China to move export goalposts again

Published: Sunday, 22 November 2009

New capital investment rule could restrict smaller mineral miners and processors from exporting

China’s ever changing export situation is set to take another twist as the Ministry of Foreign Trade and Economic Cooperation plans a new strategy for 2010 to control the exports of key industrial minerals such as bauxite, fused alumina, magnesite, and fluorspar.

An authoritative source revealed to IM that any company wishing to export material next year will be tied to the amount of capital investment a company has in China, which would rule out a number of smaller players.

The actual investment figure is still under wraps as the regulations are not yet finalised, but is expected to be substantial.

Previously, companies applying for export licences were either listed or permitted tender by involvement. Initially, allocations were made in line with a company’s export record, or production capacity, which was calculated by a government visit.

In this way, the list of exporters has been kept fairly tight, although the resale and trade in the export licences themselves was an issue for a while.

This latest move to link the size of companies into the export system may have implications for smaller trading and processing firms and could trigger further consolidation in the industry.

There have already been moves in upstream sectors of the mining industry, where state driven restructuring has led to the emergence of large corporations.

‘Export qualification conditions’

This revelation tallies with comments from China’s Dept. of Foreign Trade, Ministry of Commerce at IM’s 8th Chinese Industrial Minerals Conference in Qingdao in September.

Chao Ning, director of the ministry explained that China is looking to “improve exports qualification conditions” which will result in stricter application procedures for those wishing to export minerals and particularly processed products.

Many believed the days of strict Chinese export policy were numbered considering its recent clashes with the World Trade Organisation (WTO). Dan Horovitz, partner at Holman Fenwick Willan LLP, anticipated significant change in China’s present export regulations with the country not wishing to be seen confronting WTO practices.

Should the Chinese government enact the capital investment rule, one of the most widespread and significant changes yet will be placed on those wishing to operate and export of out China.

Chinese bauxite up $28/tonne

Traders of non-metallurgical bauxite, used in the production of a range of refractory and abrasive products, have reported that a shortage of raw material within China has pushed up prices for certain grades, despite the ongoing weak demand from the export market.

It is understood that within China bauxite prices have risen by $28/tonne in recent weeks. For the export market, prices have been quoted as follows for November loadings:

  • Bauxite, abrasive grade, FOB China: $320-350/tonne, up from $300-350/tonne
  • Shanxi, FOB Xingang, Round kiln 87/1.8/3.20+: $480-500/tonne, up from $420-460tonne
  • Shanxi, FOB Xingang, Rotary kiln 87/1.8/3.20+: $480-500/tonne, up from $420-460/tonne

The rise in prices comes in spite of ongoing depressed market conditions, especially in the export market, underpinned by the collapse in global steel markets earlier in the year which has dramatically reduced demand for refractory products.

Some refractory grades (Shanxi, FOB Xingang, Round kiln 85/2.0/3.15; Shanxi, FOB Xingang, Rotary kiln 85/1.8/3.15) and Guyana welding grades have remained stable at $400-420/tonne and $450-510 tonne, respectively.

Some brown fused alumina (BFA) prices have edged up in line with higher bauxite prices.

For real time pricing visit: