Steel emission standard may rise to cut capacity

Date May 02 2013 11:19:15

The government and a steel industry association are considering stricter environmental policies in a bid to weed out unqualified players as severe overcapacity remains an urgent issue for the sector, officials from the industry association said Saturday.

The association is now working with the Ministry of Environmental Protection on raising environmental standards for the sector, Zhu Jimin, vice chairman at China Iron and Steel Association (CISA), told the Global Times on the sidelines of a Saturday press conference.

"Unqualified steelmakers will be forbidden from getting an emission certificate, and they will have to halt production without the certificate," said Zhu, adding that the government is expected to finish the process of issuing the certificates by the end of 2013.

China's steel industry, the world's largest, is currently facing many problems. In 2012, China consumed over 700 million tons of crude steel, but production capacity topped 1 billion tons.

Due to the severe overcapacity, companies in the sector are suffering from poor profit margins. Data from CISA showed Saturday that 34.9 percent of China's large and medium-sized steel mills suffered losses in the first quarter.

But at the same time, average daily production in the first quarter reached a historic high of 2.13 million tons and total inventory at large and medium-sized steel mills also reached an elevated level of 14.83 million tons, up 47.4 percent compared with the beginning of this year, CISA said.

Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute, said that tougher environmental measures and technological requirements will phase out excessive capacity in the sector and also help to level the playing field.

"Environmental costs for steelmakers who qualify for the certificate can be as high as 157 yuan per ton," said Li. But for smaller competitors, the cost is less than 100 yuan per ton.

The Ministry of Industry and Information Technology has released one series of regulations already, in 2012, to address the problems in the steel sector. Zhang Lin, an industry analyst at Beijing Lange Steel Information Research Center, said she is skeptical about the effect of such administrative measures in reducing overcapacity in the sector.

"It is hard to implement these measures, as there are over 1,000 steel mills throughout China. And another thing is some steel mills may only cut pollution temporarily in order to get the certificate, and then they will continue to pollute when they are considered qualified," said Zhang.(chinamining)

Report by SHMET

Iron ore rules face doubts

Date Apr 23 2013 11:04:26

Industry insiders were generally skeptical Monday about the new rules the China Iron and Steel Association (CISA) is reported to have drafted, which would force applicants for iron ore import licenses to join a domestic trading platform in an attempt to boost the country's control over the raw material prices.

Chinese iron ore importers who want to apply for new import licenses are required to join an iron ore trading platform under the China Beijing International Mining Exchange (CBMX) and demonstrate a trading volume of at least 551,155 tons there, Reuters reported Monday, citing a document it obtained from an anonymous source.

With the aim of strengthening government pricing power over iron ore, the platform, jointly sponsored by CISA, the CBMX and the China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters, has seen a low trading volume since starting operation on May 8, 2012. Only five deals were concluded last week on the platform for a total of 338,000 tons of iron ore, according to CBMX figures.

However, both CISA and CBMX claimed to have no idea of such a document and declined to comment on the report when contacted by the Global Times Monday.

Industry insiders also appeared skeptical about the new rules.

"Authorities do hope the platform can attract more traders and steel mills, but it sounds quite strange to use import licenses as an incentive tool," Xu Xiangchun, information director with mysteel.net, a steel information provider, told the Global Times Monday. "It is unlikely to have much impact because a license is not that necessary and companies can always commission a licensed trader to import iron ore for them."

"Even if the rules take effect and more companies join the platform, it would still be hard for the platform to increase liquidity," Chen Yan, an iron ore analyst with steel industry portal steelhome.cn, told the Global Times Monday.

The main reason for the light trading volume is that traders derive little benefit from the platform, which only adds to transaction costs, Chen went on to explain.

The platform charges a transaction fee of 0.125 yuan (2 cents) for each ton traded there, according to its official website.

"We failed to see the need to pay an extra transaction fee to trade on the platform with old customers, who have already done business with us in the usual way for a long time," Li Guangjun, an assistant manager at Royal Advance (H.K.) Investment Ltd, an iron ore trader, told the Global Times Monday.

A member of the platform from its launch last May until the beginning of this year, Royal Advance imports around 5 million tons of iron ore on a yearly basis, but has never concluded a deal on the platform, according to Li.(chinamining)

Report by SHMET

Govt backs energy, mining investment in Africa

Date Apr 17 2013 11:35:44

The government has reiterated its backing of Chinese companies investing in Africa, particularly in energy and mining industries where jobs can be created and local communities improved.

