China, the world’s biggest iron ore consumer, needs to invest more in overseas mining projects to improve its pricing power, the country’s top economic planning authority said.
In analysis published on its website the National Development and Reform Commission said Chinese iron ore imports would continue to rise and the country would remain dependent on imports. It also said the “monopolisation” of global iron ore resources was expected to continue.
China has long tried to diversify its supply sources and ease dependence on top producers in Australia and Brazil, including Rio Tinto , BHP Billiton and Vale.
China imported 819 million tonnes of iron ore last year, an increase of 10.2 percent from 2012, with Australia and Brazil together supplying almost 70 percent of the shipments.
China has accused the big foreign miners of using their “monopoly” status to drive up prices, thereby eroding steel sector margins.
The NDRC said more investment by Chinese firms in the overseas iron ore sector would improve the balance between iron ore and steel prices and “form a new model of upstream and downstream cooperation.”
The document recommended the establishment of an investment fund to support local enterprises in the development of overseas mining projects, and in building steel mills and other heavy industrial projects abroad to reduce domestic iron ore use.