The steel and iron ore industries have agreed to limit the number of iron ore importers, in support of an automatic licensing system in operation from Tuesday.

The China Chamber of Commerce of Metals, Minerals & Chemicals Importers and Exporters (CCCMC) and the China Iron & Steel Association (CISA) agreed on requirements and application procedures for local iron ore importers.

Steel companies that had a crude steel output of above 1 million metric tons in 2004, and ore trading companies with registered capital of 10 million yuan (US$1.208 million) and an import volume last year of 300,000 tons can apply to the CCCMC or CISA. Any other companies will be prohibited from importing iron ore.

The two industry bodies yesterday submitted plans for the scheme to the Ministry of Commerce (MOFCOM) for review.

Chen Haoran, CCCMC chairman, said the qualifications have been set to reduce and rationalize unfettered imports of iron ore and would facilitate the Ministry of Commerce's new automatic import licensing system.

Unregulated import competition has undermined China's advantage as the world's largest iron ore importer. The changes aim to enhance self-discipline and enable the country to have a greater say in future world iron ore prices.

Baosteel, the largest steel maker in China, said on Monday that it had agreed on a 71.5-percent iron ore price increase for this year with two of the world's major iron ore providers, Hamersley of Australia and Companhia Vale do RioDoce (CVRD) of Brazil.

Analysts say that the rise will inevitably lead to a steel price hike, with a negative impact on the sustainable development of the country's economy.
 
The ministry said the introduction of the new licensing system highlights the central government's desire to tackle the problem, leading to more effective monitoring.

China's iron ore import volume soared to 208 million tons last year, an increase of 40.5 percent year-on-year, while the average price rose 86 percent.

(China Daily, China.org.cn March 2, 2005)