China has a vast territory and rich mineral resources. However, given that my country is the world's largest industrial country and consumes huge amounts of resources, a considerable part of its mineral resources also relies on imports.

As far as the iron ore and coal resources commonly used in my country's industry are concerned, although the total amount of resources is very rich. However, due to mining difficulty and quality issues, China is also the world's largest importer of iron ore and coal. Supply has been restricted by other countries for a long time, and it is often in a very passive position. Once there is an unexpected supply situation in Australia or Brazil, iron ore will be stuck!

However, since this year, my country’s coal imports from Australia have been zero, and domestic steel giants have also made frequent moves. Australia’s good days of reaping the dividends from China’s imports may be coming to an end.

1

Coal has been shut out of China for half a year

Australia’s market in China has been seized by the United States

Australia has always been called a "sit-down country" "A Country on Mine Cars", the importance of coal exports to the country is self-evident. China is also an important "customer" of Australian coal. Referring to 2019 data, China accounted for 21% of the US$50 billion coal export business, second only to Japan's 27%.

But by 2021, Chinese buyers have lost interest in Australian coal. What makes Australian exporters even more uneasy is that coal from the United States and other countries are stepping up their efforts to come to China to carve up Australia’s market share.

According to relevant data, as of May this year, my country has not purchased Australian coal for 6 months.

As for the reason for "not interested", it is related to the fact that relevant Chinese departments have improved the quarantine standards for coal imports. In May and June last year, many coal ships carrying Australian coal were "turned away" "Outside"; As of mid-November last year, the number of ships stranded in the port even reached 80, worth more than 1.1 billion Australian dollars.

Secondly, in addition to the improvement of quarantine standards, Australia's repeated wrong actions against China, such as issuing "travel advice", opening investigations on Chinese-related products, unilaterally tearing up cooperation agreements, etc., have also made Australia Chinese buyers have an increasingly bad impression of Australian products. Coal, as a key product in trade between the two countries, naturally "bears the brunt".

As the world's largest coal importer, China's total import volume in 2020 reached 303.39 million tons, rising for the fifth consecutive year. Therefore, after Australian coal lost the Chinese market, major coal exporting countries came to "divide" the market one after another, such as the United States, which has always claimed to support Australia in Sino-Australian trade.

Before October last year, the amount of coal exported by the United States to China was almost zero. However, according to data, in the first five months of this year, my country imported a total of 2.932 million tons of US coal, a year-on-year increase of nearly 900%; the share of US coal in China's total coal imports also increased by 2.64% from 0.22% in the same period last year. . Market news also said that on June 28, a cargo ship carrying 136,400 tons of coal was sailing from the east coast to China.

Of course, in addition to the United States, Russia, Canada, Mongolia and other countries have also increased their coal exports to China, but the increase is not as high as that of the United States.

2

No one takes over Australian coal

Want to return to the Chinese market?

Data show that in December 2020, relevant Chinese and Russian companies signed an agreement to achieve the goal of supplying 30 million tons of coal to China by 2023; in March this year, Canadian coal exports to China reached 1.2 million tons , hitting a high; in the first six months of this year, Mongolia’s coal exports to China reached 8.7935 million tons, a year-on-year increase of 5.47%...

China has no worries about having no source of imports, but Australia is struggling to find a "next home" . Last year, the British media pointed out that due to the huge demand in the Chinese market, after losing the Chinese market, it would be difficult for Australia's exporters to place their hopes on India or other Asian countries to fill the gap.

To this end, Australian Trade Minister Dan Tehan also stated in an interview on July 16 that he hoped to "sit down and talk" with China. The media interpreted that Australia may not be able to withstand the losses and wants to return to the Chinese market.

Interestingly, after eroding Australian coal’s market share in China, US trade chief Dai Qi told Dan Tehan on July 21 that the United States would support Australia. In response, netizens joked that the implication of the person in charge may be that "as long as Australia does not let go, the United States will continue to increase exports to China in the future."

3

Domestic Iron Ore Giant Alliance

Gradually get rid of dependence on Australian imports

On July 14, Shandong Provincial State-owned Assets Supervision and Administration Commission According to the release, in order to implement the steel industry plan of Shandong Province and promote the layout optimization and structural adjustment of the steel industry, the State-owned Assets Supervision and Administration Commission of Shandong Province is planning the strategic reorganization of Shandong Iron and Steel Group with China Baowu. On the same day, Shandong Iron and Steel also released the above news. Shandong Iron and Steel stated that this matter may lead to changes in the company's controlling shareholder and actual controller.

Some market analysts say that the reorganization of China's steel companies is in the ascendant, and China's steel industry has entered an important window period for mergers and reorganizations and a period of historical opportunities. For China's steel industry, restructuring has a positive effect on increasing the concentration of the steel industry, increasing the voice of centralized procurement of iron ore, and increasing the pricing power of steel products in various regions.

It is understood that this is another merger and reorganization of a large steel company by Baowu Group after it has continuously merged and reorganized and reached the top of the world's largest steel company.

