China has reiterated its demand for “fair and equitable” price mechanisms via a leading government delegate in the Western Australian capital of Perth.
The China Daily reports that Wang Yin’er, the Consul General of the People’s Republic of China in Perth, has renewed calls for rational iron ore prices during a keynote speech delivered to a mining forum in Western Australian capital.
Addressing an assembly of the world’s biggest mining companies at the Midwest International Mining Forum Wang decried the negative impact of erratic iron ore prices on the Chinese steel industry and called for “a return to rationality.”
So as to strengthen cooperation, (officials must) explore the possibility of establishing a fair and equitable price mechanism for iron ore and promote the return to rationality of the iron ore price, thus laying a solid foundation for the continuity, stabilization and deepening of cooperation between China- Australia mining industries over the coming decade.
Iron ore is one of Australia’s chief mineral exports to the Middle Kingdom, and has been a source of controversy and tension between both countries in only recent years.
China sought to break the iron ore oligopoly enjoyed by BHP (ASX:BHP), Rio Tinto (ASX:RIO) and Vale (NYSE:ADR) towards the end of the last decade by lifting state-owned firm Chinalco’s ownership stake in Rio Tinto from 9.3% to 18.5%.
These efforts were thwarted when Rio Tinto opted to raise money through existing shareholders and turned to BHP Billiton for the establishment of a joint venture.
Rio Tinto soon found itself embroiled in an espionage scandal in China, when four employees, including China-born Australian national Stern Hu, were arrested on charges of bribery and spying in July 2009 in relation to the local steel industry and iron ore prices.
China remains leery of vicissitudes in the iron ore market, as it require huge amounts of the key steelmaking ingredient for its ongoing modernization process.
It’s dependence on iron ore for the construction of modern infrastructure and urban centers is reflected by the boom in trade with Australia over just the past decade, as well as an attendant surge in ore prices.
In 2002 China’s imports of iron ore from Australia were 42.78 million tons in total, at an average price of $15.8 tonnes. By 2011, however, Australia exported 300 million tonnes of iron ore to China, with a peak price of $180 per ton in February.
