In recent days, in response to the changes in iron ore prices, the national development and Reform Commission, the State Administration of market supervision, the Securities Regulatory Commission and other ministries have made thunderous moves and deepened step by step, which fully shows the determination of the state to strictly control and investigate the speculation of iron ore in violation of the fundamentals of supply and demand.
As the attention of people in the industry to iron ore continues to rise, the news that “the proposal of the ‘cornerstone plan’ aimed at strengthening resource protection has been reported to the national development and Reform Commission and other four ministries and commissions” disclosed by China Iron and Steel Industry Association at the third meeting of the sixth general meeting in January has also been expected and concerned again.
“The ‘cornerstone plan’ answers the question of ‘whether China has exploitable iron ore resources’, which is concerned both inside and outside the industry.” On February 17, Luo Tiejun, vice president of China Iron and Steel Industry Association, gave a detailed introduction to the main content of the “cornerstone plan” and responded to some hot topics with high market attention. At the same time, in view of the recent changes in the iron ore market, he stressed that on the one hand, we should severely crack down on the speculation of iron ore prices, including public opinion speculation, futures speculation, hoarding and hoarding; On the other hand, we should strengthen the supervision of the capital market and participants, and truly make the capital market serve real enterprises.
“cornerstone plan” came into being to meet the global iron resource guarantee
Luo Tiejun first introduced the background and brewing process of the “cornerstone plan”. This iron resource development has three characteristics:
first of all, it is highly consistent inside and outside the industry iron and steel industry is the basic industry of the national economy and the “ballast” and “stabilizer” of China’s economic development. The insufficient development of China’s iron ore resources, poor resource endowment, low iron ore grade and high cost have not only restricted the healthy and stable development of China’s iron and steel industry, but also had a serious impact on the stable operation of the global iron and steel industry and economy. In this regard, both inside and outside the industry and outside China attach great importance to it, and it has also received unprecedented attention from the Party Central Committee, the State Council and various state departments. At the central economic work conference at the end of 2021, it was clearly proposed to “enhance China’s resource production support capacity”. In the face of political, economic, capital and other multi-party games and complex and changeable development environment outside China, it has been fully recognized from top to bottom that steel, like grain, crude oil and natural gas, is a strategic resource of the national economy, and a powerful steel country must be a powerful resource country. This is the right time to introduce the “cornerstone plan”.
secondly, the understanding is becoming more and more mature 2019 the new leaders of the Steel Association took office, “Since taking office, CISA has always paid close attention to iron ore, made efforts to strengthen exchanges and communication with foreign mining enterprises, and systematically studied the supply and guarantee of iron ore. on this basis, CISA has submitted about 20 documents to national ministries and commissions on iron ore price formation mechanism, resource guarantee and other issues, including 7 documents related to the development of iron ore resources The understanding of iron ore is deepening day by day. ” Luo Tiejun said.
finally, the urgency is more prominent first, China’s iron ore resources are underdeveloped, and there is no capacity scale matching the resource reserves. “In recent years, iron and steel production capacity has increased rapidly, but the problem of resources has been ignored. China’s raw ore production reached the highest value of 1.514 billion tons in 2014, and then continued to decline until there were only 760 million tons of raw ore in 2018. In recent years, domestic refined iron powder has remained at about 270 million tons, with a contribution rate of only about 15% to crude steel.” Second, there have been few overseas iron ore resource development projects in China in the past 10 years, and most of the previously obtained projects have high construction and production costs and weak competitiveness. The supply of overseas iron ore resources accounts for a large proportion and is too concentrated, highly dependent on the four major mining companies in Australia and Brazil. “This has resulted in China’s iron ore dependence on foreign countries as high as about 80 percent.” Luo Tiejun said. Third, China’s scrap output has not yet reached a high growth period, and the overall level of scrap processing enterprises is uneven, the recycling system is not perfect, and the industrial technology and equipment level and scrap processing quality need to be improved.
In this context, the “cornerstone plan”, which aims to promote the protection of the three major iron resources, can be described as “the right time, the right place and the right people”, came into being.
