Imported iron ore is unloaded at a port in Suzhou, East China's Jiangsu Province on February 21, 2022. Photo: VCG

A giant mineral resources group was set up in Xiongan New Area, North China's Hebei Province on Tuesday, in a long-awaited move that would give China a bigger say in iron ore pricing.

China Mineral Resources Group, with a registered capital of 20 billion yuan ($2.97 billion), will engage in exploration of mineral resources, ore mining, the import and export of minerals, as well as supply chain management services, investment activities and asset management services, according to Chinese business data platform Tianyancha.

The new mineral giant's legal representative is Yao Lin, per Tianyancha, who has the same name as the chairman of Aluminum Corp of China (Chinalco).

Yao is still shown to be Chinalco's chairman, according to the official website of the centrally administered state giant on Tuesday. The former chairman of Ansteel Group, a state steelmaker based in Anshan, Northeast China's Liaoning Province, was appointed as Chinalco chairman in October 2019. 

Yao, aged 57, reportedly left his role at Chinalco on July 12, paving the way for his new appointment, media reports said.

The giant's launch confirmed a long-rumored move to create a centrally administered state giant to have a bigger say in ore pricing by leveraging China's strength as the world's largest consumer of iron ore, the Global Times learned. 

Yao assumed the role as chairman of the new mineral group, as the dust settles after months of speculation about the establishment of a Chinese iron ore group, Wang Guoqing, research director at Beijing Lange Steel Information Research Center, told the Global Times on Tuesday.

One day prior to the Tuesday launch, Chinese financial news site caixin.com revealed that a new state firm that integrates some of the country's state-owned iron mining with overseas ore assets was in the works. The firm was designed to be a platform to put together some domestic iron ore demand in a market-oriented manner, according to caixin.com.

Preparation for the new mining group dated back to mid-2020, the report said, with Yao nominated as the head of the preparatory team in the second half of 2021. The purchasing needs of state giants including China Baowu Steel Group, Ansteel, China Minmetals and Shougang Group would be included in the purview of the new behemoth, caixin.com said. 

 "China is looking to set up an iron ore purchasing group by the end of 2022 and build distribution centers at ports, as domestic industry players seek more bargaining power in iron ore trade negotiations and supply security," according to a post on the website of S&P Global in late June, citing industry sources.

During last year's annual two sessions, He Wenbo, executive chairman of the China Iron and Steel Association (CISA), suggested that the establishment of a national iron ore resources development group would coordinate overseas resources, and steadily push for the development and utilization of foreign resources, to ensure supplies. 

The new behemoth is seen as game-changing for China's steelmaking, which is famed for its huge size that's also out of proportion to its bargaining power in the world.

The industrial concentration of China's steel sector is weak. The crude steel output of China's top 10 steel-makers accounts for only 43 percent of the country's total output, while the four major foreign miners hold more than half of the world's iron ore resources, Wang said.

China gets 64.7 percent of its iron ore from imports, China Merchants Securities disclosed in a research report in April.

According to Wang, as the centralized procurement of the new state-owned firm can reduce costs, domestic iron ore enterprises will enjoy a better development environment, and they will play a complementary or partial replacement role for foreign companies.

"The new firm can integrate domestic demand and enhance the nation's voice in iron ore market procurement," Wang noted.

Global steel consumption has the potential to grow in the near future. China, as a major steel producer and consumer, as well as the largest importer of iron ore, should have "enough say" on the supply and market pricing of iron ore, Wu Chenhui, an independent industry analyst, told the Global Times on Tuesday.