In an important fillip for capesize owners, China is cancelling roughly one third of its domestic iron ore mining licenses, likely pushing up import volumes in the coming months. China is already on track to import a record amount of iron ore this year, even before these domestic cuts have been factored in.
More than 1,000 mining rights will be eliminated under China’s campaign against pollution, Lei Pingxi, chief engineer at the Metallurgical Mines’ Association of China, revealed yesterday.
Jeffrey Landsberg, managing director of Commodore Research & Consultancy, said that securing high quality iron ore is now more important than ever in China, even with temporary steel production cuts looming.
“We view this is as a very logical decision where iron ore procurement and environmental regulations are concerned,” Landsberg wrote in a research note.
China’s raw iron ore is mostly low grade, with iron content of around 30% or less, compared with more than 60% for iron ore produced by international miners such as Brazil’s Vale .