“cornerstone plan” is different from the previous iron ore resource development in three aspects
In response to the voice in the market that the content of the “cornerstone plan” is not new enough, Luo Tiejun responded that the measures to strengthen the guarantee capacity of iron ore resources have indeed been repeatedly emphasized and promoted, but this plan mainly has several differences.
first, the formulation background is closely related to the “two overall situations” at present, China is increasingly moving towards the center of the world stage. In the face of the complex and changeable economic situation outside China, it is increasingly important to establish a “safety concept” and balance the relationship between resource safety and environmental protection. The starting point of the “cornerstone plan” is to ensure resource security. At the same time, it will also play a promoting role in alleviating the primary problem of project approval.
second, it answers the question “does China have exploitable iron ore resources” China’s iron ore reserves are relatively large, but the grade is low and the mining is difficult. Leaders of ministries and commissions and industry insiders have raised the above questions for many times. “That’s the answer this time.” Luo Tiejun told China Metallurgical news, “At the beginning, we proposed to add 50 million tons of domestic ore by 2025. Later, we further collected, summarized and studied and put forward the current target of adding 100 million tons. Therefore, China’s iron ore development proposed in this’ cornerstone plan ‘not only has resources, but also has competitiveness. The key is to liberalize approval and obtain policy support. “
third, pay more attention to economy this is one of the four basic principles of the cornerstone plan, with special emphasis on a rational understanding of the iron ore market and strengthening the competitiveness of the project in order to achieve sustainable development.
Then, Luo Tiejun introduced the basic principles, objectives and implementation subjects of the “cornerstone” plan.
first, adhere to the four basic principles first, improve security, increase the contribution rate of China’s resources, and keep the bottom line of resource security. “At present, iron concentrate has been maintained at about 271 million tons for a long time, with an increase of about 5.2% last year, reaching 285 million tons. However, the proportion of domestic ore in iron resources is only about 16%, and the contribution rate of China’s resource supply to iron and steel production is low.” Luo Tiejun said. Second, ensure economy. Focus on key areas and actively promote a number of key projects with excellent resource endowment, large scale and long-term cost competitiveness. “In recent years, through comprehensive measures such as new technology, intelligent mine construction and comprehensive utilization of resources, China’s key iron ore production enterprises have reduced the full cost of iron concentrate in some mines to less than $60 / ton, which is competitive .
”Luo Tiejun said. Third, adhere to marketization. To ensure the independent decision-making power of enterprises, the project enterprises solicited this time are very active. They have said that as long as the approval can be accelerated, the selected projects are guaranteed in terms of reserves and competitiveness. Fourth, adhere to green. Adhere to the concept of “green water and green mountains are golden mountains and silver mountains”, build green mines, do not blossom everywhere, and improve the level of comprehensive utilization of resources.
second, define a phased goal “cornerstone plan” proposes to use 2-3 “five-year plans” to effectively change the source composition of China’s iron resources and fundamentally solve the problem of resource shortage in the iron and steel industry chain. First of all, strive to achieve a goal: by 2025, China’s mineral resources, scrap steel consumption and overseas equity mines will reach 370 million tons, 300 million tons and 220 million tons respectively, an increase of 100 million tons, 70 million tons and 100 million tons respectively over 2020 “based on this goal, according to the calculation that China’s crude steel output will still be 1.065 billion tons in 2025, the contribution rate of China’s ore and scrap to crude steel output can reach 21% and 26% respectively, both 6 percentage points higher than that in 2020.” Luo Tiejun pointed out, “we have a clear project and data base for setting this goal. Of course, it depends on the progress of approval and the implementation of policies.” Luo Tiejun said.
third, highlight two implementation subjects the plan proposes to establish a linkage mechanism between two types of implementation subjects and two levels of promotion subjects. There are two main implementing entities: one is the iron and steel enterprise group or the consortium led by it, such as Angang, Baowu, Shougang, Hegang, Jianlong, etc; The second is an international metal mining group that focuses on the development, investment and operation of metal resources and has the mission of ensuring national metal resources, such as Minmetals. Two levels of promotion bodies: one is the inter ministerial joint coordination and promotion mechanism led by relevant national departments and composed of relevant ministries and commissions; Second, clarify the work objectives and promotion responsibilities of the local governments of the provinces (autonomous regions and municipalities directly under the central government) where the project is located.
