Chinese anger at Rio Tinto and BHP Billiton's proposed Pilbara iron ore merger would benefit WA's emerging producers, industry veteran George Jones predicted yesterday.
Speaking from Beijing, the Gindalbie Metals chairman said Chinese sentiment towards WA remained favourable and that Premier Colin Barnett's vocal opposition to the Rio-BHP Pilbara tie-up had been well received by the country's rulers.
In further good news for junior members of WA's iron ore sector, analysts at Goldman Sachs JBWere have upgraded their 2010 benchmark price forecasts from rollover to a 10 per cent gain on this year's figures.
The positive GSJBW view is in stark contrast to widespread market views only a few months ago that 2010 would herald another year of price cuts to further undermine project viabilities for many iron ore juniors.
GSJBW justified its positive stance by pointing to higher than expected Chineses iron ore imports and Rio and BHP's 2009 benchmark settlements with Japanese and Korean mills.
"After conceding contract price cuts in 2009 ranging from 28 per cent to 48 per cent depending on the product, we belive the balance of pricing power will shift back in favour of the suppliers in 2010," GSJBW said.
However, it remains unclear whether China will follow Japan and Korea and agree to similar price cuts for this year's ore supplies. China's stell mills have been holding out for a steeper cut and their stance is likely to have only toughened in the wake of the proposed Rio-BHP tie-up.
There were also fears in WAS, particulary in political circles, of a Chinese backlash to the venture not just in terms of pricing but also in terms of China's steel mills deserting the State in favour of pursuing iron ore developments in other parts of the world.
The BHP-Rio deal remains the subject of a lengthy global regulatory approvals process, with European, Japanese and Chinese steel giant, AnSteel, conceded yesterday the Rio-BHP deal was "the worst outcome for China possible" but said it opened up opportunities for WA's other miners trying to develop costly iron ore projects.
And he dismissed concerns any Chinese backlash would extend to regulators in Beijing delaying a vital $162 million cash injection by AnSteel into Gindalbie.
Chinese approval is the only hurdle before Gindalbie received the cash and begins development of Karara.
"It won't slow us down, in fact it's a huge plus," Mr Jones said. "It (the Rio-BHP deal) is pretty positive for the Mid-West and for some of the juniors in the Pilbara. They (China) will be more determined to make sure that other projects don't happen.
"Development projects are pretty scarce so it's logical that the ones heading towards development will receive a lot of attention."
Mr Jones' comments were supported by the share price re-rating of a raft of WA miners, led by Gindalbie and Fortescue Metals Group, since Rio-BHP deal was announced as investors clamoured to find stocks that would benefit from increased Chinese attention.
Gindalbie has gained 15 per cent while Fortescue, whose second-biggest shareholder is Chinese mill Hunan Valin Iron and Steel, soared 30 per cent. In a show of its support for China's steel industry, Fortescue held a board meeting in Beijing this week.
Other iron ore hopefuls like Aquila Resources, which needs to raise $2 billion for its half-share in the ambitious West Pilbara project and is likely to llok to China for funding, gained 20 per cent while BC Iron, which is poised to become the Pilbara's next producer, added 53 per cent.
Mr Jones said Beijing was "absolutely buzzing" again.