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Free Malaysia Today
27-05-2025
- Business
- Free Malaysia Today
OECD says China steel subsidies ‘distort' global market
China's steel exports reached a record level of 118 million tonnes in 2024. (Baowu Steel pic) BEIJING : Subsidies that China grants to its steel makers 'distort' the global market and hamper decarbonisation investment in the industry, the Organisation for Economic Cooperation and Development said in a report published today. China is the world's largest producer of steel, making more than a billion tonnes in 2024, and a slump in domestic demand has forced producers to seek foreign markets. The OECD said the global steel market was 'distorted by non-market forces, where producers which do not benefit from the subsidies cannot compete on an equal footing.' 'China's steel subsidisation rate (as a percentage of firm revenues) is five times higher than the average for other partner economies,' it added, pointing out that Chinese steel exports have more than doubled since 2020. China's exports reached a record level of 118 million tonnes in 2024, while imports plummeted by nearly 80% to 8.7 million tonnes, according to the OECD. A slump in China's property market has seen demand for steel slump in recent years. World number three steelmaker Angang Steel said in March that it lost nearly one billion dollars last year. Those changes for the world's leading steel producer pose a 'significant challenge' to other countries as their own exports fall and imports soar, said the OECD Steel Outlook 2025 report. Since 2020, steel imports have increased by nearly 13% in the European Union and Britain, 18% in Japan and South Korea, 40% in North America, 52% in Turkey, 60% in South America and 77% in Oceania. Chinese exports to third markets are also surging, it added. Some of those markets 'are also grappling with growing excess capacity, such as Northern Africa, the Middle East and Southeast Asia, which in turn increase their exports, particularly to OECD countries, because their domestic markets are saturated with excess steel', the report stated. The situation is leading to a proliferation of 'trade remedies'. In 2024, 19 governments initiated 81 'antidumping investigations involving steel products' – a five-fold increase on the previous year. 'Almost 80% of the cases were initiated against Asian producers, with China alone accounting for more than one-third of the total,' the report said. US President Donald Trump this year imposed 25% tariffs on all imported steel as part of his trade revolution. The British government passed emergency legislation in April to take over the country's last steelmaking blast furnaces after the Chinese owners of British Steel had threatened to close the plant. Jingye steel said that the British operation was no longer viable. The abundance of cheap steel is sharply affecting decarbonisation investment efforts in the industry, with steel production itself responsible for 8% of global CO2 emissions. 'Steelmakers cannot return to sustained healthy levels of profitability until global excess capacity and its consequences are meaningfully addressed,' the OECD said. 'Global co-operation is needed for a level playing field in the global steel market,' it added.
Yahoo
05-02-2025
- Business
- Yahoo
Why the world's biggest mining project is looking to invest in education
The world's largest mining project will begin production by the end of the year, Guinea's mining minister told Semafor, after decades of delays — with 5% of eventual revenues earmarked to expand the country's education system. Initial shipments from the Simandou mountain range in southeast Guinea — home to the planet's largest high-grade iron ore deposits — are due to begin by the first quarter of 2026, Minister of Mines and Geology Bouna Sylla said on the sidelines of the Mining Indaba conference in Cape Town. The ambition to boost Guinean education with mining profits is the latest attempt to project how Africa stands to benefit from its natural resources, which are otherwise typically shipped elsewhere for refining: Sylla likened his government's plans to those rolled out in previous generations by Southeast Asian nations, singling out Singapore in his comparison. The British-Australian mining giant Rio Tinto and China's Baowu Steel are among the companies that have partnered with the Guinean government on the $15 billion project. Guinea's plan to earmark revenues from its natural resources marks an acknowledgment of the skills gap — particularly around science and technology — that is holding back economic development in many African countries. Guinea, for example, currently only spends 2% of its GDP on education, barely half the global average, and well below the 3.5% typical of sub-Saharan African nations. That could be about to change as part of a broader trend. About 30% of global mineral reserves can be found in Africa, and politicians from across the continent say they want this wealth to improve their citizens' lives, avoiding the experience of previous governments in the scramble for the region's resources. Countries are adopting different approaches: Ghana wants to use its iron ore deposits — which are of a lower grade than Guinea's — to boost local building construction. Elsewhere in West Africa, the aim is simply to redress the balance with international companies in revenue-sharing agreements. In Guinea's case, Sylla said 5% of the tax revenues generated at each of the two mines at the Simandou site would be allocated to Guinea's education system, over the next 25 years, starting from the launch of production — funding that would come on top of the usual education budgetary allowance. Under a separate program, the government plans to allocate 20% of state revenue earned from La Compagnie du TransGuinéen (CTG) — a joint venture that manages railway and port infrastructure built as part of the Simandou project — to fund high school students studying science and engineering abroad, also over 25 years. Our 'long-term sustainable investment is in human capital,' Sylla told me. 'This is to invest in a new generation so that when the resources finish, people can come to Guinea to invest not because we have natural resources but human capital — technicians and engineers — like Singapore.' Still, all of this will take time. The Simandou project has been beset by nearly 30 years of delays, and Guinea's education program will take at least a generation to bear fruit. The government hopes its plans will show all of this has been worth the wait. Sylla said 120 million tonnes of iron ore — used in steel production — will eventually be produced annually from Simandou, but it will take up to three years to ramp up to this capacity. He also said Guinea aims to transform iron ore to steel in a local plant that will produce 500,000 tonnes of steel per year. In the bauxite sector, the minister said Guinea will produce alumina and then aluminium. Guinea signed an agreement last month with a Chinese company to produce 1.2 million tonnes per year of alumina that he said is expected to be ready by the end of 2027. Gracelin Baskaran, director of the critical minerals security program at the Washington-based Center for Strategic and International Studies, said production at Simandou 'will give Guinea a lot of value in the world of commercial diplomacy because we want more iron ore that's not going to China.' But she said the climate skepticism of the new Trump administration meant Simandou's high- grade iron ore — which results in lower carbon emissions in the steelmaking process as a result of its higher quality — will enter a 'bifurcated' market. 'You have the EU, where decarbonization is important,' and 'America, where that is not important right now,' she said. 'When you sell to Europe, you can sell at a price premium because you're responsibly sourced. Nobody in America is going to pay that now.' Euronews examines why it took Rio Tinto to edge towards production at Simandou. South Africa's mining minister said the country should withhold access to its minerals after the US president threatened to withdraw funding over a new land law.
