An Australian miner holds a piece of iron ore produced in the western region of Australia.
China plans to develop two iron ore mines of international significance overseas by 2025 to boost iron ore production.
That’s part of a five-year plan set out in a steel industry development plan released Monday (Jan. 4) by China’s Ministry of Industry and Information Technology.
China is the world’s largest steel producer, yet the quality of its domestic iron ore production is much lower than that of Brazil and Australia. It relies on imports for 80% of the iron ore it needs. However, no data has been seen on how much of this 80% of imported iron ore comes from overseas iron ore mines owned by China.
China’s iron ore imports in 2019 were 1.069 billion tons. China’s iron ore imports mainly come from Brazil and Australia. Due to the epidemic, Brazil’s iron ore production has plummeted, leading to China’s increased reliance on Australian iron ore. But the tension between China and Australia has made China feel that iron ore is another commodity that China is “stuck” with.
Since Australia proposed an independent international investigation into the source of the new coronavirus, China has been expanding its restrictions on Australian exports. The restrictions have been extended to many commodities such as barley, beef, seafood, wine and coal.
Iron ore is not included in the sanctions because it has too much impact on China’s steel industry. However, in recent months, the price of iron ore in Australia has risen sharply, leaving Chinese steel companies crying out for help. Therefore, it has become an urgent task for the Chinese government to broaden the sources of iron ore imports and seek iron ore pricing power.
China’s Ministry of Industry and Information Technology (MIIT) has proposed in its “Guidance on Promoting High-Quality Development of the Iron and Steel Industry (Draft for Comments)” that China plans to increase the share of iron ore mines held overseas by Chinese companies to at least 20% of China’s iron ore imports by 2025.
In 2019, Chinese companies won the No. 1 and No. 2 mines of the Simandou iron ore mine in Guinea. The two blocks hold high-quality iron ore reserves estimated at more than 3.6 billion tons. mining licenses for Blocks 3 and 4 are jointly held by a joint venture formed by Australia’s Rio Tinto and Chinalco.
The Simandou iron ore mine is the world’s largest undeveloped resource of high-quality open-pit hematite ore.
China will accelerate the construction of large-scale iron ore projects in West Africa and Western Australia, the Ministry of Industry and Information Technology said. In addition, China will also cooperate with neighboring countries such as Russia, Kazakhstan, Mongolia and Cambodia, which have rich iron ore resources, in iron ore resources. Meanwhile, the Ministry of Industry and Information Technology said that China will also “promote the development and utilization of alloy and alloy ore resources in Southeast Asia, Central Asia and Africa to form an effective supply capacity as soon as possible.
The development plan also states that China will enhance its iron ore pricing voice and study the establishment of an “open, fair and transparent iron ore pricing system.
The Chinese government also plans to speed up the merger and integration of the steel industry to form a “world-class” steel group.
China’s top five steel companies are expected to account for 40% of China’s total steel production by 2025.
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