WISCO invests overseas iron ore mine for short-term no-profit

The assets to be injected by Wuhan Iron and Steel Co., Ltd. are mainly divided into four major categories: domestic mines, foreign mines, shares of foreign mineral companies, and shares of several Weilara projects that domestic steel companies owned by WISCO Australia have partnered with BHP Billiton.

Among them, domestic mines and assets are wholly owned by Wuhan Iron and Steel Mining, foreign mines and related assets are included in Wuhan Iron and Steel Mining, international resources and Wuhan Iron and Steel, and Wuhan Iron and Steel Mining, Wuhan Iron and Steel Brazil and international resources have some foreign mineral company stocks. The domestic assets provided by WISCO Group are mainly three iron ore: Daye Iron Mine, Chengchao Iron Mine and Jinshandian Iron Mine. There are two other minerals in Lingxiang and Wulongquan and three prospecting licenses, but all are limestone and Dolomite, the value is very low.

The three iron ore mines under Wuhan Iron and Steel Mining Co., Ltd. are almost all close to the state of depletion of assets. Among them, the Daye iron ore mine has had a mining history of more than a thousand years. During the Westernization Movement in the late Qing Dynasty, it became China's first large-scale iron ore mined by machinery. As early as several years ago, Daye was identified by the State Council as an asset-exhausted city. Although WISCO announced that it had discovered a new ore source in Daye, it did not change the situation of the Daye iron ore mine.

According to the announcement, the metallurgical iron ore reserves of Daye Iron Mine are currently determined to be 1967.48 million tons and only 15.6258 million tons of ore can be mined. Considering the annual production capacity of 3 million tons of Daye iron ore, it is certain that it cannot continue supporting for 10 years.

Several other mines are not more optimistic. The Chengchao iron ore reserves are 1,402,818,000 tons, and the recoverable volume is only about 85 million tons. The Jinshandian iron ore mine is subordinate to two sources, and the total reserve is only 72,574,800 tons. It is difficult for these several mines to support the production of steel enterprises in Hubei. This is also the main reason why the Wuhan Iron and Steel Group has made large-scale overseas investment in minerals since 2008.

In the non-public issuance plan, the assessment values ​​approved for these mines were 280 million yuan in Daye Iron Mine, 450 million yuan in Chengchao Iron Mine and 476 million yuan in Jinshandian Iron Mine.

2 billion foreign company stocks: Having fallen more than halfway through the road of going out of Wuhan Iron and Steel Group, it was first to invest in overseas mining companies, and then to cooperate with them to establish a project company to jointly acquire mining rights, becoming a common practice.

Since 2008, Wuhan Iron and Steel Group's investment has mainly concentrated in Brazil, Australia and Canada.

In 2010, Wuhan Iron and Steel Group and Wuhan Iron and Steel Mining Co., Ltd. registered and established a joint venture company in Brazil. The joint venture company invested US$ 400 million, and 200 million U.S. dollars were used by Wuhan Iron & Steel (Group) Company and Wuhan Iron & Steel Mining Co., Ltd. in proportions of 90% and 10% respectively. There are *** funds to purchase foreign exchange, and the remaining US$ 200 million is applied for settlement by domestic banks. This joint venture company became its second largest shareholder by purchasing shares of MMX.

However, afterwards, the WISCO Group faced other opportunities, including the investment of Canada's Bloomlake and other mines and the construction of the Fangchenggang Steel Plant, which took up most of the capital flow and was almost unable to carry out Brazilian operations at the same time. After March 2012, the Wuhan Iron and Steel Group completely withdrew from the major operations of the MMX listed company, basically becoming a pure financial investor.

With the fall of MMX stocks, Wuhan Iron and Steel Group's investment is also rapidly devalued. In this scheduled increase plan, the appraisal party Zhonghua Hua stated that the main asset of WISCO Brazil is the stock holding 100 million shares of MMX listed company, and the arithmetic mean daily weighted average price of 30 trading days before the benchmark date is 5.42. Real. The final valuation of this part of the stock was 1.71 billion.

This is almost all the assets of WISCO Brazil jointly owned by Wuhan Iron and Steel Group and Wuhan Iron and Steel Mining.

However, an inquiry by the Money Weekly reporter found that on September 30, 2012, the average price of MMX on the 30th day of the M&C China evaluation benchmark was still at 5.42 reais. On April 1, 2013, the latest share price of MMX had fallen to Only 2.23 reais fell about 60%.

In other words, assuming a constant exchange rate, the market value of all MMX stocks owned by WISCO should currently be less than 700 million yuan.

In addition to MMX, the assets injected by Wuhan Iron and Steel Group this time include 30,216,480 shares of Canadian Adriana Resources, with an estimated value of 100 million yuan, and 23197768 shares of Century Irons Corporation (Century Iron Genes Co.), with an estimated value of 160 million yuan and 40,399,599 shares. Australian CXM company stocks are valued at 42.81 million yuan, which are long-term equity investments.

As of the writing of the financial weekly, CXM's latest share price is 0.15 Australian dollars, WISCO's shares have a corresponding value of 40 million yuan; Adriana's price is 0.3 Canadian dollars, and Wuhan Iron and Steel has a corresponding value of 55.45 million yuan. *** However, the price of the Century Iron Ore Company is 0.45 Canadian Dollars, and the corresponding value of the shares held by Wuhan Iron and Steel Company is 64 million Yuan.

