The establishment of centrally administered State-owned China Mineral Resources Group Ltd will help the nation better guarantee the supply of important mineral resources, experts said.
The inaugural meeting of China Mineral Resources Group Ltd, a mineral resource group with a registered capital of 20 billion yuan ($2.97 billion), was held in Beijing on Monday, a major move by the country to ensure the security of industrial and supply chains and high-quality development.
Located in the Xiong'an New Area in North China's Hebei province, the group's business scope covers activities including mining, iron ore processing, import and export of commodities, sales of metal ores, and warehouse and supply management services. Coal mining is not included in its business lines.
Yao Lin, former chairman of Aluminum Corp of China, a Beijing-based centrally administered State-owned enterprise, has become the legal representative of the new company, according to Tianyancha, a Chinese corporate information provider.
The new central SOE will adhere to openness, seek win-win cooperation, and adopt market-oriented and law-based operations to build itself into a world-class mineral resources company with global competitiveness and influence, it said.
According to a report by the China Iron and Steel Association, China, despite being the world's largest consumer of iron ore and the third-largest producer, still imports around 80 percent of the iron ore it uses each year.
In 2021, China imported 1.12 billion metric tons of iron ore, with 82.8 percent from Australia and Brazil.
The global iron ore market has been highly concentrated by the top four mining companies-Rio Tinto, Vale SA, BHP and Fortescue Metals Group-all of whom account for nearly 70 percent of global exports, the report said.
Rio Tinto said it is looking forward to cooperating with the newly founded China Mineral Resources Group "to understand more". The Australian metals and mining giant said it is willing to continue working with customers, suppliers and industry stakeholders in China to improve the company's products and services to meet evolving customer needs.
"Examples include technical collaboration to support our customers' decarbonization aspirations, expanded iron ore sales to ports in China, sales of iron ore via a WeChat app and leading the industry in completing fully paperless end-to-end transactions using blockchain technology, some of which include yuan settlement," said a Rio Tinto spokesperson.
Zhu Yi, a senior analyst with metals and mining at Bloomberg Intelligence, said the giant mineral resources group will help the nation better meet domestic iron ore demand.
China is the world's largest steel producer and biggest iron ore consumer, as imported iron ore takes up a majority of its total consumption, Zhu said.
"China steel industry's concentration rate is relatively low, with the top 10 steelmakers accounting for about 40 percent of the country's total output of crude steel, thus mills' margins are eroded when iron ore prices are high."
"Domestic iron ore mines have relatively lower ore grades and higher production costs, causing steel mills to go overseas for raw materials," Zhu added.
