Before reading this article, I sincerely invite you to click the "Follow" button, so that you can continue to push such articles in the future, and it is also convenient for you to discuss and share, your support is the driving force for us to insist on creating~
Text: Xiao Hei
Edit|t
introduction
Since the outbreak of the US-China trade war, relations between China and Australia have continued to deteriorate. Suffice it to say, Australia has become a participant, even a deep participant, in the US-China trade war. And since it has been involved in the trade war, it is the "enemy".
The mainland is "heavy-handed" to Australia's exports of beef, seafood, timber and coal.
However, for Australia's iron ore, the mainland has never started, not only did not start, but even increased the amount of purchases. What is the reason for this?
On the other hand, Russia obviously has the world's No. 1 iron ore, so why doesn't the mainland buy it in Russia?
(Australian Iron Ore)
1. If you don't buy it, can't you?
There may be many people who will say, both Russia and Brazil have iron ore, and the quality is not bad, these two countries have a good relationship with us, we can completely leave Australia behind and buy iron ore from these countries. Even our neighboring countries, Mongolia and other countries have iron ore, why not buy it? Do you have to buy Australian?
In fact, it's really true, it's really not okay not to buy it! In fact, the mainland itself has a lot of iron ore reserves, and even accounts for the fourth place in the world, with reserves of 20 billion tons, which is really a lot.
However, the iron ore reserves of the mainland have a characteristic, that is, the reserves are high but the quality is poor, and it is still extremely poor, with a poor ore rate of 98.8%.
(Mine)
The average grade of iron ore is 35% in China, 48% in Australia, 52% in Brazil, and even 63% and 62% in South Africa and India. And this brings us to the question, why don't we buy iron ore from Brazil or South Africa?
There are multiple reasons for this, but the main reason is actually only one, and that is the cost.
Iron ore in Australia and Brazil is very easy to mine, and even a lot of it is surface ore, just pick it up. However, there is still a cost gap between the two, and Australia's iron ore industry is systematic, from the production end to the transportation end.
(Australian Iron Ore)
A 24-hour transport network has helped Australia reduce the cost of iron ore mining to an alarming level. The cost of mining iron ore on the mainland is $80 a tonne, not counting transportation costs. The cost of mining in Australia is US$14 a tonne, and the cost of transportation is US$15-US$30 a tonne.
Coupled with the profit, even if it is $70 a ton or even $80 a ton, this price is still cheaper than mining it ourselves! Even higher!
With the combination of the two, there is no reason not to buy it. We use Australian mines, and steelmaking is even more efficient than our local iron ore.
And next to Russia looks like it borders the mainland, but everyone also knows what the situation is in Siberia, and the cost of land transportation is extremely high, and the cost of shipping is not comparable to the cost at all. Therefore, because of the high mountains and high roads, the Russian mines are expensive, and the mainland has not imported too much.
(Proportion of global iron ore supply)
And Australia's advantage, no country in the world can achieve, because of the low price and high quality of this characteristic, the mainland has always imported a large amount of minerals from Australia.
Second, the huge demand
China is known as the "infrastructure madman", and for decades we have been building bridges and roads around the world, as well as the world's most developed high-speed rail network. And all of these things need steel. Therefore, the demand for steel in the mainland is actually very high, and 75% of the world's iron ore actually flows into China.
(Steelmaking)
That is to say, in fact, including Russia, Mongolia, Brazil and South Africa, a large part of the iron ore is actually imported by us, but it can't stand the fact that Australia is the most efficient in mining, so it sells the most.
This can really only be said to be someone who has the ability to eat such a large order, if you don't buy Australian iron ore, you really haven't seen it to be able to make up for such a big gap.
At present, Australia eats 67% of China's iron ore imports, Brazil's freshwater river eats the other 20%, and iron ore mining is also one of Australia's most important pillar industries, if not even one of them. In fact, there are not many countries in the world that can supply iron ore in large quantities, and Australia is the only one that can supply such a large amount.
(Iron Ore)
Therefore, if we fight a trade war with the United States and Australia, the iron ore field must not be touched, which is actually our lifeline. Unless it is wartime, we will definitely not work thanklessly to mine our domestic iron ore.
Of course, we are not without the means to counter Australia.
The continent is the world's largest exporter of steel, accounting for more than half of the world's steel production.
And Australia also has to import steel from the mainland, so to speak, the iron ore they mine at the lowest cost in the world, the cost of making steel is even higher than the price of the mainland buying iron ore from them at a high price, pulling it away, making steel, and then shipping it back to count the profits!
(Iron ore)
In order to protect local steel companies, the Australian government even filed an anti-dumping lawsuit against Chinese steel. Some people say that Australia exports iron ore and then imports Chinese steel to protect the country's natural environment or something.
Pure!
If that's what kind of anti-dumping lawsuit they filed, don't you want to produce their own steel? There is no such strength!
The price war can't beat China, just like there are so many countries in the world with iron ore reserves, but Australia is the first brother, and the reason is the same, the price war can't be beaten.
(Mine)
To some extent, we are also returning the other way.
Third, there is a long way to go
But how much steel does Australia need? Even if there is no China, Australia can find others to import and even produce its own expensive points, but China can't, China really can't do without Australia.
Moreover, Australia has the pricing power of iron ore, and the China Iron and Steel Association tried to unite a number of Chinese steel companies to negotiate with Australia.
As a result, Australia has only reduced production, and China's large and small steel companies cannot find a country that can replace Australia. In the end, small and medium-sized steel companies have capitulated and have to import iron ore from Australia at a high price. To this day, the pricing power of iron ore is still in the hands of Australia, and we can't play with others.
(Iron Ore)
But how much more money has China spent on this issue for more than a decade?
We must control this pricing power in our own hands, and if we can't do it today, we will continue to work hard tomorrow, and Chinese steel companies have a long way to go.
Resources
Why does China have to buy Australian iron ore?.Sina Finance.2021-01-13
Covering 75% of the world's imports! Why does China import huge amounts of iron ore? How to reduce dependence on Australia. Sina Finance.2020-10-07
Australia made a final ruling on the double anti-dumping exemption investigation on China-related precision steel pipes. China Trade Remedy Information Network.2024-05-13
Imports of major commodities such as iron ore, crude oil, coal, natural gas and soybeans increased. The Paper.2023-11-07