About a third of China’s iron ore mines have halted production and this
could rise as high as 45 per cent by the end of the year if the price of
the steelmaking raw material stays below $70 a tonne. “I think this is
going to get worse and worse,” Pan Guocheng, president of the China
Hanking Group, told an industry conference in Beijing. Pan said about a
third of China’s miners had stopped production by January, with current
production at about 70 per cent of total capacity.
China has a
large number of small private iron ore mines with low efficiency, making
them uncompetitive compared with top miners. State-owned iron ore
miners are likely to be more resilient due to their lower cost and a
desire to maintain employment. “There has been a clear split between
state-owned and private mines. The private guys are out to make a quick
buck and have shut down very quickly. The state ones are not so
elastic,” Ian Roper, commodity strategist of CLSA told the conference.
Some private operators are surviving by concentrating their ore and
selling it for higher prices.