A year after China set up a company that’s expected to become the world’s biggest iron ore buyer, the firm and how it will operate remains shrouded in mystery.
China Mineral Resources Group was established last July to consolidate purchases for a nation that accounts for around three-quarters of the world’s iron ore imports. Ranked as the 36th most important state-owned company by Chinese authorities, the firm that’s poised to upend the $160 billion global trade in the steel-making staple still doesn’t have a website, or any public contacts.
So there was a lot of interest when the state-run China Metallurgical News published the first strategic plan for CMRG last week. But those hoping for some insight into how the company intended to challenge the pricing dominance of the top three iron ore miners — Rio Tinto Group, Vale SA and BHP Group Ltd. — were left disappointed.
CMRG said it had made progress on iron ore procurement, major national projects, and other key works in the past year. However, the plan contained no details or targets, and instead was filled with broad statements including that it would strive to become a world-class mineral resources integrated service enterprise.
Read More: China’s New Iron Ore Buyer Sets Off Biggest Shakeup in Years
The Chinese company had already began discussing supply contracts with Rio, Vale and BHP, Bloomberg reported late last year.
“We haven’t seen anything which disturbs our business,” Rio Tinto Chief Executive Jakob Stausholm said at an event in Melbourne on Tuesday, referring to CMRG. “I think they are still getting it together, but they are making umbrella purchase agreements.”
CMRG’s establishment was backed by top leaders in Beijing, Bloomberg has reported. But it’s still unclear how much of China’s iron ore buying will eventually become centralized.
Most Chinese steel mills are due to conduct annual contract negotiations with the miners toward the end of the year. That may provide an opportunity to try and gauge the role CMRG is going to play in the global iron ore market.
The Week’s Diary
Tuesday, Aug. 1:
- Caixin’s China factory PMI for July, 9:45am local time
Wednesday, Aug. 2:
- Nothing major scheduled
Thursday, Aug. 3:
- Caixin China Services PMI
Friday, Aug. 4:
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~3:30pm local time
On the Wire
China’s State Council called on cities to start introducing policies to ensure the healthy development of their property markets, as top policymakers seek ways to help the economy.
Foreign investors are returning to China’s stock market en masse, signaling a bullish shift in sentiment after months of skepticism.
Country Garden Holdings Co. faces $2.9 billion in bond payments for the rest of the year, with the Chinese developer’s liquidity woes testing its ability to meet deadlines and avoid a first-ever default.
(Updates with comment from Rio CEO in 6th paragraph.)
