Greenland end mining ban, China will participate in the island's largest iron ore project

October 26, Greenland Parliament voted to end radioactive minerals mining ban that has been performed 25 years, this could detonate foreign investment enthusiasm on local abundant uranium, thorium, rare earths etc. mineral resources. In addition, London Mining Plc teamed up with Chinese companies has also achieved a major breakthrough of Iron ore mining on Greenland.

Insiders pointed out that further opening of Greenland mining market, the future will attract more Chinese and Australian investors to invest.

Largest iron ore project progress difficult

London Mining Plc confirmed obtain a 30-year exclusive mining iron ore contracts In the Greenland capital, Nuuk, 150 km north of the ice sheet, and to pay up to 5% of sales of royalties. This is called "Isua" of iron ore mining project is expected to be mined 15 million tons of open-pit iron, required an investment of $ 2.3 billion, which is the largest investment project in local history, total investments exceed Greenland's $ 2 billion of annual GDP.

Minister of Industry and Mining in Greenland Gierke Gao said, approved iron ore mining project was the Greenland moment in history, it is the biggest local commercial projects and will have an extremely positive impact on employment and income.

London Mining Plc is a UK listed company, Shareholders mainly composed by small companies of Australia and Canada, main business is focused on mineral exploration, development and operation, many new projects require capitalized supporters to cooperate. London Mining Plc as early as in 2010 was planned to cooperate with China, to reduce costs, the initial three-year of construction project needed 3,000 workers will come from China. Greenland capital Nuuk Parliament last December also exclusively pass a special legal work terms, which allow companies to pay the wage of foreign workers is not necessarily limited to local minimum wage. Local opposition parties and Copenhagen unions criticize that this is not only Greenland's natural resources are being plundered by China companies, but also open the door to greet cheap Chinese labor. After the passage of this bill has aroused great repercussion, In March, Prime Minister of the Government of Greenland was forced to resign, the progress of the project was also stalled.

Greenland is one of the least populated places on earth, only 56,000 inhabitants, although to achieve autonomy in 2009, but so far the government about 60% of revenue still offered by Danish. Poor infrastructure in Greenland, fishing is the local absolute export pillar industries. The Government has been hoping for greater autonomy and eventual independence, trying to walk a road of development and utilization of natural resources, through the development of mineral and petroleum industry to reduce dependence on Denmark.

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Russian metallurgical industry development status

Metallurgical industry is the basic sector of Russian industry. In 2011, the Russian metallurgical industry employment was nearly 1.3 million, 80% of enterprises are belonged to urban construction fields. Look from the production, metallurgical industry (ferrous and nonferrous) output in Russia's GDP accounted for 9%, exports accounted for 11.6%, industrial sector accounted for 5% of employees, taxes accounted for 5% of the budget.

From an international comparative perspective, the Russian steel output ranked fifth in the world, (only behind to China, Japan, the U.S. and India), iron ore production is also fifth in the world, steel pipe production is third in the world. Exports of metallurgical products is second in the world (only behind to China and Japan), aluminum production is second in the world, titanium production is second too, aluminum exports is first, nickel production and exports are first in the world.

Metallurgical Industrial Structure

Russian metallurgical industry includes black, non-ferrous minerals and non-metallic mineral mining; Iron, steel, rolled, steel, iron alloy, refractory materials, coke, aluminum, copper, rare metals; ferrous metals, alloy production and processing of semiconductors; Scrap, scrap metal processing and certain related chemical products. In addition, the metallurgical industry contains a large supplementary enterprises, scientific research and design organizations.

Metallurgical industrial enterprises for nearly eight years achieves vertical integration, reducing the industry's competitive risks in the domestic market, improved investment policies to ensure the safety of their raw materials industries. In recent years, metallurgical industrial enterprises actively carry out services in the field of metal processing and metallurgical manufactures.

The overall commentary of industry development of the metallurgical industry

In 2004, the Russian finished steel production was 53.7 million tons, 29.8 million tons of domestic consumption; 2011, finished steel production increased by 10% (59 million tons), domestic consumption grew by 25.8% (37.5 million tons); steel production increased by 60% (9.6 million tons), domestic consumption grew by 78 percent (10.9 million tons).

Russia's domestic non-ferrous metal products are mainly provided by the Chinese. 2011, the domestic demand for aluminum reached 875,000 tons, compared with 2004 growth of 148.6%. Domestic demand for refined copper in 2011 reached 300,000 tons, an increase of 107% compared to 2004.

The Russian government's anti-crisis measures in preventing the decline in production capacity of metallurgical enterprises have played a very good effect, which ensure the number of jobs, and enable investment projects to be continued before crisis. In recent years, the metallurgical industry upgrading of fixed assets become one of the main factors of the industry to successfully overcome the financial crisis, also make high-tech products with high added value production has been enhanced.

Over the past decade, metallurgical industry used for the upgrading, transformation and expansion of production investments totaled more than 1.6 trillion rubles. Currently, Russian metallurgical enterprises large equipment of wear rate does not exceed 50%, which makes the industry more flexibility to respond to negative changes in the external market environment.

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Why China's steel exports in September create new low

China's steel exports in August created a new high in nearly three years, in September suffered a dump, total exports fell sharply. EU and emerging economies export situation of uncertainty and accelerate the appreciation of the RMB is the main reason about China's steel exports decline.

According to customs statistics, September China's steel exports were 4.92 million tons, MOM fell 1.22 million tons in August, drop 4.47%; From January to September, China's steel exports was 46.9 million tons, an increase of 14.6 percent. September, China imported 74.58 million tons of iron ore and concentrates, MOM in August increased 5.57 million tons, an increase of 14.72 percent, average import price was $ 126.18, MOM rise 7.34 U.S. dollars / ton.

