(Yicai Global) July 27 -- Low-cost iron ore imports from Australia and Brazil are being accused of undercutting Chinese mining firms and causing huge losses to the domestic iron ore industry.
The Metallurgical Mines' Association of China has filed an anti-dumping investigation application with the Ministry of Commerce in order to safeguard the interests of Chinese iron ore enterprises that are going through a hard time, Mr. Jiang Shengcai, deputy secretary-general of the association, told Yicai.
The suspected unfair competition has led to the domestic industry operating at under 65 percent capacity. Mines have seen continuous investment withdrawal, huge losses and some have even shut down.
China purchases over 80 percent of global iron ore production, and this figure has been on the rise in recent years as import prices fall well below the production cost of domestic iron ore.
The price of iron ore in the global market has fallen from USD135 per ton to USD40 per ton, and yet capacity at mainstream multinational mines is still expanding. Vale S.A. plans to increase its output from 300 million tons to 450 million tons by 2018, Rio Tinto Group from 260 million tons to 360 million tons by 2016, and BHP Billiton Ltd. from 220 million tons to 290 million tons by 2017. It is likely that the threat to China's iron ore industry is only to intensify.
However, some steel enterprises say there is no so-called cut-throat price competition. The four main mines can still make money despite the low price of iron ore as their production costs are also low, an insider told Yicai.
Yicai Global sought confirmation from the World Trade Organization Affairs Department of the Ministry of Commerce, but has not yet received a reply.