China Aims To Curb Unauthorized Steelmaking

China said it will crack down on unauthorized steel mills as it maneuvers to wield more control over prices during crucial iron ore talks, Manufacturing.Net reports. Only about 300 million tons of the 567.8 million tons of crude steel produced last year in China were made with full government authorization, according to Miao Yu, a vice minister of the Ministry of Industry and Information Technology.

China, the world’s largest steel producer, plans step up efforts to shut down small mills or merge them with big steelmakers, cutting output to about 500 million tons by 2011, Miao said. One key goal of the restructuring is to increase Beijing’s influence over prices set for imported iron ore in ongoing negotiations with foreign suppliers, led by Shanghai-based Baosteel Group Corp.

In the last round of talks, China sought but failed to present a unified front against the three biggest ore producers — Anglo-Australian miners Rio Tinto Ltd., BHP Billiton Ltd. and Brazil’s Vale SA. Instead, its bargaining position was undercut as smaller steel mills negotiated their own deals with miners, buying heavily on the spot market.

The benchmark iron ore price paid by Asian steel mills is expected to rise by 40% or more this year, buoyed by strong demand from massive stimulus spending on construction projects, and recoveries in other economies.