“The price has risen. The increase in production of domestic mines is not a problem. It is not a problem for the formation of iron ore negotiations.†Lei Pingxi, secretary-general of the China Metallurgical and Mining Enterprises Association, told reporters.
Recently, the Ministry of Land and Resources held a national report on the major achievements in iron ore exploration and mining. At the meeting, the Ministry of Land and Resources revealed that at present, the production of domestic mines has increased significantly; moreover, the iron ore design capacity under construction and planned construction in China is 480 million tons per year. With the start of production of these new mines, domestic iron ore supply will be provided. Capacity will continue to increase steadily.
Increased production of domestic mines will bring a bit of warmth to China’s iron ore negotiations this year. Luo Bingsheng, executive vice president of the China Iron and Steel Association, told reporters that domestic mines are increasing production and will replace the market share of imported iron ore to a certain extent.
Increased production
In the first half of last year, as the price of spot mines plummeted, the proportion of domestic mines that stopped production was once as high as 70%.
Starting from the second half of 2009, the spot ore field has gradually increased and has now risen from the low of US$60/ton last year to US$140/ton. With the rise in the spot price of iron ore, domestic mines began to resume production.
Analysts said that in the near future, the domestic spot price of mines quickly rose. At the same time, due to the callback of shipping charges, the premium of domestic ore spot prices on Australia and Brazil's long-term co- ore CIF has increased significantly. Among them, the premium of CFO Australia's long-term CIF price has increased to 72.8%, and the premium of Brazil's long-term CIF share price has increased to 54.9%.
"On the one hand, the rise in domestic ore prices will lead to the recovery of domestic mines; on the other hand, domestic mines will bring pressure for the price of long-term mines," said the analyst.
Lei Pingxi told reporters that at present, domestic iron ore mines have basically resumed production and their demand is bullish. "The cost of domestically produced ore is about 600 yuan per ton. The market price is now far higher than this level."
Hebei Province is the country's largest iron ore production area. At present, the recovery of mining enterprises in Hebei Province is obvious. Wang Dayong, Secretary-General of the Hebei Metallurgical Industry Association, told reporters that at present, the original ore production in Hebei Province has gradually increased, and production increased by more than 30%.
A purchasing person in charge of Hebei Iron and Steel Group told the reporter that from the overall perspective, domestic steel mills are gradually increasing the procurement of domestic ore; if the spot mine further rises, steel mills will consider increasing the use of domestic ore again.
Lei Pingxi said that at present, China's iron ore mines have an annual capacity of 1.1 billion tons of iron ore. It is expected that the actual production of domestic iron ore will reach 1 billion tons this year.
In addition, Lei Pingxi also expects that the total investment in domestic iron ore is expected to further increase. "Last year, the total investment of domestic mines was about 80 billion yuan. This year's market is likely to be better than last year. Therefore, the total investment is expected to increase."
Or become a "fire brigade"
China Steel Association has proposed a goal, that is, in the market share, domestic mines and imported mines accounted for 60% and 40% respectively. However, in 2009, China’s steel industry’s dependence on imported iron ore has risen to 60%, almost equal to 70%.
In this regard, Lei Pingxi said that starting this year, China will initially have the basis to break the monopoly of international iron ore. "China's self-produced iron ore will reach 1.1 billion tons to 1.2 billion tons. The self-produced iron ore and overseas rights and minerals can meet about 70% of China's iron and steel raw material demand. At present, the proven reserves of domestic iron ore are increasing."
The Ministry of Land and Resources also announced at the above-mentioned meeting that in recent years, China's iron ore resources supply capacity has increased significantly, and domestic self-sufficiency of iron ore has steadily increased. The iron ore concentration areas in Liaoning Province, including Anbu, Longdong, Luzhou, Sichuan, Panxi, Sichuan and Anhui, have accumulated a total of nearly 10 billion tons of iron ore reserves.
Lei Pingxi believes that China does not lack iron ore resources. In fact, from 2001 to 2008, China's cumulative output of iron ore was 3.586 billion tons, while the retained reserves of iron ore resources increased from 58.1 billion tons in 2001 to 62.4 billion tons, an increase of 4.3 billion tons. "The proven iron ore resources are less than 50% of their true development and utilization."
In addition, China has also increased investment in overseas iron ore. In recent years, Baosteel, Wuhan Iron and Steel, Anshan Steel, Shougang and other large enterprises have "goed out" and spent large sums of money to invest in the development of overseas iron ore resources. "By 2015, China's overseas equity minerals will increase by about 100 million tons, and the total amount of overseas equity mines will exceed 20% of China's total imports," said Lei Pingxi.
Regarding the future role of domestic mines in iron ore negotiations, Lei Pingxi said that in a few years time, China will create a new pattern of the international iron ore market and a stable and stable supply system for iron ore resources.
Hou Zhiyu, director of the Lange Steel Information Research Center, said that with the large-scale construction of domestic mines, they compete for market share with imported mines, which foreign iron ore exporters do not want to see.
Call for "reduce"
Hou Zhixuan emphasized that if one wants to gain an advantage in iron ore negotiations, increase the price competitiveness of domestic mines, and support the growth of domestic mines, it is undoubtedly the best way to increase the bargaining power of iron ore negotiations.
In this regard, Lei Pingxi said that to support the domestic mines, they must reduce the burden on domestic mines. "The mining environment of domestic mines has made it difficult to reduce the cost of mining, but mine taxes are still heavy."
Zhou Zhongshu, president of Minmetals Group, proposed during this year’s “**†period that he will give metal mine companies special support for taxes and fees, combine mineral resources compensation and resource taxes, implement a differentiated taxation policy, and cancel unreasonable duplicate taxes.
According to the reporter's understanding, since 2009, the China Metallurgical and Mining Enterprises Association and China Steel Association have been calling for the relevant departments to reduce the domestic mine tax burden.
According to statistics from the China Metallurgical and Mining Enterprises Association, domestic metallurgy and mining companies have a tax burden of over 20%, such as 21.7% for Meishan Mining, 22.2% for Jinling Iron Mine, 24.1% for Miyun Mining, and 31.6% for Hainan Mining. The combined taxes and fees for mines in Australia and Brazil are only 4% to 5%.
At present, domestic mining enterprises need not only pay 17% of value-added tax, but also pay a resource tax of 9 yuan/ton, plus various taxes and fees such as mine resource compensation fees, which are four times before the 1994 tax reform. At that time, the tax reforms increased the value-added tax burden of mine enterprises by more than double the time before the tax reform and the metallurgical mine resource tax increased by 10 times.
At present, the Ministry of Industry and Information Technology is studying plans to solve the mine's taxes and fees. A person familiar with the matter revealed that at present, the industrial authorities in various regions are making suggestions for rectification of the unreasonable burdens reflected by the mining companies, and the Ministry of Industry and Information Technology will begin to study specific solutions in April.