China’s willingness to step in and invest in struggling iron ore mines around the world will prevent iron ore prices returning to boomtime highs, Rio Tinto iron ore chief �Andrew Harding says.

Speaking to The Australian yesterday, Mr Harding said investments in iron ore by both customers and competitors would continue to keep the global iron ore market in balance over the longer term.

“I’m sure that will continue to play out,” Mr Harding said when asked about recent Chinese �investment in iron ore assets around the world.

“Whether it’s customers want- ing to get involved — and there have been examples of countries doing that before — or whether it’s further suppliers coming into the market, the market will sort �itself out over the longer term. It will all be about trying to match supply to demand.”

Chinese steel company Shandong Iron and Steel last month agreed to step in and acquire a �further 75 per cent stake in the Tonkolili iron ore mine in Sierra Leone from collapsed miner �African Minerals.

Shandong plans to restart Tonkolili, which with a production capacity of about 20 million tonnes a year of iron ore was one of the largest sources of iron ore supply knocked out by the slump in iron ore prices.

Chinese interests are also the obvious buyer of a stake in the �assets of Fortescue Metals Group. Fortescue flagged back in March that it would be willing to explore a sale of a minority stake and has had informal talks with a range of groups.

There have also been reports of several applications to the Foreign Investment Review Board regarding potential investments in Australian iron ore assets, with Chinese interests again seen as the most likely parties.

Mr Harding said that a return to the record high iron ore prices of recent years was unlikely against that backdrop.

“What we’ve been through is a boom in price, the price was quite elevated from where it had been historically,” he said.

“The future is not going to be reflective of the most recent years of price, it will be reflective of the longer-term supply and demand.

“Those fundamental rules �existed before and they existed during the price boom; the supply just took some time to catch up. Now we’re going to have supply well caught up with demand for a considerable period of time.”

While the spot iron ore price continued its recent rally on Wednesday night, rising by 0.8 per cent to $US62.60 a tonne, bleak diagnoses continue to dominate the sector.

Goldman Sachs yesterday forecast that iron ore would �continue to slide over the next few years to just $US40 a tonne in 2017.

Mr Harding’s comments came as Li Xinchuang, deputy chairman of the China Iron and Steel Association, said the Chinese steel mills the association represents would be willing to invest in iron ore mines on the right terms.

“If the cost is OK, there are lots of opportunities to invest,” Mr Li said. “Not just in Africa, but also in South America and also opportunities in Australia.”

Speaking after an address at the Stockbrokers Association of Australia conference yesterday, Mr Li told The Australian the �recent volatility in the iron ore price — which has prompted �accusations from Fortescue founder Andrew Forrest that major producers BHP Billiton and Rio Tinto were manipulating the �market — was a normal function of the market.

“What is happening in iron ore is natural, don’t worry,” he said.

“The good companies, the low-cost companies, will push out the high-cost companies.”

Fortescue is seen as one of the most likely iron ore miners courting Chinese investment, and the company has repeatedly said it has various parties “knocking on its door” from time to time.

But Fortescue chief financial officer Stephen Pearce was unwilling to say whether the miner was currently in any talks when he fronted the media yesterday.

Speaking at an event to mark the opening of the 270km Fortescue River gas pipeline, which will pipe gas to the company’s Solomon mining hub and reduce its annual energy bill by about $20 million, Mr Pearce deflected questions about Chinese interest in the company.

“This morning for us is all about celebrating the opening of the Fortescue River gas pipeline; we’ve made comments on those sorts of things over the last few days,” he said.

Western Australia Premier Colin Barnett said he would �welcome any further investment in the state’s iron ore sector by Chinese entities, noting that Japanese and Chinese customers had historically taken strategic interests in many of the state’s iron ore mines.

“I’ve always encouraged (them), particularly the Chinese in recent times, to invest; don’t get in a dominant position necessarily, look for quality partners and quality resources,” Mr Barnett said. “I’m quite open. If Chinese interests wanted to increase their investment in Australian mining I think that’s a good thing, as long as the Australian participation �remains strong.”