In 2020, China Baowu achieved operating income of 673.7 billion yuan, profit of 45.5 billion yuan, steel production exceeded 100 million tons, ranking 111th among the world's top 500 companies, and its business scale and profitability ranked first in the world. one.

Shandong Iron and Steel Group is an important state-owned backbone enterprise in Shandong Province, with assets of 373.6 billion yuan. It was formed from the merger of Jinan Iron and Steel and Laiwu Iron and Steel. In 2020, Shandong Iron and Steel Group's operating income exceeded 220 billion yuan, profit was 7.7 billion yuan, and steel output exceeded 31 million tons, ranking 7th in the country. From 2017 to 2018, two domestically leading 5100m2 blast furnaces were put into operation, and other production equipment are also at the domestic leading level. The current Shandong Iron and Steel Group is a brand-new steel enterprise.

4

Expanded scale advantage

Increased say in iron ore pricing?

China Baowu’s reorganization of Shandong Iron and Steel Group will lead to the integration of resources of the two giant companies, which is of great significance to both parties. The scale advantage caused by the wave of steel mergers and acquisitions may help to improve the iron ore industry. The right to speak in stone procurement.

Wang Guoqing of the Lange Steel Research Center said in an interview that Baowu’s strategic reorganization of Shandong Iron and Steel will effectively increase the concentration of the steel industry and help increase its say in iron ore procurement pricing.

For Baowu, the reorganization of Shandong Iron and Steel will further expand the territory of Baowu Steel, and its market radiation range and comprehensive competitiveness will be effectively improved. The restructured Baowu Group's scale advantage in the industry will be further highlighted, and coordinated development will be achieved in aspects such as procurement, production, R&D, sales, management and industrial chain cooperation, which will help Baowu Group optimize its product structure and eliminate homogeneity. In order to reduce competition and achieve overall improvement in quality and efficiency, we will help Baowu and Shandong Iron and Steel continue to develop well.

For Shandong Iron and Steel Co., Ltd., with the help of Baowu’s R&D, technology, management and supply chain system collaboration, it can help Shandong Iron and Steel Co., Ltd. achieve transformation and upgrading. Especially under the constraints of the "dual carbon" goal, Baowu's research and development and technological exploration in carbon emission reduction and carbon sequestration are relatively early. After realizing industrialization in the later stage, it will be beneficial to the application and promotion of Shandong Iron and Steel, and promote Shandong Iron and Steel to achieve green , low-carbon and high-quality development goals.

Moreover, after the reorganization, Shandong Iron and Steel Group will not only receive more financial and technical support, but also optimize the industrial organizational structure from a higher perspective, which will further improve operating efficiency and profitability.

Although Shandong Iron and Steel Group is an old state-owned enterprise, it is indeed a "new generation". After the integration of Shandong Iron and Steel Group and China Baowu Group, the latest regional steel force will be integrated into China Baowu Group. For China's steel industry, restructuring has a positive effect on increasing the concentration of the steel industry, increasing the voice of centralized procurement of iron ore, and increasing the pricing power of steel products in various regions.

5

The reorganization of steel companies continues

In recent years, my country's steel industry has entered a new stage of development, from the previous focus on quantity development to high-quality development. development stage. The National Development and Reform Commission also mentioned at a recent press conference that it will promote mergers and reorganizations in the steel industry. Adhere to the principles of enterprise subject, government guidance, and market-oriented operation, use market-oriented legal methods, respect the wishes of enterprises, and let enterprises carry out mergers and reorganizations through independent decision-making. Government guidance is mainly reflected in creating an open, fair and just market environment, eliminating market segmentation, creating favorable conditions for cross-regional reorganization, and striving to reach a new level of mergers and reorganizations in the steel industry during the "14th Five-Year Plan" period.

Li Xinchuang, Secretary of the Party Committee and Chief Engineer of the Metallurgical Industry Planning and Research Institute, and a foreign academician of the Russian Academy of Natural Sciences, analyzed that the important prerequisite for achieving high-quality development goals is to enhance the industry through mergers and reorganizations, especially reduction and reorganizations. The degree of concentration lays solid foundation for achieving coordinated development of the industry and improving overall quality. China Baowu has pioneered a disruptive reorganization, and the reorganization of steel groups such as Jianlong Heavy Industry, Delong Steel, Shagang Group, and CITIC Special Steel is in the ascendant. China's steel industry has entered an important window period for mergers and reorganizations and a period of historical opportunities.

The strategic reorganization of China Baowu and Shandong Iron and Steel Group has once again started the integration of Chinese steel companies. Zhang Guishan said that the strategic reorganization of China Baowu and Shandong Iron and Steel Group may still be a process for my country to promote the high-quality development of the steel industry. China Baowu may have a new national strategic layout in the future, and the competitiveness of China Steel in the international market will will be further strengthened.

China’s steel industry needs to accelerate the pace of mergers and reorganizations, build an industrial structure with division of labor, collaboration, effective competition, and coordinated development, and focus on improving the ability to coordinately respond to market crises, and create advantageous enterprise groups at different levels. Cultivate leading enterprises with global influence, regional appeal, and professional influence.

