China to set new licensing system for iron ore importersStaff writer ▼ | Tuesday June 18, 2013 12:20PM ET
China is the world's largest iron ore importer and consumer with annual consumption of more than one billion tonnes and up to 60 percent of iron ore traded globally comes to China.
The China Iron and Steel Association and the China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters are responsible for regulating iron ore trading on behalf of the Ministry of Commerce, and issuing licenses to importers.
But industrial insiders now believe traders will not require their approval for iron ore imports in future. The move by the Chinese government will provide fairer access to foreign iron ore resources by middle and small-scale steel companies, which currently have to pay commission fees to middlemen who have importing rights for the raw material.
The commerce ministry's announcement to change its license approval system is just the first step and the need for importing rights, as well as the license, will be removed.
There are 118 steel companies and traders in China that have the right to import iron ore. A small number of traders with importing rights charge a commission fee of between 0.3 yuan ($0.05) and 0.5 yuan per ton to help other companies import iron ore. That brings more than 10 million yuan to the table every year.
Those companies will be affected by the new rule but it will be beneficial for medium and small-scale steel companies and traders. ■