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Government opens up iron ore imports as license rules nixed

Keywords: Tags  China imports, iron ore, iron ore imports, import licenses, China Iron and Steel Association, Ministry of Commerce


SHANGHAI — China, the world’s largest iron ore importer, is allowing companies to import iron ore without requesting import licenses.

The policy alteration came into effect July 1 and is in line with the central government’s resolution to streamline its bureaucratic processes.

"Generally speaking, any company qualified to do import business is able to import iron ore into China. Companies can apply online for automatic iron ore import permits for each cargo, and an import license is no longer a must," a steel mill source in Hebei province told AMM sister publication Steel First.

Smaller traders previously had to have qualified importers bring the iron ore in for them, in return paying agency fees on top of the cost of the iron ore. Although these agent fees were small compared with the total value of the cargo, smaller traders still welcome China’s move to scrap import licenses.

"It simplifies the process of importing iron ore and it will cut costs for us," according to one trader in Zhejiang province that imports 3 million tonnes of iron ore annually.

The extent to which companies with large proportions of import agent business will be affected remains to be seen.

"Some agent fees were 1 yuan (16 cents) per tonne, 0.5 yuan (8 cents) per tonne or even lower, so it didn’t really change much for those who didn’t have licenses or who collect agent fees from licenses," a steel mill source in Shandong province said.

"What really matters in iron ore importing was never the license. It was and still is the abundant cash flow and the ability to control supplies. That means smaller traders or steel mills will still rely on big traders for imported iron ore," a trader in Singapore said.

"Theoretically, foreign companies which have subsidiaries in China that are qualified to do import business can import iron ore," a steel mill source in Shanghai said. "It might take a while before the new policy is fully implemented, and we need to see some of those foreign companies or non-licensed companies get an iron ore cargo into China to make sure."

Iron ore products could easily be sold before reaching China’s shores, so it is unlikely that big mining concerns would be interested in a yuan-based iron ore business within China, traders said.

As a result, it is equally unlikely that the world’s biggest iron ore miners would turn to building iron ore distribution centers in the country.

The former iron ore import licensing system had been running since 2004. It was introduced by the China Iron and Steel Association, which wanted to reduce the number of certified importers in an effort to curb speculative buying of iron ore.

The system also presented the opportunity to licensed importers to gain a profit by leasing their licenses.

But China’s Ministry of Commerce in early June said that iron ore and alumina importers would be able to submit import permit applications online starting July 1.

A version of this article was first published in AMM sister publication Steel First.


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