China to build overseas iron ore mines to ensure supply, boost pricing power

Tuesday, 05 January 2021 16:35:07 (GMT+3)   |   Shanghai

China is aiming to build one or two globally influential overseas iron ore mines by 2025 to boost supply of the steelmaking ingredient from alternative sources and strengthen its pricing power, with the supply of iron ore from its overseas equity mines to account for more than 20 percent of iron ore imports, according to a five-year plan for the steel sector issued by China’s Ministry of Industry and Information Technology (MIIT).

The plan is open for public feedback until January 31, and also targets increased supply of other steelmaking mineral supplies such as manganese and chrome.

China will also accelerate mergers and acquisitions in the steel sector and form several “world-class” steel groups, the MIIT said.

The top five Chinese steelmakers are expected to account for 40 percent of China’s total steel output by 2025, while the top 10 will account for a 60 percent share, up from 37 percent at present.

Electric arc furnaces, mostly using scrap steel as feedstock, should account for 15-20 percent of China’s crude steel output by 2025, it added, from around 10 percent or less at the moment. In particular, annual domestic scrap supply will reach 300 million mt by 2025.

In China, new steel production capacity will be strictly prohibited and new steel projects in coastal areas are “in principle” not allowed, the MIIT said.

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