As a major infrastructure country, my country has a strong demand for steel. Naturally, iron ore is also very important. Although my country’s total iron ore reserves are not low and roughly rank among the top five in the world, the quality of my country’s ore is not excellent and is not suitable for use as Raw material for steel smelting. Therefore, my country imports a large amount of iron ore from Australia, Brazil and other countries every year. In 2020 alone, it has imported a total of 1.17 billion tons, of which more than 60%of the iron ore imported from Australia.
Relying on its advantages in natural resources, Australia often uses iron ore as a bargaining chip to threaten China. Especially since 2020, Australia has been clamoring for the cut-off of China’s iron ore supply almost every day, and has repeatedly raised ore prices and increased tariffs. As early as May 2020, after China took certain measures on Australian agricultural products, Australian trade expert Gavin Thompson said that it would stop exporting iron ore to China. In their eyes, Australia’s iron ore is very important. Once the supply is cut off, the Chinese market will be severely hit.
However, what Australia did not expect is that its cut-off and price increase measures not only failed to hit China, but put itself in a difficult position.
Seeing Australia voluntarily abandoning China’s large iron ore market, many countries have begun to secretly make efforts to win large orders from China. Since May 2020, Brazil has increased its iron ore production and is willing to export iron ore to China at a preferential price. After Australia’s price increase, as of July 2020, my country has imported nearly 35 million tons of iron ore from Brazil, an increase of 17%from the previous month. In addition, Pakistan, Guinea and other countries are also working hard to negotiate with China, hoping to win large iron ore orders.
On the one hand, my country holds the initiative on the demand side of iron ore. On the other hand, in order not to be restricted by resources, my country is also reducing its dependence on iron ore. Even more so Australia can only be anxious. A few days ago, Tangshan City issued an official notice to strengthen energy conservation and environmental protection, and decided to implement production restrictions and emission reduction measures for 23 Chinese companies. This is a big move after the”carbon neutral” goal was put forward. It indicates that my country’s industrial production will truly shift to cleaner methods in the future. It is reported that Tangshan is one of the most developed regions for domestic steel manufacturing. The current restriction on enterprise production will inevitably greatly reduce the demand for iron ore.
In addition to restricting output, my country is also looking for new outlets from the steel production side. Soon after Australia announced an increase in iron ore prices, Chinese companies handed over nearly 6,000 tons of orders to Japan. However, this time it is not an iron ore order, but an order for recycled steel. As a substitute for iron ore, recycled steel can greatly reduce China’s demand for iron ore.
However, Australia’s most unexpected thing is that in the recent frenzied price increase of iron ore, the country’s iron ore Handing over the mining rights to China is completely”betrayed” by one’s own people. Recently, a Chinese company headquartered in Hong Kong announced that it had obtained a license for mining abandoned iron ore on Parrot Island in Western Australia, with a period of up to 12 years. Moreover, 98%of Australia’s iron ore is distributed in the west, and Western Australia has been clamoring for independence. This just makes China a bargain.
Now that Australia sees that its various tricks are no longer valid, and even the”ace” iron ore cannot restrict China, it has begun to bow its head. However, it may be unrealistic to write off all the previous ones.