It looks like Colourful Clive Palmer has moved a large step closer to landing another major Chinese iron ore deal for his WA magnetite resources with his Australasian Resources announcing a project agreement with steel maker Shougang that could see the US$2 billion development of Balmoral South.

That would be additional to the CITIC Pacific deal Palmer has done through his private company for the nearby Cape Preston deposit.

The AFR jumps the gun a little this morning by reporting the project agreement means the big Balmoral South development is a done thing – there are a few more bridges to cross yet – but it’s certainly much closer. Shougang also is buying 12.8 per cent of Australasian for $56 million that will help the company’s immediate funding needs.

Now maybe Australasian might think about resuming trading on the ASX – it’s been suspended for several months. The Shougang placement puts a price of just $437.5 million on all of Australasian, but it will be up to the market to really decide its worth, one of these days.

Palmer’s success in promoting the magnetite deposits is just a small part of the continuing Chinese commodities boom story. All reports of that booms death have proven exaggerated, resulting in some embarrassing reappraisals.

Chanticleer today mentions Citigroup and Macquarie Bank analysts have scrapped their forecasts of copper prices falling by 20% and 15% respectively next year. They’re now tipping a five per cent rise. Credit Suisse, which already had a 5% growth figure, is considering going higher.

And that, boys and girls, is why the money will keep rolling into Peter Costello’s Treasury, funding any number of barrels containing pig meat.

Peter Fray

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