Zhong Manying, director general of the Department of West Asian and African Affairs of the Ministry of Commerce, said on Wednesday that during the recent visit to the continent by President Xi Jinping, more than 20 economic and trade cooperation agreements were sealed with African countries.

Chinese financial institutions and companies also finalized around 10 commercial contracts, in sectors including agriculture, machinery, power, ports, energy and mining resources.

"In the past, China imported minerals and crude oil directly from Africa - but now we are investing more in downstream mineral processing businesses there, in order to bring more jobs to local people and improve local economies," Zhong said.

According to the China Institute of International Studies, energy exploration technology levels remain relatively low in Africa, and much of the prospecting is still done by foreign companies.

Currently, around 400 foreign oil firms have oil and gas exploration rights in Africa, covering about 80 percent of the available blocks.

"Developed countries have acquired many high-quality oil and gas blocks in Africa, but they do not develop the resources fast enough, and African countries have learned from that," said Zhong.

As a result, African governments are imposing stricter requirements on new energy and mining resource contracts signed with foreign developers.

Wang Wei, a senior researcher at CIIS, said that in Angola, for instance, local laws require foreign contractors to invest at least $35 million in the first three years of any oil and gas exploration contract.

In Sudan, contractors must start energy prospecting within three months of contracts becoming effective, and any investment in the first two years cannot be less than $4 million.

"Energy cooperation between China and Africa is based on equality and mutual benefit, to realize win-win results, which is different from many energy resources exploration agreements made with developed countries," said Wang.

In the past year, China imported 64.7 million metric tons of crude oil from Africa, accounting for 24 percent of the country's total crude imports, according to official figures.

China's direct investment in Africa reached $2.9 billion in 2012, up 70 percent year-on-year, a strong indication of how Africa has become the priority investment target for many Chinese companies, said Zhong.

"They will face more challenges in energy investment in Africa, as countries there raise their requirements for deep-processing projects besides upstream resources exploration," she added.

Some African host countries require investing oil producers to build refineries in an effort to boost local economies.

Zhong explained that China entered the African energy market later than developed countries, which means many of the sites now being developed by Chinese companies are more remote, adding to transportation costs.

"It is a challenge for Chinese companies to invest in African energy projects because of the high investment costs involved," she said.

Yu Yingfu, deputy director-general of the ministry's Department of Aid to Foreign Countries, said that Chinese aid had been used in the past to develop African resource exploration, which was beneficial to local energy industry development.

He said that China's foreign aid amounts to about 40 billion yuan ($6.3 billion) going to more than 100 countries, including Africa.

"Our aid policy is to help solve the problems of these countries, rather than help in exchange for resources."(chinamining)

Report by SHMET

China to build low-carbon certification system

Date Apr 10 2013 11:34:29
Apr.10,2013(SHMET)--China will build a unified certification system for low-carbon products as part of its efforts to boost the consumption of green goods, according to the country's top economic planner.

An independent third-party agency will assess the carbon footprint of products and services and grant low-carbon certificates to those that have met certain requirements, according to a document issued by the National Development and Reform Commission (NDRC).

The NDRC will then issue a catalogue of certified products and an identification mark will be printed on the products' packaging, according to the document.

The certification scheme is being piloted in the provincial regions of Guangdong, Chongqing and Hubei. The expansion of the pilot program is part of growing efforts to push for a greener growth model.

By the end of 2015, China aims to lower its energy consumption per unit of GDP by 16 percent from 2010 and lower its carbon dioxide emissions per unit of GDP by 17 percent, according to the government's 12th Five-Year Plan (2011-2015).(chinadaily)

Report by SHMET

China to open fund custody market for non-bank entities

Date Apr 03 2013 17:23:08

China's banking regulator announced on Friday that it will allow non-banking financial institutions to offer custody services for securities investment funds in June.
Starting June 1, Chinese non-bank financial intermediaries whose net assets exceeded 2 billion yuan ($319 million) as of the end of each fiscal year for the last three years can apply to the China Securities Regulatory Commission for the license, according to a CSRC statement.

The CSRC requires applicants to have an independent fund custody department with a well-designed security monitoring system and a business operating system. It has also laid down qualification requirements for team personnel.

The CSRC believes the new regulations will promote market competition in the fund custody sector.

The CSRC also announced on Friday a set of rules to regulate Chinese securities companies in the areas of asset securitization and the operation of affiliated agencies.

Report by SHMET