Xiamen authorities point to quality issues with Indian iron ore imports

Wednesday, 02 December 2009 07:22:44 (GMT+2)

From 2006 up to October this year, the Inspection and Quarantine Bureau in Xiamen in the southeastern Chinese province of Fujian found 228 batches of imported iron ore to be below standard and thus disqualified, with the products in question amounting to a total tonnage of 9.04 million mt worth $913 million. Among the disqualified iron ores, Indian iron ores accounted for 157 batches, totaling 5.44 million mt with a value of $540 million. The figures thus point to a serious quality problem in relation to iron ores imported from India.

According to the Xiamen Inspection and Quarantine Bureau, quality issues in relation to Indian iron ores include low iron content, adulteration via the inclusion of extraneous materials and tonnages which are regularly lower than the ordered quantities.

India is the chief exporter of iron ore to Xiamen. From 2006 to October this year, the Xiamen Inspection and Quarantine Bureau has inspected a total of 379 batches or 16.66 million mt of Indian iron ore worth $2.263 billion.

India has proven reserves of 25.25 billion mt of iron ore, with a basic reserve of 17.71 billion mt, accounting for 6.8 to 7.0 percent of global reserves. In spite of having strong reserves of iron ore, India had previously not undertaken mining of the resource in question on a massive scale due to certain historical reasons, and some large-scale mines were only producing several million mt of iron ores per year. Massive exploration began several years ago with the growth of the global steel industry, especially in line with the rapid development of the Chinese steel industry. At that time, a great number of small iron ore mines emerged in succession. In order to obtain huge profits, these small mines sold iron ore adulterated with non-Fe materials or palmed off low-grade iron ores.

Around eighty percent of Indian iron ores are exported to China. Due to the price surge in the global market, some steel producers are so eager to obtain iron ore that they pay less attention to quality issues. Some have even been issuing L/C to suppliers in advance for 100 percent-prepayment. Thus, when such steel producers have claimed compensation for substandard iron ores, Indian suppliers have rejected the results of the quality tests since they have already received full payment or have stopped their supplies. Thus the Chinese importers are unable to retrieve their losses.

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