China - 2009 July 15

China is reviewing iron ore import licences held by steel mills and trading companies, and may cancel 20 licences, most of which are held by trading houses, three industry sources said on Tuesday. The China Iron and Steel Association and the Ministry of Commerce were investigating whether importers were making speculative purchases, said the sources, who are familiar with the situation. “Big and state-owned trading houses should be fine, but some private-sector (trading) companies could face some trouble,” said a source, on condition of anonymity due to the sensitivity of the issue. Currently, 112 steelmakers and trading houses are licensed to import iron ore in China. Iron ore trading has been a sensitive topic in China since annual price talks with international suppliers blew up into a spying row after China detained four executives of London-listed miner Rio Tinto, including one Australian, and accused them of stealing state secrets. The 21st Century Business Herald, a widely-read Chinese newspaper, quoted Shan Shanghua, general secretary of the China Iron and Steel Association, as saying the association was “currently continuing to restore order in iron ore trading”.