Long-Term Iron Ore Price Negotiation in 2006

Principals of the Ministry¹ of Commerce and the National Development and Reform Commission said that the Chinese government was highly concerned with the negotiation² on long-term price of iron ore in 2006 and stressed that pricing of iron ore should benefit to establish a fair international economic order and realize win-win in cooperation between resources supplying countries and consuming countries.

　　The Official from the Ministry of Commerce said that reserve of iron ore in the world was abundant and 140 billion tons had been proved. Calculating at 1.3 billion tons annual output of iron ore, we had at least 100 years to exploit. In 2005, the output of iron ore of the world reached 780 million tons and consumption hit 1.25 billion tons, nevertheless, global output of iron ore reached more than 1.3 billion tons, therefore, supply and demand of iron ore was basically balanced worldwide.

　　With the development of China's steel industry, import of iron ore increased by a big margin³ and amounted to 275 million tons in 2005, accounting⁴ for 43% of total world sea trade of iron ore. China became the biggest import country of such product. On the other hand, iron ore trade drove up the investment and development of its industry, and enterprises engaging in mines obtained high profit, meanwhile, promoted the rapid development of national economy of iron ore export countries. But some transnational corporations took advantages of the monopoly on international trade of iron ore to get high and unreasonable⁵ monopoly profit, which not only impaired⁶ the interest of import countries of iron ore including China but also violated the rule of fair trade, and will not be beneficial for supplier and demander of iron ore to establish a long-term and steady trade cooperation relations to push forward the healthy development of bilateral⁷ and global iron ore trade, and will not be in favor of maintenance of a fair and sound international trade order.

　　The Official from NDRC said that 2006 was the first year since the implementation⁸ of Development Policy for the Iron and Steel Industry. According to the unified⁹ arrangement of the State Council, NDRC would focus on the control of gross output of steel and iron industry and work of elimination¹⁰ of outdated¹¹ production capacity, will expedite the elimination process and do better the supervision¹² and implementation.

　　MOFCOM principal pointed¹³ out that iron ore was the main raw material of steel and iron production, price of iron ore was directly related to the development of steel industry and all sectors¹⁴ of national economy. China's steel industry was in a very difficult position that cost was rising, profit was decreasing and price of iron ore was increasing again. The Chinese government had taken measures to further enhance the control to the utilization¹⁵ of imported iron ore, accorded with national industrial policies, supported eliminating and outdated system and restrained over-fast growth of production capacity of iron ore. The unreasonable demand for iron ore will be further reduced. Chinese government will pay close attention to the negotiation process of iron ore price, and take necessary measures to avoid damaging interests of the nation and enterprises if price set is unreasonable and unacceptable to China.

　　President of Pakistan Pervez Musharraf signed the Agreement on China-Pakistan Cooperation in Fishery during his visit to China not long ago, and relative departments of fishery in China and Pakistan specified¹⁶ cooperation items in the Agreement and confirmed content of certain cooperation items. The two countries will strengthen cooperation in information exchange in fishery technology, two-way visits of technicians, technology transfer, research and training, and establishment of joint¹⁷-ventures in fishing and processing. Besides, the two sides will also launch cooperation in development of inland and coastal¹⁸ fishery, freshwater and seawater aquiculture, fish processing, marketing¹⁹ and management.

　　According to Agreement on China-Pakistan Cooperation in Fishery, the two sides agreed to set up a joint workgroup to study and guide the cooperation. Besides, the Agreement encouraged and supported private departments in China and Pakistan to launch cooperation with mutual benefit in fishing and processing