Source: SEAISI
CISA (China Iron & Steel Association) in the recent 6th China International Steel & Raw Materials Conference reported that within 5 years, China's crude steel production has increased by 223.8 million tons (a staggering 174.15% growth). The rapid growth of production has led to increasing imports of iron ore. In 2005, iron ore import was 275.26 million tons; an increase of 205.29 million tons from the year 2000 figure. The following table summarises the growth of China's crude steel production and iron ore imports.
Crude Steel Production & Iron Ore Imports of China
|
|
2000 |
2001 |
2002 |
2003 |
2004 |
2005
|
|
Crude Steel Prod. |
128.5 |
151.6 |
182.4 |
222.3 |
282.8 |
352.4 |
|
Iron Ore Imports |
70.0 |
92.3 |
111.5 |
148.1 |
208.1 |
275.3 |
(CISA, 2006) in million tons
However, this year China has been experiencing a downward trend in volume and growth rate. In the first quarter, imports reached 80.9 million tons, an increase of 27.73% compared to last year. In the second quarter, iron ore imports dropped to 80.56 million tons or just a 9.26% increase from the same period last year. Imports are still growing in July and August at 14.56% and 42.09% from last year's figure respectively.
The slowing trend of growth is due to production increase of local iron mines. It is estimated that large and medium mines produced 350.4 million tons of iron ore during January-August this year or a 36.07% increase from last year. Smaller miners may have produced 66.7 million during that period so the total local miner's production amounted to 417.2 million tons.
CISA forecasts that during 2006-2010 the annual crude steel production shall be around 13%, therefore the total consumption of iron ore shall also experiencing a change from a high growth to a steady growth. The share of local iron ore will be increased as rapid increases of production are expected in the future.
In the same conference, CMMA (China Metallurgical Mining Association) explained the current status of China's iron ore resources that may limit the future growth. The total China's resource and reserves accounted for only 9% or the world total and 97% are low grade deposits. Furthermore, there are limited number of single metal deposits.
To summarise, the characteristics of iron ore resource in China are:
- Total reserves are 46 billion tons (No.5 after Russia, Brazil, Australia, Ukraina).
- Average Fe content is low (33%). Rich ores of more than 50% Fe are less than 5% of the total resources.
- 50% of the iron ore resources are difficult to mine and to be processed.
Despite the disadvantages, major breakthrough were made in ore dressing for hematite. The grade of concentrates has reached over 67% and recovery rate over 75%. Moreover, profitability of the mining sector has been increasing dramatically. Last year, total revenue of relatively large mining companies was RMB 128 billion with RMB 20 billion in profit, which were 24.1% and 37.5% increase compared with the previous year figures.
To conclude, there is no doubt that China will consume more iron ore as the steel production is forecasted to increase by 13% annually during 2006-2010 period. Imports of iron ore will be increased at more moderate levels as domestic iron ore production will gain more market share. However, the growth of domestic iron ore production will be limited by both technical and economical disadvantages.
