India, Vietnam tightens iron ore exports

In 2012, some iron ore exporting countries adopted trade protection policies, and the external environment of China's iron ore imports has further deteriorated. From the current point of view, there are mainly two manifestations. First, emerging countries such as India and Vietnam continuously raise iron ore. Export tariffs; the other is the ** that has not started, that is, the Australian Mineral Resources Tax Act that has not yet been finalized.

Iron ore export tightened

In early February, the Vietnamese government raised export tariffs on iron ore. From February 7, Vietnam will increase the export tariffs on iron ore and concentrate iron ore and pyrite from the original 30% to 40%. In addition, India also raised its iron ore export tariffs in January from 20% to 30%.

In recent years, the industrialization of emerging countries has led to an increase in steel consumption and the country’s strong demand for iron ore. In order to protect demand, these countries set iron ore export tariffs and have a tendency to increase.

These countries have raised iron ore export tariffs and have their own characteristics of demand, but have had an impact on China's iron ore imports. Obviously, India, India's domestic steel production capacity expansion, the Indian government to encourage their own companies, foreign companies to build steel mills, Tata, India Steel Authority and other companies to expand production, Nippon Steel, Pohang and other companies have also set up factories in cooperation The demand for iron ore began to increase, and the consumption of iron ore increased significantly. Recently, the OECD (OECD) predicts that India's steelmaking capacity will accelerate its expansion. By 2014, the steel production capacity will increase to 128 million tons, an increase of 32.8% compared to 2011.

So far, India has seen some bottlenecks in its iron ore supply. With the rising cost of ore mining, local governments have increased taxes and limited production, resulting in a tighter supply and demand situation in India's domestic iron ore market. In February, the Union Chamber of Commerce and Industry of India began to ask the Indian government to cancel the import duty of 2.5% on iron ore, in order to solve the shortage of iron ore supply, resulting in the inability of many steel mills to operate at full capacity. This incident shows that in the future, the Indian government’s iron ore import and export policies will be completely diverted, from encouraging exports to encouraging smelting and even importing iron ore.

India began to protect domestic demand orientation, adopt restrictive policies, and raise costs. As a result, China’s imports of Indian ore have fallen sharply. In 2011, China imported 7.3055 million tons of Indian iron ore, a year-on-year decrease of 24.36%. In the same period, the major import ore sources and sites are all steadily increasing. In 2011, China's imports of Australian iron ore increased by 11.8% year-on-year, while imported Brazilian iron ore increased by 9.1% year-on-year. In this way, Indian ore accounts for a significant decline in the proportion of China's iron ore imports, which dropped from 20% in 2008 to 10.6% in 2011, and dropped by 10% in three years. This time, the Indian government has imposed a 10% increase again, and the export tariff of iron ore will be raised to 40%, which will significantly increase the import costs of China's traders, and India's mineral resources will further decline.

Vietnam's mineral sources themselves account for a relatively small amount of iron ore imports in China. In 2011, China imported 2.9 million tons of iron ore from Vietnam, accounting for 0.42%. Therefore, Vietnam’s increase in export tariffs has less impact than India’s mines, but it indicates that the supply of mineral resources from neighboring mines in recent years will likely be curbed.

The sources of mineral resources in Vietnam are representative. In particular, the degree of monopoly in international ore has intensified, and Chinese enterprises have accelerated the amount of imported ore from other countries. The growth rate in neighboring countries has been significant. Statistics show that in 2011, China imported 15.61 million tons of iron ore and 11.87 million tons of iron ore from Russia and Indonesia, an increase of 145% and 54% year-on-year, and imported 5.42 million tons and 2.9 million tons of iron ore from Malaysia and Vietnam, an increase of 121 % and 50%.

Vietnam's annual steel output is one million tons and its own steel production is relatively small. However, economic development in Southeast Asia has driven the increase in steel consumption, construction of highways, railways, ports and terminals, airport airports, and urban facilities has been carried out in an all-round manner. Moreover, processing and manufacturing in Vietnam have become a bright spot for economic growth. Demand for steel products has risen and imports are required every year. With a lot of steel, Vietnam’s dependence on steel imports reached 50%.

