He Wenbo: Chinese mills should focus on overseas and local iron ore investments

Friday, 29 May 2020 12:19:22 (GMT+3)   |   Shanghai

He Wenbo, secretary of the Communist Party Committee of the China Iron and Steel Association (CISA), has suggested increasing the development of overseas iron ore resources and has encouraged Chinese steelmakers to jointly “go abroad” to directly invest in overseas mining companies’ equity and mining assets, while also moderately increasing the supply of Chinese domestic iron ore.

According to Mr. He, iron ore-based steel production accounts for 75 percent of global steel output, with China’s percentage above this average level in the global market, while China has had to depend on import iron ore due to the high cost of domestic ore.

To ensure stable iron ore supply, Chinese mills should continue investments abroad, cooperation with major miners, and development of mines in Africa and Canada, the CISA official stated.

Moreover, Mr. He said that it is necessary to increase and to keep China’s domestic iron ore production at more than 20 percent of total demand by using revenue from a value-added tax on iron ore imports for the creation of a fund for local iron ore production development. This fund should be about RMB 90 billion ($12.6 billion) per year, he noted.

Import iron ore prices in China moved on an overall uptrend in May, reaching their highest level of $97.5/mt CFR on May 19 from $83.3/mt CFR on May 1, and fluctuated within a limited range at a high level in late May amid good demand from steelmakers, according to SteelOrbis’ data. 

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