China Metallurgical News Agency, China Iron and Steel News Network

Reporter Hao Shuhui reports

"We must address potential uncertainties in the steel industry's resource security efforts by leveraging the certainty of increased domestic iron ore production. Simultaneously, we must improve the comprehensive utilization of resources, reduce production costs, and enhance competitiveness."

"Currently, companies without mines hope for low ore prices, while mining companies hope for high prices. The China Iron and Steel Association (CISA) is 'supporting both sides,' concerned with increasing iron ore production and production, with prices determined by supply and demand, thus reducing the impact of the capital market on the real economy."

On April 25th, at the 8th Session of the 4th Council (Enlarged) Meeting of the CISA, Luo Tiejun, Vice President of the CISA, introduced the recent operating situation of the steel industry and his thoughts and suggestions on the strategic security of iron ore resources. He believes that the high-quality development of the steel industry requires the support of both the quantity and quality of domestic iron ore resources. How to adapt domestic iron ore resource development to the new demand structure and reflect its unique value is a significant and innovative issue.

Photo shows Luo Tiejun (provided by the conference organizing committee).

The steel industry's supply and demand imbalance became apparent in the first quarter.

Luo Tiejun explained that since the beginning of this year, the steel industry's production and operation have exhibited the characteristics of "three highs and three lows": high output, high costs, high inventory, low demand, low prices, and low profits. Crude steel output declined slightly, while apparent consumption dropped significantly. The overall steel market performed poorly, and corporate profits declined sharply. "Especially since March, steel companies' inventories and social inventories have increased rapidly, steel prices have fallen significantly, corporate marginal profits have decreased, and production and operation pressures have further increased," he said.

In the first quarter of this year, my country's crude steel output was 257 million tons, a year-on-year decrease of 1.9%; apparent crude steel consumption was 232 million tons, a year-on-year decrease of 4.6%. The average China Steel Price Index (CSPI) was 109.74 points, a year-on-year decrease of 6.5%; it fell to a low of 104.57 points in the first week of April. “The CSPI uses the average annual steel price in 1994 as a base, meaning that steel prices in the first week of April were only up by a little over 4% compared to 30 years ago,” said Luo Tiejun.

In the first quarter of this year, my country's steel exports increased by 30.7% year-on-year, while the average export price decreased by 33.4% year-on-year. However, iron ore imports saw both volume and price increases. In the first quarter, my country imported 310 million tons of iron ore, a year-on-year increase of 5.5%; the average import price was US$129.6 per ton, a year-on-year increase of 10.7%, a stark contrast to the trend in steel prices. In the first quarter, the profits of key steel enterprises fell by 48% year-on-year, with an average profit margin of only 0.61%; the loss rate reached 53.1%, an increase of 8.65 percentage points year-on-year.

“With changes in consumption structure and total volume, the trend of sustained growth in steel consumption demand has fundamentally changed. The main contradiction in the industry has shifted to how to meet the slowly declining steel demand with sufficient production capacity. Steel producers are adapting to this change,” Luo Tiejun analyzed.

Significant Progress Has Been Made in my country's Strategic Safeguarding of Iron Ore Resources

A strong steel-producing nation needs the support of a resource-strong nation. Major developed economies such as Europe, the United States, and Japan are increasingly emphasizing mineral resource security, forming systematic strategic measures for safeguarding key mineral resources. Major mines both domestically and internationally have increased investment, leading to increased production capacity. It is estimated that global iron ore supply will increase by more than 50 million tons by 2024.

Regarding domestic iron ore development, Luo Tiejun stated that relevant ministries and commissions such as the National Development and Reform Commission and the Ministry of Natural Resources attach great importance to the development of strategic mineral resources and resource security in the steel industry, continuously optimizing mineral resource management systems and policies to promote domestic exploration, development, and increased reserves and production of important mineral resources. Local relevant departments have introduced specific implementation plans, effectively accelerating project approvals and ensuring thorough implementation. The China Iron and Steel Association has strengthened research and promptly reflected the demands and suggestions of enterprises. Steel and iron ore companies have responded actively and acted quickly, strengthening communication with relevant departments, effectively resolving the approval difficulties that had hindered the progress of mining projects for many years.

With the joint efforts of all parties, significant progress has been made in the construction of key domestic iron ore projects. Luo Tiejun introduced that the processing time for over 40 documents across six categories for the Ansteel Group's Xi'anshan Iron Mine project, the largest single underground iron ore mine in China with a capacity of over 10 million tons, was shortened by 29 months, setting a new record for the fastest processing time for documents required for newly built large-scale mines in China. The project commenced construction in November 2022. Since 2023, the China Minmetals Chentaigou Iron Mine project has started construction, Ansteel Mining's Qidashan and Dagushan iron mines have obtained expansion mining licenses, the Jianlong Group's Sishanling Iron Mine project has entered the trial production stage, and the mining rights for the Honggenan Mine have been auctioned.

Meanwhile, domestic iron concentrate production has maintained growth. "In 2023, my country's iron ore production reached 991 million tons, a year-on-year increase of 7.1%; in the first quarter of this year, it reached 284 million tons, a year-on-year increase of 15.3%. In 2023, my country's iron concentrate production reached 298 million tons, a year-on-year increase of 4.1%; in the first two months of this year, it reached 46 million tons, a year-on-year increase of 2.8%," said Luo Tiejun.

