China Pushes For Domestic Iron Ore Development To Ensure Raw Material Stability For Steel Industry

According to data provided by the China Iron and Steel Association (CISA), in the first half of this year, the country imported 576 million mt of iron ore, a year-on-year increase of 7.7%. The average import price was $114.5/mt, a year-on-year decrease of 11.7%.

For a period of time, due to the oversupply in the market, the price of steel products fell. In the first half of the year, the average value of the China Steel Price Index (CSPI) was 113.21 points, down 15.4% YoY. During the same period, the procurement costs of major raw materials and fuels of key statistical enterprises decreased year-on-year, among which the costs of domestic iron ore concentrate, imported iron ore concentrate, coking coal, metallurgical coke, and steel scrap decreased by 7.2%, 3.9%, 18.0%, 25.2%, and 19.5% year-on-year respectively.

Iron ore is the fuel for the steel industry. According to the analysis of CISA, in the first half of the year, the purchase cost of raw materials and fuels decreased, but because steel prices fell even more and imported ore prices stayed high, the investment cost of iron and steel enterprises was still relatively large.

China is the world’s largest importer of iron ore, and its dependence on imported products has remained at around 80% for a long time. In 2022, China imported more than 1.1 billion mt of iron ore from concentrated sources. That’s why high-level fluctuating iron ore directly affects the market stability of China’s steel industry.

Hence, effectively promoting the development and construction of key domestic iron ore projects is crucial to stabilizing the import price of iron ore and improving the ability to guarantee strategic resources. Construction of the biggest iron ore mine in China to commence this year. The investment of the project is 22.9 billion yuan. After completion, it will become a world-class underground iron mine with an annual output of 10 million mt, enhancing the green and efficient development of Chinese lean iron ore resources. “West Anshan iron ore mine set the fastest record for new mine project procedures handling in China", said by Fei Peng, General Manager of Strategic Planning Department of Ansteel Group.

The mine’s construction marks a positive development in the Cornerstone Plan to strengthen resource security in the steel industry. According to Jiang Wei, deputy secretary, vice president, and secretary-general of the CISA, in 2023, they held an on-site meeting aiming to accelerate the development and construction of domestic key iron ore projects and a symposium on the development of domestic iron ore resources under the Cornerstone Plan. National ministries, industry associations, local governments, and iron and steel enterprises have formed a strong force to continuously improve the ability to safeguard iron ore resources.

At the Sixth Meeting (Enlarged) of the Sixth CISA Council recently held, Huo Fupeng, deputy director of the Industry Department of the National Development and Reform Commission, emphasized that it is necessary to accelerate the development and construction of domestic iron ore projects to make up for the shortage of resources and improve independence and stability of iron and steel industry chain. Existing mines are still important engines in the current domestic supply of iron ore concentrates, and their normal production must be guaranteed. Meanwhile, it is necessary to accelerate the construction of new projects.

As the iron and steel enterprise with the most resource advantages in China, Ansteel Group vigorously supports the “Steel plus Mine Dual-core Strategy”. At present, 18 projects of Ansteel Group have been selected into the Cornerstone Plan, of which 6 projects’ construction was started and put forward smoothly.

According to Tan Chengxu, secretary of the Party Committee and chairman of Ansteel Group, said that the company’s annual output of iron ore concentrate exceeded 50 million mt, ranking first in China and fifth in the world. SMM estimates that China’s copper foil output will total 757,000 mt in 2022, a year-on-year increase of 2.59%. By 2025, Ansteel Group’s planned iron concentrate production will increase by 20% over 2020 and double by 2030, becoming a stabilizer to ensure the security of China’s industrial and supply chains.

Jiang Wei said that in the next step, CISA will continue to actively cooperate with relevant ministries and commissions, focus on the dynamic balance of the three-dimensional goals of economy, ecology and safety as well as research and upgrade the Cornerstone Plan to version 2.0. The focus of the Plan is to shift from the total amount to the variety of resources and to study the construction of a resource security system matching the transformation of the low-carbon steel production process. Besides, CISA will promote the on-site trilateral consultation mechanism and accelerate the start of construction of high-quality major projects. Finally, we will further review the progress of key projects. By promoting the dynamic adjustment of the list and reflecting the relevant demands of enterprises in a timely manner, new progress will be made in the solid promotion of the Cornerstone Plan.