China’s The Global Times reported “it seems the Australian government has no intention of sowing new troubles in its trade with China, but the possibility of deteriorating tensions escalating into a trade war should not be ignored”.
Mr Murray said it is clear China is once again “threatening us” and they "are confirming by their actions that they are going after us”. “First it was barley, then a bit on beef and now the big game, iron ore”.
The Age reported “China’s customs authorities have released new rules coming into force on June 1 that officials would conduct quality inspections for iron ore shipments at the request of the buyer”. “The buyer of course is the Chinese Communist Party,” Mr Murray said.
China amends inspections of iron ore imports as trade tensions with Australia rise: China's General Administration of Customs (GAC) said on Wednesday that it will streamline the inspection procedure for imported iron ore at Chinese ports to facilitate trade.
According to the new supervising rules, which takes effect on June 1, customs officials will inspect iron ore at the request of the trader or the importer. Previously, customs officers conducted mandatory on-site inspections of iron ore batch by batch.
When necessary, Chinese customs officers will conduct test for harmful and toxic elements in imported iron ore, according to the new rules. The announcement comes at a delicate time when the China-Australia relations have ebbed because of Canberra's incessant efforts to spearhead an independent probe of the Covid-19 outbreak in China in order to stigmatize the country.
China said that the virus, like MERS and SARS, was jumped to humans from a host animal, and was not made in a lab. Analysts speculate that Australia's iron ore export to China could fall victim to the rising bilateral tensions. China-Australian iron ore trade was worth $63 billion in 2019.
China has largely suspended imports of Australian beef due to quality issues. China also slapped an 80-percent tariff on Australian barley imports on Monday after an 18-month antidumping and anti-subsidy probe. "This is another implicit warning to Australia," said Yu Lei, a chief research fellow at the Research Center for Pacific Island Countries at Liaocheng University.
"It is associated with how Australia has acted, and a general decline in demand for steel on the global level," Yu said. Industry insiders estimated that about 62 percent of China's iron ore imports come from Australia.
In 2019, China imported 1.07 billion tons of iron ore, with 665 million tons coming from Australia and 229 million tons from Brazil, according to data provided to the Global Times by the Beijing Lange Steel Information Research Center, an industry consultancy.
An iron ore trader at Lianyungang Port, a major port in East China's Jiangsu Province where iron ore accounts for half the throughput, said that the new rule is an optimizing import procedure and there won't be any discrimination against iron ore from Australia.
"I see it as a value-added service that will improve efficiency and inventory turnover at ports," the trader told the Global Times on condition of anonymity. On-site inspection includes the detection of radioactivity, sundries and solid waste, according to the GAC.
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| China is getting the best iron ore from Australia at the lowest price. |
Australia’s economic future lies underneath our feet. The island continent is blessed with a variety of natural resources but none as plentiful or important as iron ore. Iron is a common element in soils and rocks – but finding it in high concentrations and the right minerals worth mining takes a bit more effort. Australia has been endowed with giant iron ore mineral resources and we keep finding more.
In 2010, iron ore overtook coal as Australia’s most valuable export – $47.2 billion worth left our shores (coal was $43 billion). Given the debate about the carbon tax and climate change, can iron ore replace the money we currently earn from exporting carbon emissions - in coal form - to the world? The answer is undoubtedly yes.
What is iron ore?
Iron is found in three major types of iron-bearing minerals – hematite, goethite and magnetite. In general, steel mills love hematite and goethite ores since they contain high grade iron (more than 50% iron), while magnetite ores have lower grades and require more processing to produce a saleable iron ore pellet for the steel mills. Historically, the vast majority of Australia’s iron ore production has been from hematite or goethite-type ores, with only minor magnetite production.
Given the insatiable demand for raw materials in Asia, especially in China, Australia’s iron ore exports have quadrupled since 1990 and reached 400 million tonnes (Mt) in 2010. The big three miners are Rio Tinto, BHP Billiton and more recently Fortescue Metals Group, with many other smaller players.
If one examined all current iron ore projects under consideration or active developments, it is easy to see why the industry boasts of reaching a billion tonnes of exports per year by 2020. The obvious question then arises as to how long this boom or so-called super-cycle’ can last.
How much ore do we have?
The Australian mining industry reports annually on the mineral resources they control – so it’s easy to check just how much we have.
For example, 2010 resources in the Pilbara alone include Rio Tinto’s resources of 15,500 Mt grading 60.3% iron, BHP Billiton’s resources of 14,300 Mt grading 59.6% iron, and Fortescue Metals resources of 8,160 Mt grading 49.5% iron – or some 38,000 Mt for just the three big players alone.
A raft of mid-sized and junior companies also report iron ore resources in the Pilbara – as well as moderate size iron ore mines in South Australia, Tasmania and the Northern Territory. There are also prospects for iron ore mines in Queensland and New South Wales (some speculative but others quite real), although poor old Victoria misses out.
According to Geoscience Australia, in December 2009 there was 28,000 Mt of economic iron ore resources and a further 35,700 Mt of sub-economic and marginal resources. If you look at Western Australia’s resource data, the Department of Mines and Petroleum’s ‘MINEDEX’ system reckons that there is some 66,900 Mt of iron ore resources in WA alone – ignoring the rest of the nation which also hosts various modest deposits.
If one remembers their history lessons, in 1938 Australia supposedly considered itself so short of iron ore that it banned exports – a policy which remained until 1961. The trend since this time is beyond the wildest dreams of the miners – from a minimal resource base to being a powerhouse of iron ore globally.
Let’s do some basic maths. Assuming the industry reaches a billion tonnes by the end of this decade, and then the production stays constant – by 2050 the cumulative production would be 28,000 Mt. Alternatively, let’s assume that the production grows at this same rate – by 2050 the annual production would be 3,000 Mt and the cumulative production would be 68,000 Mt.
Given the ongoing exploration, discovery and increase in reported economic iron ore resources – we clearly do not need to be worried about the “amount left”, since there is plenty for several decades at least. Worry about peak oil absolutely – but certainly not peak iron ore.
Related posts at following links:
China punishing Australia: Suspending beef imports