The establishment of a national strategy for iron ore resources is imminent, it is not too late

The Central Economic Work Conference held at the end of last year emphasized "enhancing the independent and controllable ability of the industrial supply chain." For the steel industry, the biggest shortcoming is the issue of iron ore resources. How to establish a stable supply chain of mineral resources?

Shen Wenrong believes that from a national level, the increase in the price of imported resources will bring about an increase in product production costs, a decline in product competitiveness, and a large consumption of foreign exchange. For the steel industry, the unreasonable increase in iron ore prices has further increased the risk of industry operations, which is not conducive to the stability of the industrial chain and supply chain.

According to estimates, the price of imported iron ore in China in 2020 has nearly doubled from around US$82/ton in February, while the cost of imported iron ore is only US$40/ton.

"From a national perspective, we still have a lot to do in resource strategy." Shen Wenrong pointed out.

He believes that at least the following issues need to be resolved: First, does the company think about going global from the perspective of resources? Including coal mines, iron ore, aluminum ore, and ferroalloy ore. The second is whether the country currently implements a resource strategy? Are there corresponding organizations and policies? "Our companies can learn from what Japan does when going global: Japan is a resource-poor country. They go out to get resources from the national level in the form of a consortium, and have corresponding policies." Shen Wenrong suggested.

"Organize iron and steel companies to jointly establish a steel alliance, and invite railway construction and port construction companies to join, and it must be organized by the state." Shen Wenrong pointed out, "China is a country lacking resources, and it is not too late to pay attention to the issue of iron ore. ."

According to his analysis, from 2020 to 2030, China’s annual crude steel output will be between 1 billion tons and 1.1 billion tons, and it is estimated that 10 billion tons to 11 billion tons of steel will be produced within 10 years; from 2030 to 2060, according to expert predictions, this 30 Annual crude steel production will gradually return to below 1 billion tons, with an average annual output of 800 million tons, totaling 24 billion tons. From 2020 to 2060, China will produce 34 to 35 billion tons of steel in total. my country’s current steel stock is 11 billion tons. If the per capita stock is close to that of the United States, 34 to 35 billion tons of steel will be needed in the future, indicating that China's steel stock currently accounts for only about a quarter.

"To produce steel in the future, the proportion of electric furnace steelmaking output will increase, and the demand for scrap will increase, but even if it increases, it will still need to import a large amount of iron ore to meet production." Shen Wenrong believes.

If calculated on the basis of 1 ton of iron 1.6 tons of ore, 54.4 to 56 billion tons of iron ore (excluding scrap steel) will be needed in the next 40 years.

For specific operations, Shen Wenrong also gave his own suggestions.

One is that the state should lead the organization of relevant enterprises to purchase overseas resources, such as the China Development Bank to invest in the purchase of resources. As for which resource to buy, it must be studied and demonstrated. "The state controls the mine, this is one way." Shen Wenrong thought.

The second is to seize the opportunity of the “Belt and Road” to help countries along the route strengthen infrastructure construction.

The third is to have the awareness of acquisitions, and take control of existing overseas miners.

"With my country's existing infrastructure construction and development capabilities, it is not a problem to build a railway in three years, a port in two years, and to control 200 to 300 million tons of iron ore resources every year. It depends on whether there is such a determination. "Shen Wenrong emphasized.