increasing China’s mineral development is urgent
In recent years, from the supply chain of China’s iron and steel industry chain, the development of mining and steel is not synchronized, and China’s effective supply of iron ore resources is seriously insufficient. Statistics show that in 2020, China imported 1.17 billion tons of iron ore, 271 million tons of domestic refined iron powder and 230 million tons of scrap steel. The contribution rates to crude steel output were 62%, 15% and 20% respectively, and the total contribution rate of domestic ore and scrap steel was only 35%. In 2021, China imported 1.124 billion tons of iron ore, 285 million tons of domestic refined iron powder and about 230 million tons of scrap steel, contributing 61%, 16% and 20% to the output of crude steel respectively. The contribution rate of domestic ore and scrap steel is 36%, which is 1 percentage point higher than that in 2020, but it is still 25 percentage points lower than that of imported ore.
” although there are objectively some problems such as poor resource endowment and high cost, what is more serious is the prominent problems such as long project approval cycle, tight policy and system constraints and heavy tax burden, which affect the development of China’s iron ore resources. ” Luo Tiejun pointed out, “From the perspective of China’s raw ore output over the years, it reached 1.514 billion tons in 2014, which is much higher than the current output, indicating that it has strong development potential. At the same time, through the investigation and statistics of China’s iron ore production potential, we find that the production increase target proposed by the ‘cornerstone plan’ can be achieved.” In recent years, due to less investment in mineral resources, many enterprises want to produce when the iron ore price is high, but they do not have the ability. The “temporary cramming” can only increase production slightly, which leads to the shortage of China’s mine supply, as well as various problems such as safe production and environmental protection.
Luo Tiejun pointed out that this is consistent with the “establishment of iron ore production capacity reserve and mineral land reserve system” proposed in the “guiding opinions on promoting the high-quality development of the iron and steel industry” recently issued by the Ministry of industry and information technology and other three departments. “It does not refer to the reserves of iron ore products themselves, but directly to the exploration, development and construction of iron ore resources. This formulation implements the spirit of the central government, which not only strengthens the role of China’s mineral resources’ ballast ‘and basic support capacity, but also reflects the reserve differentiation with oil, grain and other products.” Luo Tiejun stressed.
” iron ore itself is not a rare and high-value product. Under the current tight supply of iron ore, it does not have the conditions for product reserve, but to strengthen capacity-building. ” Luo Tiejun said.
accelerate overseas mining development on the premise of risk prevention
\u3000\u3000 “At present, overseas investment is very sensitive and faces relatively large geopolitical, economic and legal risks. However, from the perspective of the long-term development of the iron and steel industry, we actively support all domestic and foreign mining enterprises, iron and steel enterprises and various enterprises to invest in overseas iron ore development and construction, but we must carry out it on the premise of effectively preventing investment risks and encourage Chinese enterprises The industry should strengthen cooperation with foreign capital, jointly develop and benefit from it. We should pay attention to preventing risks and ensuring benefits. ” Luo Tiejun stressed.
He introduced that after extensive research and sorting in the early stage, it is expected that by 2025, overseas iron ore projects of Chinese enterprises will generate an increase of 100 million tons. In recent years, the development speed of overseas mining enterprises has slowed down. In addition to some new mines in FMG, most overseas mining enterprises invest in continuous mines to increase production. We believe that the high demand stage of China’s iron and steel will remain for a long time. We hope that foreign mining enterprises will continue to strengthen the development of iron ore resources and obtain sustainable benefits while meeting the world and China’s iron and steel demand.