In other words, in the previous assessment report, the valuations of the four foreign mining companies totaled 2 billion yuan***, while the current market value of these stocks totaled only 860 million yuan***.

7.5 billion overseas iron ore: basically still in the early stage of the project, no short-term profit due to the poor domestic mineral resources and the failure of foreign equity investment, the biggest highlight of this increase in Wuhan Iron and Steel, is its huge overseas mineral rights. If the issuance is completed, WISCO will become the steel company with the largest overseas iron ore resources among listed companies.

The iron ore of Wuhan Iron and Steel Group is distributed in three countries: Liberia, Canada and Australia.

The project in Liberia was attributed to the name of Zhongli Lian (Hong Kong), which is controlled by International Resources Corporation. Prior to this, Wuhan Iron and Steel Group had considered the listing of this project in Hong Kong. Due to a dispute with a consulting company, it was sent to Hong Kong in the second half of 2012. Dismissed.

If the interests and encumbrances behind Zhonglilian are omitted, based on the quality of the mine, the material disclosed that the Bolivia Iron Project in Liberia plans to adopt open-pit mining methods, with an initial resumption of 1 million tons of iron ore and 900 Million tons of iron ore follow-up project in two phases. The early-stage rehabilitation project is under active construction and is expected to be completed in the second quarter of 2013. It will be put into production in the third quarter of 2013. At this stage, the grade of iron ore concentrate is 62.42%; 9 million tons of iron ore concentrate follow-up project is expected to start production in 2015.

According to the materials provided by WISCO, the current exploration data in this area include: 324,489,000 tons of reserves of resources in Yawei District I, with an average grade of 32.11%; the northern ore body (N1) has reserves of 2,508,930 tons, with an average grade of 33.44%. A total of 63.32 million tons of iron ore resources were reserved for the S3 orebody in the south, with an average grade of 31.29%. A total of 81.22 million tons of iron ore resources were recovered from the Yawei II-Bangfeng section, with an average grade of 36.62%. The resources in the Karma District are 646,882,300 tons, with an average grade of 35.26%.

At present, Wuhan Iron and Steel has 25 years of mining rights in addition to other sections of the mine outside the Karma District, reserves total 1.45 billion tons, with an average grade between 31% -37%.

However, most of the materials issued by Wuhan Iron and Steel are still compiled by the Nonferrous Metals Geological and Mineral Bureau of Henan Province in 2008. There are no other more detailed descriptions, such as the amount of recoverable over the period and the mining plan. However, there is only one geological report in the Karma District, indicating that the exploration phase has just begun and the final result is unknown.

What WISCO really has high hopes for is the minerals in Australia and Canada. Currently through various company associations, Wuhan Iron and Steel owns 60% equity in Aier Iron Mine in Australia, 25% in Bloomlake Iron Mine in Canada, 40% in Sunnylake Iron Mine (Sunshine Lake Project), 60% equity in LacOtelnuk and December Lake Project , as well as 60% of the Attikamagen iron ore mine (Atkinmagan Project) and 40% of the Duncan Lake project.

In fact, among these projects, only mature Bloomlake has been confirmed to be produced. The mine is currently the main source of North American iron ore exports to China. At present, the first phase of this project has been put into production, with an annual output of 8 million tons. According to the plan of its large shareholder, Cliffs, it should complete the second phase in 2013, expand production to 16 million tons, and build the third phase after 2015, and the production capacity will be expanded to 24 million tons.

According to the China Enterprise Report, the valuation of Wuhan Iron and Steel's Bloomlake was 1.89 billion yuan.

So far, Wuhan Iron and Steel has only prospecting rights in other mining areas. For example, Aier Iron Mine obtained five prospecting certificates in 2012; Canada’s Sunshine Lake, Duncan Lake, Atkinkan Magen, and Lac Otelnuk are mining areas with very concentrated prospecting power. WISCO has only controlled part of the prospecting certificates. It is difficult to predict the future earnings of this part of the mineral rights. The December Lake mining area is still in the preliminary investigation stage, but the prospect is unknown.

Moreover, such projects that have acquired less than one year of prospecting rights generally require more than five years to complete the exploration, acquisition of mining rights, and commencement of production. In the meantime, Wuhan Iron and Steel Co., Ltd. needs a large amount of capital investment.

However, China Enterprise Hua did not hesitate to give a high valuation to the prospecting certificate. According to its report, the iron ore project owned by Wuhan Iron and Steel Company had an estimated value of 1.2 billion yuan, state-owned mine assets of 2.4 billion yuan, LacOtelnuk and December Lake Lake. At 1.33 billion yuan, the Attikamagen project was 130 million yuan and the Sunnylake project was 390 million yuan.

In other words, the overall valuation of all overseas mining rights and exploration rights should be around 7.5 billion yuan. The Willala project, despite its lack of access to mineral rights, also saw a high price of 1.45 billion yuan because of profit expectations.

Even so, these assets are still quite a distance from 15 billion yuan. The Wuhan Iron and Steel Mining company received a valuation of nearly 8 billion yuan. The total appraisal value of its domestic mining rights, Ai Iron Mine, Bloomlake, and equity investment is less than RMB 5 billion, and the remaining RMB 3 billion may only come from mining equipment, mine land use certificates, housing, vehicles, and logistics. waited.