Nation to diversify ore imports

China will increase its iron ore imports from foreign independent miners to diversify its supply channels in a major effort to reduce its dependence on major global players, a senior official said on Friday.

The ratio of China's iron ore imports from independent miners will rise to 50 percent of total imports in the following years, said Wang Xiaoqi, vice-chairman of the China Iron and Steel Association.

He made the comments at a ceremony where Australian company Atlas Iron Ltd signed an agreement with China Beijing International Mining Exchange to join the nation's first online iron ore trading platform.

In 2011, up to 60 percent of China's iron ore imports came from the three giant miners — Rio Tinto Plc, Vale SA and BHP Billiton Ltd. Wang said this figure will gradually be cut to 50 percent.

"We encourage more independent miners to join our platform," said Dong Chaobin, president of China Beijing International Mining Exchange, and one of the organizers of the platform.

"Only through this way can we make the structure of the country's iron ore imports more reasonable."

Being the fourth-largest iron-ore producer in Australia, Atlas Iron attaches great importance to the Chinese market. In early 2012, Atlas Iron shipped its 10 millionth ton of iron ore to China.

"Our company has a steadily growing output and strong ambition in the Chinese market," said Ken Brinsden, managing director of Atlas Iron.

"Joining in the platform is very helpful for us to maintain a good relationship with the Chinese market."

According to the company, its target annual output is 46 million tons by 2017, and it is estimated it will ship up to 9 million tons of iron ore to China this year.

Iron ore inventories have increased in the past few months. The country's total inventories at ports increased 2.9 percent to 98.15 million tons last week from 95.35 million tons in April, according to Shanghai Steelhome Information.

China imported 58.31 million tons of iron ore in June, an 8.7 percent drop from the previous month, according to the General Administration of Customs.

Some industrial analysts estimated that iron ore prices will drop to around $100 a ton. Wang shared this opinion.

He said iron ore prices will continue to fall in the second half of the year even though the central government has carried out a series of macroeconomic policies to boost the economy.

"The main cause of the high inventories is the increasing supply and falling consumption of iron ore," said Wang.

"Facing shrinking demand for steel products, steel makers tend to have low stockpiles at their factories to reduce costs. But suppliers are continuing to transport iron ore to ports."

At present, steel factories' iron ore stockpiles are only for 10 to 15 days' use and inventories at ports total 90 million to 100 million tons, said Wang.

He also estimated that China's steel output this year will not increase too much from the last year.

The online trading platform was launched in January by the China Beijing International Mining Exchange, CISA and China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters, aiming to create a fair and transparent iron ore trading platform for domestic and foreign companies.