Iron ore price, page-31999

short term pain, long term gain. Encouraging article below (news.com.au) - which I think we already know

‘No chance’: China’s empty threat to harm Australia by stepping up domestic iron ore miningMay 21, 2021 1:54pmAustralia's government has hinted an awful lot about a war with China – but experts point to a different motive behind their statements....Ben Grahamnews.com.auDespite everything that’s transpired between Australia and China in the past year, Beijing has somehow ended up giving our economy a massive boost.Australia’s biggest export iron ore — 60 per cent of which goes directly to China to be used in steel production — has skyrocketed in value.This time last year it was worth about $US60 per tonne. Now, the same amount is worth over $US210.Analysts say this due to a spike in infrastructure-driven Chinese steel production and disruptions to Brazilian and Indian suppliers.China’s increased steel production, now hitting record levels, is in turn giving Australia a massive cash windfall — ironically over a period of time when trade tensions between Beijing and Canberra hit rock bottom.However, it has become clear this week that Beijing is not happy about the situation.In its monthly briefing, the National Development and Reform Commission (NDRC) recommended Chinese firms boost domestic exploration for the steelmaking input, explore overseas ore resources and widen their sources of imports.Over 60 per cent of Australia’s iron ore exports end up in China. Picture: Bloomberg Source: BloombergIn strong words for the Morrison government, NDRC spokesman, Jin Xiandong, was reported by state media as saying Australia only has itself to blame for damaging its economic and trade co-operation with China.“Consequently, we have to make the legitimate and necessary reaction, and Australia should bear full responsibility for such moves,” Mr Jin told the conference.“We urged the Australian side to treat China-Australian co-operation objectively and reasonably, to treat Chinese companies fairly, end the disruption of bilateral trade and investment co-operation and take actions to bring forward bilateral relations for healthy development.”However, the move has not only been deemed extremely risk by analysts — given the near-record prices and China’s dependence on Australia’s high-quality supply for about two-thirds of its imports — but a hollow threat too.Shiro Armstrong, director of the Australia-Japan Research Centre at the Australian National University, said China’s mines are not producing high enough quality iron ore and their operations, usually in the mountains or on the grasslands, are environmentally messy.Tim Murray, the co-founder of equity and macro research house J Capital, says you only need to visit a Chinese mine to find out what the issue is with Beijing’s plan.“I have visited 30 or more Chinese iron ore mines. I’ve been underground. I’ve been to the biggest ones, he told the AFR.China’s steel sector is booming alongside surging iron ore prices. Picture: Reuters Source: Reuters“So I’m quite familiar with the capacity for domestic iron ore. The short answer is there is no chance of domestic iron ore replacing imports. Definitely not in the short term.“Their deposits are harder to get. They are a low Fe [ore minerals] and require a lot of energy and environmental impact to make the blast furnace red.”China is making efforts to put its money where its mouth is, as local iron ore miners prepare to ramp up production in the coming months.However, analysts believe China would need to develop hundreds of new mines to keep up with its steel production.As the world’s factory floor and largest construction market, China has been the main driver of global metal markets for more than a decade and they’re showing no signs of slowing down.From the start of the year through mid-May, prices for China’s steel and copper production has surged more than 30 per cent as a revival in construction and manufacturing supercharged demand in the world’s largest metal consumer.RELATED: US puts China on notice in Aussie fightChina said Australia only has itself to blame for the potential move, failing to act “objectively and reasonably”. Picture: Anthony Wallace/AFP Source: AFPIt comes after the Morrison Government last month revoked Victoria’s participation in the Belt and Road Initiative. Picture: NCA NewsWire/Dan Peled Source: News Corp AustraliaEven if China was able to develop hundreds of new mines in a short amount of time to keep up with this breakneck pace, it would require an enormous amount of water and energy at a time when President Xi Jinping has promised to reduce the country’s carbon footprint.The latest move to hurt the Australian economy from Beijing comes after the Morrison Government last month revoked Victoria’s participation in China’s Belt and Road Initiative.“We are not going to surrender our sovereignty,” Defence Minister Peter Dutton told Today in late April.“China and others need to understand that Australia is not going to be bullied.”Chinese officials swiftly lashed the move as “unreasonable and provocative”, while Chinese state-owned media said Australia would face “serious consequences” and a potential trade conflict.“We urge Australia to set aside cold war mentality and ideological bias, view the bilateral co-operation in an objective and rational light,” Foreign Ministry spokesman Wang Wenbin said at the time.“Immediately redress mistakes and change course, refrain from going down the wrong path further, and avoid making the already seriously difficult China-Australia relations worse.”A Chinese embassy spokesman echoed the sentiment, warning in a statement it could further derail already soured relations between the two nations.RELATED: China’s ‘warning shot’ to AustraliaThis article contains features which are only available in the web versionTake me there“We express our strong displeasure and resolute opposition to the Australian Foreign Minister’s announcement on April 21 to cancel the Memorandum of Understanding on Cooperation within the framework of the Belt and Road Initiative and the related Framework Agreement between the Chinese side and Government of Victoria,” the spokesman said.“This is another unreasonable and provocative move taken by the Australian side against China.“It further shows that the Australian government has no sincerity in improving China-Australia relations.“It is bound to bring further damage to bilateral relations, and will only end up hurting itself.”– with Natalie Brown