Given the strong position of the big three iron ore giants - Vale, BHP Billiton and Rio Tinto - and following the switch from the annual to a quarterly pricing system, Chinese steel producers have been paying increasingly higher prices for iron ore. In this context, Chinese steelmakers are seeking to create greater diversification in their sources of iron ore supplies.
According to Chinese steel producer Shandong Steel Group (Shangang), apart from the major iron ore sources like Australia and Brazil, Shangang has also imported iron ore from Chile and India. Of the iron ore purchased by Shangang, 80 percent comes from overseas sources, while the remaining 20 percent comes from Chinese domestic iron ore mines in various regions including Shandong, Hebei, Jiangsu and Hainan. On the overseas iron ore sources' side, in addition to the big three iron ore giants, Shangang also imports from Australia-based Robe River Co., Australia's Hammersley Co. and Chile-based CMP Co..
Meanwhile, the Chinese steel producers are also now paying greater attention to cooperation with smaller mines. As stated by Xu Lejiang, chairman of Shanghai-based Baosteel Group, Chinese steel producers have expanded their iron ore sources to include more than forty countries.