Furthermore, my country's overseas iron ore projects have made positive progress. The Simandou iron ore project in Guinea has entered the substantive construction phase, with railways, ports, and other infrastructure under construction. It is expected to be completed and put into operation in 2025. The second phase of the 12 million tons/year ore beneficiation project at the New Tangkri iron ore mine in Sierra Leone has been signed. "The implementation of these projects will help enhance my country's resource security capabilities in the steel industry and optimize the import source structure," said Luo Tiejun.

Enhancing and Stabilizing Domestic Iron Ore Supply Capacity

Luo Tiejun stated that in terms of total iron ore demand, although my country's apparent crude steel consumption has continued to decline in recent years, it remains above 900 million tons. In the future, my country's steel demand will remain high. In recent years, driven by the need for low-carbon transformation and development, my country's electric arc furnace (EAF) steelmaking has accelerated. 27% of the planned new steelmaking capacity will be EAF, totaling approximately 110 million tons, and it is projected that by 2035, the proportion of EAF steel production in my country will reach 30%. However, the blast furnace-converter integrated production process will remain the main process in my country's steel industry for a considerable period, and the demand for iron ore will remain at a high level.

"From the perspective of iron ore quality demand, iron ore quality is crucial for reducing pollution and carbon emissions in the blast furnace integrated process and for the steel industry to achieve its 'dual carbon' goals," analyzed Luo Tiejun. On the one hand, the development of large-scale blast furnaces requires high-quality iron ore. By reducing the content of harmful impurities in raw materials and minimizing quality fluctuations, the lifespan of blast furnaces and stable production can be achieved. On the other hand, optimizing the blast furnace burden structure requires higher-quality iron ore. The pelletizing process consumes less than 50% of the energy and pollutants emitted by the sintering process, and emits about 30% of the carbon dioxide. The iron content of pellet ore is 5% to 10% higher than that of sintered ore. Increasing the proportion of pellet ore can effectively increase the iron content of the ore fed into the furnace. A 1% increase in the ore grade leads to a 1.5% decrease in the coke ratio, a 2.5% increase in output, and a corresponding decrease in carbon emissions.

"Currently, some of the world's leading steel companies are promoting the use of global pellet ore in blast furnace smelting," said Luo Tiejun. Furthermore, the development of hydrogen metallurgical processes such as hydrogen-based shaft furnaces also requires high-quality iron ore and products like direct reduced iron (DRI) from pellet production. Adding a certain proportion of DRI to electric arc furnace short-process steelmaking can dilute harmful residual elements and significantly improve steel quality.

"Currently, domestic iron ore contributes 15% to crude steel production, and with scrap steel contributing 20%, the contribution of domestic iron resources is approximately 35%. Overseas mines still contribute over 60%, which is still far from the industry's goal of optimizing the iron resource source structure. Based on the research and analysis of key domestic iron ore projects by the China Iron and Steel Association and the China Mining Association, domestic iron ore resource development still faces many difficulties and challenges, and its actual capabilities have not been effectively utilized, leaving considerable room for improvement," Luo Tiejun frankly stated. He identified three main problems: First, iron ore resource exploration still needs to be intensified. Data from the Ministry of Natural Resources shows that my country's newly discovered iron ore resources decreased from 16.4 billion tons during the 11th Five-Year Plan period and 13.3 billion tons during the 12th Five-Year Plan period to 3.5 billion tons in the first four years of the 13th Five-Year Plan period. The national calculated iron ore reserve-to-production ratio was 16.8 in 2022. Secondly, the approval and construction of iron ore projects remain difficult. According to relevant enterprises, some iron ore projects still require further coordination and expedited solutions in areas such as mining rights processing, land use quotas, and tailings dam construction. These include issues such as expanding the horizontal and deep mining areas of existing open-pit mines, the feasibility study and selection of underground iron ore mining methods, tailings dry and wet disposal methods, and tailings dam quotas. Thirdly, the production of existing iron ore projects has been affected. Due to factors such as safety and environmental protection rectification and difficulties in resource continuity, the production capacity of some operating iron ore mines has not been fully utilized. "The 'one-size-fits-all' regulatory approach of 'one person sick, the whole family hospitalized' must be stopped," said Luo Tiejun.

Therefore, he put forward two suggestions. First, it is recommended that relevant national ministries continue to leverage the inter-ministerial coordination mechanism to further accelerate the development and construction of key domestic iron ore projects, thereby enhancing the resilience of the industrial chain and supply chain and the capacity for resource supply security. He stated that the China Iron and Steel Association (CISA) will continue to cooperate with relevant national ministries to organize the industry in implementing the "Iron Resource Development Plan," accelerating the development of domestic iron ore resources; and organizing research on "Global Iron Resource Balance" and "Iron Ore Corridor Construction" to improve the resource security system. Second, it is recommended to conduct a thorough economic assessment of domestic iron ore resource development, emphasizing a dynamic balance between economic efficiency, ecological sustainability, and safety.

"‘If resources are extracted prudently and used sparingly, there will be abundance; if resources are extracted without restraint and used without restraint, there will be scarcity.’ We do not advocate expanding iron ore mining without considering development conditions, but rather advocate ensuring that all mineral resources with development potential are discovered more extensively and utilized more quickly, appropriately enhancing and stabilizing the domestic iron ore supply capacity," said Luo Tiejun.

Source: China Metallurgical News - China Iron and Steel News Network Editor: Zhang Yutian