This is the first time the MMAC has published guidelines for green iron ore mines and production after the country set targets for carbon peak and carbon neutrality in 2030 and 2060. More details are expected to be released in the coming months.
The MMAC’s guidelines will work in tandem with the China Iron & Steel Association’s (Cisa) “Cornerstone” plan, previously announced in 2022, to resolve China’s iron ore shortage and dependency on imported ore.
The MMAC guidelines aim to:
- Accelerate the construction of 25 iron ore mining hubs and develop 28 state-backed mining projects domestically and eliminate low-efficiency and high-energy consumption iron ore mines.
- Ensure that by 2025, 40% of Cornerstone mining projects have commenced, with that percentage increasing to 90% by 2030. Output from these mines will account for more than 60% of total domestic iron ore production by 2025 and 70% by 2023.
- Establish a “green” iron ore production system, cutting carbon emission per GDP growth down by more than 5% by 2025 and 18% by 2030 compared with 2020.
- Accelerate the application of clean energy and green transportation in the mining process.
What is the impact?
“The impact from the new guidelines is likely to be minimal in the short term because output from these iron ore projects is limited, and production costs will be higher than the other miners [from Australia and Brazil],” a Zhejiang-based trader said, adding that it usually takes more than five years to develop a large-scale mine, while it usually takes three to five years to develop medium-scale domestic mines.
Other sources, however, noted that the most effective way for China to decarbonize will be to reduce crude steel production and capacity, along with developing a “green” or low-pollution system for domestic iron ore production.
“Improving domestic iron ore quality and production to compete with imported alternatives is a good thing, but we’ll have to wait to see production and consumption figures in the next few years [during China’s decarbonization period],” a mill source in southern China told Fastmarkets.
It is only a matter of time before demand for iron ore moves toward high-grade iron ore under China’s decarbonization plan and the new guidelines from the MMAC are a good step forward, some market participants said.
“Domestic run-of-mine [ROM] usually has lower iron content, so it requires further processing to produce concentrates with higher content,” a Beijing-based steelmaker said.
Another industry source said this guideline from MMAC focuses more on green and high-quality iron ore mines with a low-carbon emission mining process, which ties in with a focus on increasing domestic supply as part of the “Cornerstone” plan.
Currently, as part of Cisa’s Cornerstone plan to increase overseas iron ore production, boost domestic output to 370 million tonnes and steel scrap consumption to 300 million tonnes by 2025, China is developing large-scale overseas mining operations, including the Simandou mines in West Africa, which are believed to be the world’s biggest untapped high-grade iron ore deposits.
Large domestic mines include the West Anshan mine in north-eastern China.
The development of these overseas and domestic mines will increase iron ore supply and China’s negotiating power to ensure the stability of iron ore prices, another trader in southern China said.
