SMM Metals Reports

Record Smog Levels Prompt Stricter Environmental Rules for China's Iron Ore Mining

SHANGHAI, Dec. 11 (SMM) – Record smog levels in Beijing and Shanghai this year are set to prompt Chinese authorities to reverse environmental damage caused by the country’s iron ore mining, Shanghai Metals Market’s ferrous branch Steelease foresees.
Below is a list of moves and changes happening in China's iron-ore mining industry that Steelease has learned so far, following the government’s stricter environmental rules.
- Some open-pit mines in Handan and Xingtai of Hebei province were ordered by local governments to suspend and install environmental protection facilities lately. However, some mines did not halt production and continued to operate after inspections ended. Therefore concentrate output from these regions remained unabated. Nevertheless, these unqualified mines would eventually be forced to stop for renovation given China’s greater emphasis on environmental protection.
- Mines in Chengde of Hebei province put large sums of capital in environmental protection facilities in response to local government’s requirements. An 800,000-tpy plant is said to need to invest 10-30 million yuan. Provided that remaining service life of a mine is 10 years, concentrates production cost will increase 1.25-3.75 yuan per tonne. When combined with operational and maintenance charges, total cost will reach 2.25-5.75 yuan per tonne. Environmental cost will thus increase to 1.12%-1.65% of total production cost, up from 0.78%.
- Hebei and Shanxi provinces required local mines to complete dry discharge system construction by the end of 2014, and forbade all tailings pond construction. Dry discharge system is safer and saves land but costs more. Dry discharge system needs 10-million-yuan preliminary input and 100,000-200,000-yuan maintenance charges annually. It also increases tailings discharge cost to 20 yuan per tonne, more than doubling what is needed for tailings pond.
- Hebei’s province required all local mines to install water-cycling system to curb water wasting, and ordered mines that are located within 200 meters from national or provincial roads must pave cement tracks to the roads.
- In Chifeng city of Inner Mongolia, a series of measures for optimizing resource allocation of mines have been adopted since H2 2011. Meanwhile, some SMEs were acquired by larger enterprises for consolidation in local iron ore industry. Operating rates at SME mines in the city were down sharply as a result. Sources disclosed recently that the local government might loosen control over SME mines in 2014 and allow them to resume production to increase tax revenue.

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