Nick Squires
When will China be ready to invade Taiwan? Perhaps never. But Xi Jinping is talking a lot about war, and a huge military and naval buildup is underway. It’s definitely something to think about.
One limitation on Xi is that an attack across the Taiwan Strait might well be seen by China itself as bringing a recalcitrant province to heel, but in the Western world it would be seen rather differently. It is likely that at least some supplies of raw materials into the Chinese economy would be cut off if it does happen.
Possibly the most vital of these would be the iron ore with which China is building itself. Constructing version 1.0 of a modern society requires vast amounts of iron and steel. Our own situation, where building something new usually means tearing down something else first, produces a lot of steel scrap. This is why the recent Tata and Port Talbot issue in Wales is being resolved with £500 million to build scrap reprocessing furnaces, rather than ones to make new steel. This is why Nucor, American’s largest steel company, is mainly engaged in reprocessing the scrap from taking down the last version of society to make the next. In the West we mostly do not need to make new, we can be green and reprocess old. But building for the first time, as China very often is, cannot be done that way.
Therefore China is reliant upon imports of iron ore: that’s the only way it can continue to develop. The imports come mainly from Australia, and a war over Taiwan would interdict that. Currently there are, quite literally, mountains of iron oxide in the Pilbara and other parts of Western Australia that get shipped off to make China’s new cities. The likelihood is that would stop upon hostilities. So, China will probably only feel free to initiate those hostilities when it can replace those supplies.
Sadly iron ore is not just iron ore – nothing in mining is ever quite that simple. There’s plenty of magnetite around – China mines tens of millions of tonnes a year of it at home. The trouble with magnetite is that it requires considerable processing from rock to furnace, and there isn’t enough to meet China’s requirements. There’s another type of ore, a step further back, called taconite which is also common – iron itself is very common of course. But what people actually want is hematite (or haematite) which is also known as direct shipping ore, DSO. It’s not quite true, but almost, that mining this stuff is as simple as scooping it into a railroad car and sending it off. This is also what’s available in the hundreds of millions of tonnes quantities necessary to build that new China.
Well, it’s currently available as long as those Australian mines keep shipping. Even in Australia there’s not quite enough: one Chinese company also mines magnetite in that country.
So, if China invades Taiwan it’ll lose – at least for a time, until bruised egos give way to money again – access to those Australian iron ores. But if iron’s that common around the world then possibly it can be purchased from elsewhere? There is substantial mining of hematite in Brazil but simply not enough to feed those furnaces. Nor is it feasible to ramp up supplies from there.
But there is one other source. The last – last known at least – vast hematite deposit is in Guinea in West Africa. This is like those vast Australian deposits. Shovel the mountains into the rail cars and ship them off. It’s large enough to keep China going for a time, too. The Chinese government has insisted that it wants to reduce dependence upon the Land of Kangaroos. The Chinese government has encouraged investment in that iron ore project in Guinea.
The whole thing is called “Simandou”. It’s divided into four pieces, but 1 and 2 are let to one group of companies, 3 and 4 to another. The first is a Singapore logistics company, a Chinese miner and the government of Guinea. The second is Rio Tinto, a Chinese company and the government again. The involvement of the logistics company is important.
That’s because this type of iron ore mining is a lot less about mining than it is about transporting the stuff, which means building a railway to get it to the coast and a harbour to get it aboard ships to China. So the opening of Simandou depends on how quickly 600km of railroad line can be built, with port facilities at the end. Progress on the project was delayed for many years by accusations and counter-accusations of corruption, and changes of government in Guinea.
The most recent government change was a military coup in 2021. Everything stopped again for a year – was stopped for a year. The more cynical observers (me) put this down to the colonels deciding how many Rolexes everyone should get. This is West Africa. But now there’s a declaration from the new government: Simandou will be producing by March 2025, with the railroad and port ready by the end of 2024.
I would say: not a chance. If the project does meet that timescale it’ll fall apart. As with all engineering you can get it fast, cheap, good – pick any two. The whispering, perhaps muttering, around the industry is that 2028 looks like a better date for something that could work reliably for the desired decades.
It could be, of course, that cheap doesn’t matter when there’s military glory to be had. Xi Jinping is an old man and those with political power do have that disturbing habit of wanting to do something famous before they pop off themselves. Good sense and the lives of others aren’t fully part of that calculation before the long good night. Some China watchers, too, think that Xi may need a war soon in order to unite the country and stand off internal forces which are possibly plotting to oust him.
But China would find it very troublesome to invade Taiwan without a replacement iron ore supply. That can really only come from this project in Guinea. Which might, maybe, start shipping in 2025 if cost truly isn’t a worry but later is more likely.
Now, because I’m a realist, not a cynic, what I would not be surprised to see is a substantial spend on Rolexes in the Taiwanese military budget. This is West Africa after all.
However things play out, it’s true to say that Taiwan will be a lot less safe as and when Simandou ore starts to ship. Those who are interested in Taiwan, whether that’s because it’s a righteous democracy or because it makes much of the world’s supply of microchips (often making big money for designers such as UK-based Arm as it does so) – such people and their navies, air forces and marines might do well to keep an eye on events in Guinea and specifically the Simandou project.
No comments:
Post a Comment