Iron Ore Resources in China
China has plentiful iron ore resources. In 2017, the iron ore reserves in China amounted to 23.80 billion tons, which ranks third in the world behind Russia and Australia. Placing into account variety, these iron ore resources include magnetite, hematite, limonite, siderite and recently, ultrafine disseminated iron ore. They are widely distributed in every province and autonomous region in China, such as Liaonning, Heibei, Anhui, Jilin and Inner Mongolia, accounting for 95% of the total reserves.
Iron ore is primarily used in making steel and almost 97 percent of China’s deposits are used in the steel-making process. According to statistics, the country’s iron ore output in 2016 was 1.15 billion tons, making China the world’s third largest producer and the top ore supplier.
The price of iron ore is determined by the international iron ore market, based on the interplay between supply and demand. In 2017, the average price of China’s iron ore imports was $64.20 per ton, a decrease of 13.1 percent year-on-year. The decline in prices indicates that China’s domestic production and production in some other countries such as Brazil and India has outweighed the demand from China’s traditional importers such as Japan, South Korea and EU countries.
Major Chinese iron ore mining companies include Shanxi Coking Coal Group, Ansteel Mining, Shougang Corporation, and Maanshan Iron and Steel Group. The largest steel mills are Hebei Iron & Steel and Baosteel.
The price of iron ore has suffered from the current oversupply in the global iron ore market. The resultant depressed prices have led to layoffs and decreased steel production. The Chinese government has been implementing a series of policies to address the problem of oversupply in the domestic market by curbing the production capacity of inefficient steel mills, cutting overcapacity, and encouraging industry consolidation to replace outdated capacity.
The strict implementation of the government’s policies has offered support to the industry and enabled industry giants, such as Baosteel and Ansteel, to gain an upper hand in the current market. Another objective of these regulations is to reduce environmental pollution caused by inefficient production. As a result, many small and medium-sized producers have had to reduce their production, restructure, and outsource parts of the production process.
China remains the world’s biggest consumer of iron ore and is highly dependent on imported ore and semi-processed materials. Going forward, the country is likely to continue to support the growth of its domestic steelmaking industry by introducing environmental regulations that restrict foreign ore and semi-processed materials from entering the market. The government is likely to concentrate its efforts on improving the efficiency of the steelmaking industry and increasing the productivity of the entire iron ore industry.
