 2010, Aquila’s 50% stake in the WPIO project is worth at least A$375 million. However, Aquila's valuation of the WPIO project may be much higher than this level, and the company emphasized in its 2013 annual report that the project has increased reserves by nearly 2 times since exploration and has obtained the necessary state and federal Environmental approval.

If the acquisition is successful, Baosteel Resources International will hold up to 85% of Aquila's shares and the remaining shares will be held by Aurizon. Although the growth in demand for China's steel and iron ore may slow down, the overall demand will remain huge, which will make this acquisition more reasonable.