6

There is still a long way to go before China can get rid of its dependence on mineral resources

In the face of non-renewable mineral resources, Especially for those resources that are heavily dependent on imports, how to ensure that they are not "stuck" is an urgent matter.

Increase the acquisition of overseas mines and expand import sources. For strategic resources with huge demand such as oil, coal, natural gas, iron ore, etc., we choose to implement import "diversification". Taking oil as an example, in order to get rid of the "Malacca Dilemma", our country has worked with Pakistan Railways to build an economic corridor, and also cooperates with Russia, Central Asia and other countries to build energy import channels to China.

Finally, increase domestic prospecting efforts. China has a vast territory and rich resources, and there are still many places where mineral prospecting efforts are being made. In short, with the actions of the state, I believe that our country can handle the issue of resource security.

Improve the development environment of the domestic mining industry, strengthen the construction of overseas resource bases, accelerate the formation of a dual-circulation mineral security pattern at home and abroad, enhance my country's ability to independently control resources, and establish multi-dimensional, diversified and efficient resource security Channels and capabilities have become common knowledge in the industry, but we still have a long way to go in terms of stable and healthy advancement.

On the 20th, we learned from the Shanxi Provincial Department of Emergency Management that the Safety Committee Office of the Shanxi Provincial Government issued the "Notice on Carrying out Centralized Rectification and Rectification of Mining Engineering Outsourcing and Affiliation Behavior" (hereinafter referred to as the "Notice"). Anyone who violates regulations on outsourcing or affiliation will be ordered to suspend production and construction for rectification in accordance with the law.

This centralized clean-up and rectification will start from July and last for three months. Regarding the identification standards for outsourcing and affiliation of mining projects, the Safety Committee Office of the Shanxi Provincial Government has clarified that outsourcing refers to the use of external resources to serve the company's internal production and operations.

Among them, coal mines are allowed to outsource the installation and removal of underground working surfaces, the installation and maintenance of large equipment, gas drainage drilling construction, drainage pipeline installation and other projects to professional service companies; coal mines are allowed to outsource projects in accordance with the " The "Measures for the Safety Management of Overall Trusteeship of Coal Mines (Trial)" implements overall trusteeship.

Whenever the following circumstances exist, such as contracting or subcontracting a construction project to a unit that does not have the corresponding qualifications; the contracting unit transfers all the projects contracted to other units or individuals for construction; the coal mine installs or dismantles the work face In the outsourcing of various types of professional service projects, the "Outsourcing Project Safety Production Management Agreement" has not been signed with the contracting unit, or the contractor has not fulfilled the agreement and failed to implement the safety production responsibilities; the establishment of the management organization, management personnel allocation and If the special operations personnel do not meet the requirements and do not have custody capabilities, it is illegal and illegal outsourcing.

For non-coal mines, non-coal mines are allowed to integrate exploration, construction, production, pit closure and other projects, or main ventilation, main lifting, water supply and drainage, power supply and distribution, main air supply systems, and their equipment The operation and management of facilities shall be outsourced to professional service companies with corresponding qualifications in accordance with laws and regulations.

If the following circumstances exist, for example, the contracting unit outsources the project to a unit that does not have the corresponding qualifications, or the contracting unit contracts the project outside the scope of the qualification level; the contracting unit subcontracts all the projects it contracted, or All the projects contracted by it will be dismembered and then transferred to other units or individuals for construction in the name of subcontracting; if there are more than 3 contracting units for a production system of metal and non-metal underground mines, or the main ventilation, main lifting, water supply and drainage, power supply and distribution, The operation and management of the main air supply system and its equipment and facilities are subcontracted, which is illegal and illegal outsourcing.

According to the "Notice", affiliation refers to the behavior of units or individuals contracting projects in the name of other qualified units. Any one of the following circumstances is an affiliated behavior: unqualified units or individuals borrow the qualifications of other construction units to contract coal mine construction projects; qualified construction units borrow each other's qualifications to contract projects; other affiliated behaviors stipulated by laws and regulations.

The Safety Committee Office of the Shanxi Provincial Government requires that mining enterprises in the province immediately organize self-examinations on the outsourcing and affiliation of mining projects owned by the enterprises, and formulate self-examination reports; emergency management departments at all levels follow the principle of hierarchical territorial supervision , mine-by-mine identification, strict inspection, strict enforcement, and investigation and punishment of illegal outsourcing and affiliated projects of mining enterprises in accordance with laws and regulations.

Anyone who violates laws and regulations regarding outsourcing or affiliation will be ordered to stop production and construction for rectification in accordance with the law, and the supervisory unit and responsible person will be clarified to urge the rectification to be in place. Each mine must fill in a mine-by-mine verification form for centralized clean-up and rectification of mining project outsourcing and affiliated activities. If it is found that city and county inspections are not strict, rectification is not thorough, and the rectification work is a formality and a formality, the relevant personnel will be seriously held accountable.