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Iron Ore Eats China's Steelmaking Profit

Tuesday, 21 February 2012 | 11:00
Indexes for steel varieties have seen sharp decline since the New Year began, particularly cold rolled and longs materials. There are many things to blame for the sluggish market, and iron ore monopoly is certainly one of them.
For 2011, Rio Tinto Group, BHP and Vale posted a net profit of $5.8 billion, $23.065 and $22.885 billion respectively, 3.7 folds of the profit of RMB 87.5 billion ($13.9) reported by 77 large and medium sized steel mills in China.
The alternative sources which China considers as a break down to iron ore monopoly are successively raising export tariffs. Even the stable supplier, Australia , which fed 43% of Chinese iron ore consumption in 2011, seems like an unexploded bomber after they passed 30% Australian Resources Tax which is to be effective from July 01, 2012.
China is facing threat to the country's resources safety, as China 's dependency rate of iron ore surpasses 50%, according to Xu Shaoshi, Minister of the ministry of Land and Resources. To jump out of the boundary, China launched own index and spot trading platform, encourages oversea investment in mining, ports, and define it as a strategic mineral, but it seems there's still a long way to go.
China's demand for mineral resources will peak in 2025~2035 and then steadily fall down later on, said Xu.
Source: Steel Home
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