Luo Tiejun, deputy director of raw materials at China's Ministry of Industry and Information Technology (MIIT) has stated at the Iron Ore Development Forum held in Beijing that Chinese domestic iron ore miners have come under strong pressure due to high taxes and also due to the fact that their iron ore is mostly of low Fe content. He said that from March this year China has started to draw up long-term development plans for its iron ore industry, trying to solve problems in the industry, such as the heavy tax burden, the large number of miners in China, and weak competitiveness.
Zhu Jimin, vice president of the China Iron and Steel Association (CISA), said that, despite sharp declines in prices this year, foreign miners still have substantial profit margins due to their cost advantage and the large scale of their operations, while domestic iron ore miners in China have been negatively impacted by the falling ore prices.
Li Xinchuang, deputy secretary of the CISA, stated that the iron ore costs of the main overseas miners such as Rio Tinto, BHP Billiton, FMG and Vale stand at only $20/mt, $25/mt, $30/mt and $20/mt, while their costs including freight to China stand at around $40-50/mt, whereas China's domestic production iron ore struggles with costs exceeding $80/mt. In this context, Mr. Li said he believes that Chinese iron ore miners may have the opportunity to compete with foreign miners if their tax rate is reduced to below 10 percent from the current average level of 25 percent, adding that the Chinese government should do something to lower the tax burden for domestic miners.