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A giant mineral resources group was set up in Xiongan New Area, North China’s Hebei province on Tuesday, in a long-awaited move that is expected to give the country a bigger say in iron ore pricing.
China Mineral Resources Group, with a registered capital of 20 billion yuan ($2.97 billion), will engage in exploration of mineral resources, ore mining, import and export of minerals, as well as supply chain management services, investment activities and asset management services, according to China’s corporate registration information platform Tianyancha.
The new giant’s legal representative is Yao Lin, according to Tianyancha, who has the same name as the chairman of Aluminum Corp of China (Chalco). The record did give further biographical information.
The preparations for the new group started in mid-2020 and some senior management have started working at new positions at the company, reported Chinese news outlet Caixin, citing people familiar with the matter.
The report said that the new group’s Yao Lin is the former chairman of Chalco, adding that Yao stepped down from his role as chairman and party head at Chalco on July 12, 2022.
Yao assumed the new role as chairman of the new mineral group, as the dust settles after months of speculation about the establishment of a Chinese iron ore group, Wang Guoqing, research director at Beijing Lange Steel Information Research Center.
In addition, Guo Bin, executive vice president of China Baowu Steel Group, will also lead the new group, according to Caixin report. When working at China Baowu, Guo was in charge of business including resources mining, raw material purchases and overseas investment.
The establishment of the new group marks China’s biggest effort yet to tackle what its officials have long argued is the excessive pricing power wielded by miners including BHP Group Ltd. and Rio Tinto Plc. China spent about $180 billion on iron ore imports last year.
The new entity will house outbound investments such as the Simandou iron ore project in Guinea, seen by China’s leaders as the best route to ease the steel industry’s reliance on Australian ore, according to industry insiders.
It also aims to become the channel for put together Chinese steelmaker’s iron ore demand and make concentrated procurement of imported iron ore, in a bid to increase bargaining power and strengthen the ability to ensure supply of the resource.
According to Caixin report, iron ore demand for China Baowu Group, Ansteel Group, China Minmetals and Shougang Group have already been integrated into the new conglomerate.
China Baowu’s crude steel output was close to 120 million tonnes in 2021, ranking the top globally for the second consecutive year, according to data from the World Steel Association. Ansteel Group’s crude steel output reached 55.65 million tonnes last year, ranking third globally.
During last year’s annual session of the National People’s Congress, He Wenbo, executive chairman of the China Iron and Steel Association (CISA), suggested that the establishment of a national iron ore resources development group would coordinate overseas resources, and steadily push for the development and utilization of foreign resources, to ensure supplies.Â
China is the world’s largest iron ore buyer, taking more than 1 billion tonnes a year, accounting for around 70% of global production. For the last 10 years major steel-producing nations have shifted from annual contract negotiations to an index-price mechanism. Prices for iron ore have been highly volatile during the pandemic.