India's announcement on May 21 to impose high tariffs on eight types of steel, iron ore and pellets has led to a drop in domestic prices of steel and steelmaking raw materials, including iron ore.

Iron ore prices in the state of Orissa plummeted nearly 20% at auctions after India slapped high export tariffs on falling steel prices in India and rising inventories amid sluggish domestic demand for steel. India's largest mining company, NMDC, has cut prices by nearly 25% in more than two weeks.

It is understood that sales in India in June were already lower than the level in May, with falling steel prices in overseas markets and weak demand in the domestic market weighing on market sentiment. Sources say many buyers are reluctant to buy raw materials amid the current uncertain market conditions and low plant capacity utilization.

In recent years, the price of imported iron ore has fluctuated high and fluctuated. China's iron ore dependence on foreign countries is close to 80%. How to ensure the supply of iron ore resources and promote the development of domestic iron ore has attracted much attention from the industry.

The National Development and Reform Commission reported on May 30 that the "cornerstone plan" proposed by the China Iron and Steel Association to strengthen the guarantee of iron ore resources has recently been promoted. In January 2022, China Iron and Steel Association reported the "Cornerstone Plan" to four ministries including the National Development and Reform Commission.

The so-called "cornerstone plan" is to use 2-3 "five-year plans" to change the source composition of China's iron resources, fundamentally solve the problem of resource shortcomings in the iron and steel industry chain, and then reduce the external dependence of iron ore.

Iron ore is an important raw material for iron and steel production enterprises, and iron and steel is an important basic industry. From national defense construction to household appliances, iron ore is inseparable from iron and steel. It can be said that iron ore is the "food" of iron and steel enterprises. Therefore, iron ore is very important to my country's economic development. However, in recent years, the price of imported iron ore has continued to fluctuate at a high level, and my country's iron ore dependence on foreign countries is close to 80%, which is highly dependent on imports. Therefore, it is imperative to solidly promote the "cornerstone plan" to improve the resource security capability of my country's iron and steel industry, starting from the three main sources of iron resources, and fundamentally solve the problem of short-board resources in the iron and steel industry chain.

As an important part of the "Cornerstone Plan", the scale of overseas equity mines controlled by China is also constantly advancing. On May 6, 2022, Sinosteel Group and the Ministry of Industry and Mining of Cameroon signed a mining agreement for the Lobi iron ore.

Measures such as developing domestic mines, overseas equity mines, and increasing scrap steel imports are all to break the monopoly of iron ore by Rio Tinto, BHP Billiton, Vale, and FMG.

Recently, after more than half a month of gaming, the Simandou iron ore incident has finally ushered in a turning point. According to local media reports in New Guinea, the Guinean government has reached an agreement with project investors and developers including holding Chinese companies. A new framework agreement has been signed, which means that the Simandou iron ore project, which has been suspended for two weeks, can finally be restarted. Previously, on March 11, the Guinean government ordered the suspension of all mining projects at the mine on the grounds that it was "unclear how the Simandou iron ore mining project will safeguard national interests."

Simandou Iron Mine is located in the hinterland of the new southern part of Guinea. It is currently the undeveloped iron ore with the largest reserves and the highest quality in the world. The total resources of the mine are 5 billion tons, of which iron ore resources are 2.25 billion tons, and 39.95% of the southern half of the mine is in the hands of Chinalco. According to analysts at JPMorgan Chase, once the Simandou iron ore is fully operational, it is expected to produce 100 million tons of iron ore per year, so it is indeed a good news for us that the mining project has been restarted after half a month of downtime. information.

In recent years, China's economy has developed rapidly, and the country has invested a lot of resources in the field of infrastructure, and steel is one of the most critical raw materials. According to data from the General Administration of Customs, my country will import 1.124 billion tons of iron ore in 2021, and the import volume is still at a high level. The huge demand requires us to find stable and high-quality mining sites. Previously, the sources of my country's imported minerals were mainly concentrated in Australia and Brazil, but last year's tense relations between China and Australia also reminded us that we must broaden the channels for international energy cooperation.

According to the previous statistics from the General Administration of Customs, China's imports of Australian iron ore have fallen more than all other countries. "On the contrary, Brazil's iron ore exports to China have been increasing. In addition, Chinese companies signed an energy agreement with Guinea. As the undeveloped iron ore with the largest reserves and the highest quality in the world, the Simandou iron ore can provide my country with the iron ore energy it needs.

This incident also sounded the alarm for us. In the face of diplomatic disputes and political risks brought by a single source, we should not only seek to diversify iron ore imports, but also increase the self-sufficiency rate of iron ore in our country.