(Minews) - China is drawing up plans to subsidise its struggling iron ore sector, official media reported on Wednesday, with many high-cost mines forced to shut as a result of a collapse in global prices.
China, the world's biggest steel producer, has long been worried by its growing dependence on foreign miners and has tried to maintain a level of self-sufficiency in the key raw material, but its mines have been unable to compete with massive low-cost producers in Australia and Brazil.
The Shanghai Securities News said on its website that the state would soon publish new policies aimed at providing financial support to China's iron ore mining sector. It did not provide further details.
Iron ore prices have fallen around 60 percent since last year after a concerted effort by major producers to expand output and boost market share. The glut has been compounded by an economic slowdown in China, by far the world's biggest consumer.
According to data from the Metallurgical Mines Association of China (MMAC), around three quarters of China's iron ore mines were making losses in 2014 as a result of the price slump, and many smaller producers have already halted operations.
An industry official said earlier this month that China had agreed in principle to cut the tax burden on domestic iron ore miners, which is currently much higher than in Australia, which supplies more than 60 percent of China's imports.
Apparent consumption of domestic iron ore fell more than a third to 205.86 million tonnes last year, according to industry consultancy Custeel. China's import dependency last year rose 9.7 percentage points to 78.5 percent, according to the China Iron and Steel Association.
Global miners such as Brazil's Vale and Australia's Rio Tinto and BHP Billiton have mapped out a 7-year plan to add 430 million tonnes of new supply onto the sea-borne market by 2020.
The miners were banking on sustained steel demand growth in China, especially in the less developed central and western regions, but Chinese steel production could already have peaked, a senior industry official said this week.
"China's peak steel consumption is probably right now," Dai Zhihao, president of the Baoshan Iron and Steel Corp , told the official Xinhua news agency on Tuesday.
