Ministry working to assure iron ore supplies
China will strengthen the establishment of an assurance system for iron ore resources to ensure the steady development of the steel industry during the 12th Five-Year-Plan period (2011-2015), the Ministry of Industry and Information Technology said on Monday.
Ensuring the supply of raw materials for steel mills - including coal and iron ore - will be an essential goal over the next five years, said Luo Tiejun, deputy director of the ministry’s Department of Raw Materials.
Luo commented during an industry event in Tianjin.
China should accelerate the overseas iron ore projects that domestic companies have invested in over the past few years.
"We have invested in many iron ore projects in Australia and Africa, but few have reached large effective production capacities," he said.
According to the ministry, China aims to have an additional 100 million tons of overseas iron ore capacity by the end of 2015.
"Domestic iron ore demand was high during the first nine months and imports during the period increased 11.5 percent," said Luo.
"The number of countries that export iron ore to China keeps growing and has risen from 48 to 63," Luo said, without giving specific data.
He said China should make full use of iron ore resources in nearby countries, where there are abundant reserves.
"For instance, two steel companies in Heilongjiang province imported about 7 million tons of iron ore in 2011, 4 million tons more than last year," Luo said.
The government encourages domestic steel mills to explore resources cooperatively with foreign countries to realize better global resource distribution.
"Mining resources have become the essential element for energy security and sustainable development for all countries," said Zhu Jimin, chairman of Shougang Group, one of China’s largest steel companies, also speaking in Tianjin.
China’s steel production capacity has increased from 100 million tons in 1996 to about 700 million tons at present, spurring rapid growth in iron ore and coal demand, said Zhu.
However, domestic iron ore mines only supplied 32 percent of demand, with imports of 618 million tons in 2010, he added.
"The assurance system for iron ore resources will help the supply situation for domestic steel makers, but a market-oriented mechanism is required to ensure the fairness of the system," said Xu Weidong, managing director of Tianjin Zhongtian Hongda International Trade Co Ltd, a State-owned resources trading company.
"The system helps keep iron ore prices more stable to some extent, but it requires a long time to take effect," he said.
According to the ministry’s announcement, China will eliminate hundreds of small steel companies over five years through mergers and acquisitions. At the end of the five-year period, the total output of the top 10 steel companies will increase from 48.6 percent to 60 percent.
Meanwhile, the government will implement policies to encourage steel companies to establish mills abroad and expand their overseas business, with the aim of forming world-class companies in the industry.
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