SHANGHAI, Oct 14 (SMM) - The operation of domestic iron ore mines have been affected by the mine accidents in Qianxi County and Shanxi Province, and the use of explosives are increasingly restricted with the National Congress around the corner. According to SMM estimates, the average capacity utilisation rate of domestic iron ore mines stood at 55.9% in September 2022, down 1.8 percentage points MoM. During the same period, the iron ore concentrate output was 20.36 million mt, a decline of 1.37 million mt from a month ago. Specifically, the output of state-owned mines fell 3.1% to 10.93 million mt, and that of private mines dropped 9.7% to 9.43 million mt.
The capacity utilisation rates dropped of mines in Hebei, Shanxi, Jilin, Jiangsu, Xinjiang and other provinces in south-west China. The reasons are as follows. First, the mine accidents in Daixian County, Qianxi County and Tonghua City resulted in restriction on production for security concerns. The explosives supply was banned, and dressing plants with insufficient ROM inventory were closed. Second, the use of explosives in areas surrounding Beijing have long been restricted due to the upcoming National Congress. Third, mines in some areas were forced to halt the production due to snowfalls.
The capacity utilisation rates of mines increased of mines in Inner Mongolia, Liaoning, Shandong, Anhui, Jiangxi, Fujian, Guangdong and other provinces in central China. First, many mines in the above-mentioned places ramped up the production in late September, when the ore prices rose. Second, most mines resumed the operation as the maintenance and power rationing ended.
SMM expects that the average capacity utilisation rate of domestic mines will continue to decline in October. It is mainly because explosives supply has been prohibited on the upcoming national major conferences. At the same time, many mines have to cut the output due to a lack of ROM inventory. Among them, mines in Hebei are affected most, where the explosives are completely banned in October. As a result, all dressing plants were shut down in Tangshan and Hanxing, except for affiliated dressing plants to open-pit mines. In addition, the weather is turning cold in north China, where it begins to snow. The adverse weather, coupled with poor profits, has caused some mines to suspend the production as well.
