A miner holds a lump of iron ore at a mine located in the Pilbara region of Western Australia December 2, 2013.
A miner holds a lump of iron ore at a mine located in the Pilbara region of Western Australia December 2, 2013. The world's second-biggest iron ore miner, Rio Tinto, last week said it would delay the expansion of its iron ore operations in Australia to 2017 but save $3 billion in the process. It plans to cut capital spending to $11 billion in 2014 from just under $14 billion this year, and sees capital spending at $8 billion in 2015, which would be less than half the level it was in 2012. Picture taken December 2, 2013. Reuters/David Gray

Australia’s iron ore production may soon be surpassed by Brazil as China has a $5 billion stake in the country’s iron ore industry. Vale, the Brazilian mining company who accepted a deal with China, can now expand its iron ore mines.

The Chinese invested in several of the Brazilian company’s giant ore carriers or ships that can carry more resources and cut transport costs by 25 percent. Vale is expected to produce more iron ore than Rio Tinto and BHP Billiton combined, reports ABC.

“The Chinese have put in a revolving line of credit for Vale of about $5 billion,” said Jose Blanco, chair of the Australian Latin American Business Council. He added that the Chinese would take equity in some of the Valemax vessels that the Brazilian company has been using to transport iron ore to China.

Vale is predicted to increase iron ore production from 330 million tonnes to 450 million tonnes by 2018. The forecasted production has helped put into perspective the complaints about unsustainable ore prices and calls of billionaire Andrew Forrest for an inquiry. However, Blanco said he does not see any value in the inquiry.

Forrest said “plane loads” of lobbyists should be blamed for the Australian government’s decision to back down from a proposed inquiry. The Abbott government has already confirmed it will not push through with the resources sector investigation of BHP Billiton and Rio Tinto.

Forrest said the decision has raised questions about the influence of multinationals in Australia. The billionaire added he has literally seen lobbyists being flown in by multinationals into Canberra. He added that governments should not be manipulated in this way, reports SMH.

Australian Treasurer Joe Hockey has acknowledged that the consultation resulted into the inquiry being abandoned. In a statement released Thursday night, Hockey said the government would not be launching an investigation during this time.

Blanco told a conference in Sydney early this week that Australian miners and investors should view Latin America as an opportunity and not a threat. About 25 percent of the global investment for exploration of non-ferrous metals is in Latin America for the past 10 years.

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