The industry pays more attention to “encouraging enterprises to carry out port mixing business, increasing port inventory and giving play to the buffer effect of port inventory on resource guarantee” proposed in the guiding opinions on promoting the high-quality development of iron and steel industry. In recent years, China’s port blending industry has developed rapidly. Many port enterprises have built iron ore blending and distribution centers, and have successively cooperated with international mines. In 2021, China imported 1.124 billion tons of iron ore, and the port standing inventory was about 150 million tons, about 10% of the annual iron ore consumption, which was widely distributed in more than 40 port yards of different sizes in China.
In this regard, Luo Tiejun said, “The advantage of promoting port blending is to be close to users, which is conducive to meeting the needs of Chinese iron and steel enterprises. It should be noted that the focus of overseas mining enterprises and Chinese enterprises in carrying out blending business must be on strengthening downstream services and giving full play to the role of port inventory in ensuring the supply of resources. beware of using port blending as a cheap reserve base and price control frontier of iron ore, Hoarding pushed up iron ore prices ”
scrap is an important way to ensure the supply of iron resources
“cornerstone plan” proposes to strive to achieve scrap consumption of 300 million tons, 350 million tons and 400 million tons respectively by 2025, 2030 and 2035 . The goal of 300 million tons in 2025 is basically consistent with the goals put forward in the 14th five year plan for the development of scrap iron and steel industry and the guiding opinions on promoting the high-quality development of iron and steel industry.
How is this phased goal formulated? Luo Tiejun pointed out that the growth during the 14th Five Year Plan period was about 70 million tons, and the next two five-year plans were 50 million tons each. In fact, setting the growth target in this way took a more conservative estimate. “On the one hand, based on international experience, when the per capita steel stock exceeds 8 tons, the amount of scrap begins to increase significantly.
According to our calculation, at present, China’s per capita steel stock is about 7.5 tons, and it is expected that the rapid growth of scrap production will take about 10 years on the other hand, at present, the annual trade volume of scrap steel in the world is about 100 million tons, which is not particularly large. Therefore, China’s import volume of scrap steel is also limited. ” Luo Tiejun explained the reasons for goal setting.
As for the import volume, the statistical data show that since the official implementation of the standard of recycled steel raw materials on January 1, 2021, 556000 tons of scrap steel have been imported in the whole year, which is much higher than that in 2020, but there is still a huge gap from the 13.69 million tons in 2009, the highest year in history. Luo Tiejun believes that the reasons are as follows: first, the waste steel produced by the maintenance and refitting of foreign ships in China is allowed to be stored, transferred, utilized and disposed in China under the conditions of meeting the relevant regulations and standards of China’s solid waste management, and is not managed according to the import of solid waste. Second, most of the qualified recycled steel raw materials that China can import belong to the category of high-grade scrap steel. In 2021, the price difference outside China is mostly at the upside down level, resulting in insufficient import power of relevant enterprises. At the same time, in order to prevent pollution and substandard products from entering China, China requires that scrap steel must be processed abroad before it can be imported. As a result, the import volume of scrap steel is not too much in the first year of liberalizing import.
Luo Tiejun also said that the industry has high hopes for the implementation of the announcement on improving the value-added tax policy for comprehensive utilization of resources (Announcement No. 40 of the State Administration of Taxation of the Ministry of Finance in 2021) (hereinafter referred to as Announcement No. 40) issued by the Ministry of Finance on December 31, 2021. Announcement No. 40 made it clear that qualified enterprises can refund 30% of the waste steel, and proposed that “if there are acts of giving financial returns and rewards to taxpayers engaged in renewable resource recovery business in violation of laws and regulations, they shall be investigated for corresponding responsibilities according to law.”, “The long-standing problems in the scrap industry, such as the difficulty of invoicing, the separation of freight tickets and tax depression, are expected to be solved,” Luo Tiejun said.
In a word, resource guarantee has become the primary issue affecting the safe and stable operation and healthy development of China’s iron and steel industry at present and for a long time in the future, which requires the joint efforts of the government, industry and enterprises. “The Steel Association will give full play to its role as a bridge and link, constantly improve its working methods, strive to solve the prominent problems such as difficult approval cycle of mine construction, tight policy and system constraints, heavy tax burden and difficult financing, and spare no effort to promote the implementation of the ‘cornerstone plan’.” Luo Tiejun said.