Vietnam's steel investment is also following the Indian road, and foreign companies have taken the initiative. Large-scale steel companies such as Nippon Steel and Posco have acquired shares and acquired Vietnamese steel mills. China's local steel mills began to set foot in Vietnam, Kunming Iron and Steel Corporation and Vietnam Iron and Steel Corporation jointly established Sino-Vietnam Minerals Smelting Co., Ltd. to develop the Laishi Province Guisha Iron Mine, investing and building a plant with an annual output of 1 million tons, of which Kunming Steel holds shares. 45% of the first phase of the project is expected to be completed in 2012, annual production of 500,000 tons of billet.

Although the amount of iron ore that China imports from Vietnam has continued to grow, Vietnam’s export tariffs for iron ore have increased dramatically. Since the import tariffs on iron ore began in 2010, Vietnam’s iron ore export tariffs have risen from zero to 40% in two years, which has weighed on Chinese steel companies’ efforts to develop mineral resources.

Australian resource tax increases steel company costs

In general, emerging countries raise their iron ore export tariffs. The impact of Indian ore is more obvious. The impact of the Vietnamese minerals will continue to ferment in the later period. However, the most far-reaching impact on Chinese iron ore imports will be the pending Australian resource tax. bill.

Compared with the goal of emerging countries to develop their own steel industry, the essence of Australia's mining tax reform is to allow profitable mining to subsidize state finance.

However, due to the struggle of various interest groups, the Australian resource tax process can be described as confusing. In 2010, Kevin Rudd, then Prime Minister of Australia, plans to collect 40% of the resource's super-profit tax. This regard corporate profits as the object of taxation. Among the opposition of the mining companies, Rudd eventually stepped down. After several battles, on November 23 last year, the Australian House of Commons officially passed a 30% tax on mineral resources, which will be submitted to the upper house for voting in the first half of 2012 and will be implemented on July 1, 2012.

Australian iron ore is of great significance to China's iron ore market. In 2011, China imported 297.68 million tons of Australian iron ore, which was an increase of 11.8% year-on-year and accounted for 43% of the total imports for the year. The taxation of the Australian government will directly affect the production costs of China's steel companies.

Judging from the bill passed by the House of Commons, the mineral resources tax is mainly targeted at large profit-making large-scale mining enterprises. The cost of large-scale mines will increase, even if considering deducting the state government's mineral tax revenues and subsidies, it is estimated that each ton of iron ore Taxes payable account for half of the sales price. According to the 2011 Australian average price of iron ore agreed at $150 per ton, the tax will increase by about $20/tonne.

The traditional advantage resources of Australia are occupied by large-scale mining enterprises. The cost of Rio Tinto and BHP Billiton is around US$30/ton. Late-stage development companies such as FMG's iron ore cost between 50 and 60 US dollars per ton. In the previous round of peak investment in ore, that is, after the financial crisis, companies entering Australian mining companies will have production costs that are significantly higher than these large mining companies. After the capital invested, a certain resource tax will be levied, which will be the latter stage of the ore enterprises. Profits form a test and even eat all profits directly. In addition, the Australian Government's levy of mineral resources tax has a long-term impact on the global supply of ore, and the decline in the attractiveness of iron ore investment projects will lead to a reduction in investment in mining.

In terms of form, Australia levies a mineral tax, which has a greater degree of influence and is more concealed. Emerging countries have imposed iron ore export tariffs, and Chinese companies can also contend that they violate the "national treatment principle" of the WTO, causing domestic and foreign companies to purchase the same product at different prices and thus forming price discrimination. However, the tax on mineral resources levied by Australia, starting from the production process, has a domestic and international market price, and it is difficult for Chinese companies to apply WTO principles to appeal.

In the future, the Australian Government's levy of mineral resources tax will be considered as a nail on the board. It will only be passed in the end. It is unknown how the Australian House of Lords will adopt the bill and how the specific content will change.

The iron ore-producing countries have stepped up trade protection measures and imposed resource taxes. In 2012, the iron ore import situation in China has further deteriorated, and the already weak steel industry in China will once again worsen.