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To: RealMuLan who wrote (24067)	2/22/2005 1:32:27 AM
From: RealMuLan	Respond to of 116555

Ore exports to China in licence trap OUR BUREAU Mining trouble Mumbai/Calcutta, Feb. 21: A new import licence system that China plans to introduce next month could upset the apple cart of Indian iron-exporters, who have benefited hugely from the Asian giant’s insatiable appetite for resources. Last year, China squeaked past Japan as the world’s biggest iron ore importer, buying 40.5 per cent more for its rapidly-expanding steel firms — at the heart of a 9.5 per cent growth. The licences from March 1 will regulate imports but will not affect CVRD, Rio Tinto and BHP Billiton since these global mining majors supply to Bao Steel and Wuhan Iron & Steel under price-locking long-term contracts. This would also be true of Indian companies like NMDC, Essel Mining and Sesa Goa. All of them have sewed up similar arrangements for their ore exports. The real gainers could be Indian steel companies, which often have to grapple with wild swings in global ore prices. They will also be assured of more supply since the new Chinese licences will choke off some exports. For China, the move comes at a time when iron ore imports in the spot market are 70 per cent more expensive than those bought under long-term contracts. It also coincides with a deadlock in negotiations between Chinese and Japanese buyers on the one hand and exporters on the other. The talks are now in their fifth round. In the past, Japan and Europe were the key importers who thrashed out terms with Australian and Brazilian ore exporters. China has now elbowed in, and insists that the annual price hikes be kept at modest levels. Steel mills there have made it clear they will not accept an increase of 30 per cent over last year’s levels, but Brazil’s CVRD, for instance, is asking for 90 per cent. In India, the smaller iron ore traders, who have made a killing from the booming spot market in China, may find it difficult to acquire licences, analysts say. Through its new licence norms, China is also keen to decongest its ports, where some 21 million tonnes of iron ore is waiting to be hauled away to mills in the hinterland. Some analysts say even the shipping industry could be impacted by the new import-capping move. telegraphindia.com