External demand is still uncertain, September China negative growth in exports to the EU

With the gradual recovery of the global economy, September global manufacturing sentiment index rose to 51.8%, an increase of 0.2 percentage points and create a new 27-month high. But the euro-zone manufacturing sentiment index totally fell 0.3 percentage points to 51.1%, according to statistics, compared with the same period of last year September China total value of exports to the EU appeared 1% of negative growth, compared with August fell 3.1 percentage points. On a month-on-month basis, September China exports to the EU fell 8%. Situation is analogous that exported to other area in the world, September total trade of China's exports in East Asia fell 2.8 percent, only Japan and Vietnam export value MOM appear rise, Japan's growth of 16.7%, an increase of 7.8% in Vietnam.

Looked from international market's major economies’ export performance, although the performance of the global manufacturing economy steadily recovering, Asian economies have also maintaining recovery situation, but the total value of imports from China did not improve.

Overall decline in international steel prices, China steel export prices fell slightly

With the Fed's heating of Quantitative Easing, international markets all want to avoid risk, commodities collectively appeared price decline. Led by the capital market of price reduction, the international steel prices also totally reduce. Because China's finished steel export prices fell slightly, reducing the low price export advantage of finished steel, which is relatively unfavorable on the latter exports.

Global crude steel production growth, create a new high in past two years

Statistics show that, September 2013 Global 64 major steel-producing countries and regions of crude steel production is132.5 million tons, year on year an increase of 6.1%,the growth rate is the highest level since November 2011, which show that global economy is significant improvement. However, this result directly result an oversupply of global steel market, therefore, China's steel exports become more difficult.

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Choice between scrap and iron ore: Environmental protection become key factor

In the current vigorously promote energy conservation and recycling economic situation, increase scrap application level is imperative, however, for requiring high-yielding of domestic enterprises, this is also greater difficulties. Therefore, to change the status of low utilization of scrap, it still needs a long process.

At present, China's steel industry transformation and upgrading of the two cores - green transformation and product upgrades are directly related with the consumption of scrap, but last year to this year, domestic key steel enterprises of scrap consumption was dropped significantly.

Data show that in 1-5 months of last year, China's overall steel scrap consumption fell 21.7 kg. Among them, BOF steel scrap consumption decreased 8.8 kg more than last year, EAF steel scrap consumption fell 117.6 kg.

Meanwhile, China's total consumption of scrap also shows a downward trend. Statistics show that in 2012 China consumed 84 million tons of scrap steel, compared with 2011 year of 9100 tons, reducing by 700 million tons.

In this regard, experts said this is mainly due to steel prices continued to slump, scrap costs are high, as well as controllability of steel scrap is poor etc. factors affected. In which the cost of scrap higher than iron is the root cause of low scrap consumption.

In the international market, for example, although iron ore prices experienced several price increases, which has be more than 100 dollars / ton of price, and 1.67 tons of iron ore can produce one ton of steel, but compared with 400 dollars / ton of the scrap price, 1.67 tons of iron ore price is very low.

Experts point up that even adding iron ore steelmaking of consuming energy costs, it still not enough to make up the difference price with scrap, moreover, Iron ore of thermal utilization and recovery can’t be ignored.

It is worth mentioning that another major reason resulting domestic scrap ratio is not high, that is environmentally illegal low cost. Because domestic environmental protection has insufficient attention, illegal cost is low and causing law-abiding at a disadvantage. In contrast, because of stringent foreign environmental system, scrap as energy saving materials is more likely to be favored than iron ore.

In addition, the high scrap import taxes and stringent environmental protection system, also to some extent dampened the enthusiasm of buyers, resulting in insufficient supply of raw materials, eventually had to abandon reliance on scrap and turning to iron ore. However, with the national importance of environmental protection and the increase in volume of output, scrap iron will also be favored by steel enterprises.

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Russia Severstal Group quit India steel project

Russian steelmaker Severstal has announced it quitted from the Indian joint venture plant project, which result to the future direction of the project is unknown. Severstal Group is already the third foreign-funded enterprises quit India steel construction projects this year. Earlier, South Korea's POSCO abandoned Karnataka construction plans because land acquisition problem. The ArcelorMittal because of the slow progress of the project issues quitted Orissa construction plans.

Severstal and Indian state-owned miner National Mineral Development Corporation of India (NMDC) had reached an agreement in 2010 about Karnataka jointly build an annual output of 300 tons of steel mill. However, because the Indian government reluctant to transfer the majority stake to Severstal, the project has been stopped. Severstal said difficult business environment of India lead to its exit the project. NMDC did not declare how to develop the project in future, NMDC may be carry out independently. NMDC can be through cash reserves and bank loans to India to finance the project. However, NDMC has several developing projects, and previously expressed focus on completed Chhattisgarh Province with an annual output of 3 million tons of steel construction. Meanwhile, through the construction of new mines and the development of existing projects, domestic iron ore production capacity will be expanded from 32 million tons / year to 48 million tons / year.

Brazil levy anti-dumping duties to China stainless steel pipe

Brazil's Foreign Ministry announced on July 29, levied anti-dumping duties from China mainland and China Taiwan imports of circular welded austenitic stainless steel (outer diameter 6mm-2.03m, thickness 0.4mm-12.7mm), valid for five years. In which to Zhe Jiang Jiuli Special Material Technology Co., Ltd. tax rate is zero, other mainland enterprises’ anti-dumping duty is $ 679.08 / ton; To China Taiwan Yun Qiang Industrial Co., Ltd. of anti-dumping duties levied $ 359.66 / ton, other Taiwan enterprises’ anti-dumping duty is $ 911.71 / ton.

To reply South American steel companies Aperam applications, Brazilian authorities initiated an investigation on the case in last September, investigation period is from January 2007 to December 2011.

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