From China spectator Chinese iron ore mines continue to cut back...

From China spectator

Chinese iron ore mines continue to cut back on production

• PAUL PENNAY
• 1 HOUR AGO

• INDUSTRIES
• RESOURCES AND ENERGY
• ECONOMY
• CHINA

The rapid decline in commodity prices has pushed many Chinese mining firms into the red, according to a brief article in today's Beijing News.

According to the article, as of April 10, Chinese mines were operating at an average 38 per cent of capacity, a far cry from the 75 per cent capacity utilisation rates recorded at this time last year.

It also represents a 10-percentage point drop from the 48 per cent capacity utilisation rate recorded on March 13.

Six of China's 10 largest mining companies recorded combined losses of 290 million yuan in 2014, according to recent data from the Metallurgical Mines' Association of China.

Around 80 per cent of small- and medium-sized iron ore miners with high costs have been forced to cut back or even cease production, according to a report in China Securities Journal last week.





In the fourth quarter of last year, three-quarters of China's domestic iron ore capacity was operating at a loss and capacity utilisation rates at small iron ore mines had dropped to as low as 20 per cent, according to recent comments by Yang Jiasheng, chairman of the Metallurgical Mines Association of China,

Yang also noted that during the same period capacity utilisation at large mines was below 80 per cent and mid-sized miners were operating at less than 50 per cent of capacity.

"The after-tax production costs of most state-owned mines is over 700 yuan a tonne, basically double the price of landed imports," an unnamed person with ties to a state-owned mine told reporters from National Business Daily yesterday.

The same article says that these state-owned mines were making a loss of about 200 yuan on each tonne of iron ore fines produced.

Analysts expect a large shake out in the sector as more mining firms are forced to cease production, according to the Beijing News report.