Global iron ore producers said they will continue to invest because China’s urbanization and industrialization will continue to support iron ore demand. Fortescue Metals Group (FMG) will invest USD10 billion to expand its iron ore production capacity to meet the growing demand mainly from China, said the company’s CEO Neville Power during the Boao Forum for Asia Annual Conference in Hainan province. He said FMG will have 155 million metric tons of production capacity by the end of 2013 and up to 90% of the output will supply the Chinese market. By then, the company’s iron ore supply will account for about 20% of China’s total iron ore imports. Sam Walsh, CEO of the world’s third-largest miner Rio Tinto, shared similar views with Power. During the China Development Forum, Walsh told China Daily that China’s “enormous” economic base will create significant demand and Rio Tinto will continue to invest in China. At present, a third of Rio Tinto’s revenue is from the Chinese market. China is expected to produce 746 million tons of crude steel in 2013, 30 million tons more than last year, which will result in new iron ore demand of 50 million tons, according to figures from the National Development and Reform Commission (NDRC). The Dalian Commodity Exchange, one of the three major commodity exchanges in the country, is preparing to launch iron ore futures, hoping it can give Chinese steel companies a bigger say in iron ore prices in the international market. FMG’s iron ore business has been highly dependent on the Chinese market since it exported the first cargo of iron ore to China in 2008. So far, it has supplied more than 200 million metric tons of iron ore in total to China. In 2012, the company supplied iron ore to 52 Chinese steel mills with a closer cooperation relationship. Valin Group Co in Hunan province, one of China’s large steel companies, has become a major shareholder of FMG, the China Daily reports.

China plans to close 7.81 million tons of outdated annual steel making capacity this year, the Ministry of Industry and Information Technology (MIIT) said, as the government continues to consolidate an industry that’s struggling with overcapacity and slowing demand. The combined crude steel capacity in China, the world’s largest producer, is believed to have exceeded 900 million tons per year, according to industry estimates. Crude steel output rose 3.1% to 717 million tons last year. The growth rate was sharply lower from that in 2010 and 2011 as the economy slowed. In February, the Ministry estimated that China’s steel output may total 750 million tons this year. The Ministry also said that China will shut down 14.05 million tons of coking coal capacity and 1.73 million tons of ferroalloy capacity this year. Meanwhile, there are also plans to close down 273,000 tons of aluminum, 665,000 tons of copper smelting, and 879,000 tons of lead smelting capacity this year.

China’s antitrust authorities removed the last obstacle to Glencore’s USD30 billion takeover of miner Xstrata after the commodities trader agreed to sell a USD5.2 billion mining project to ease its grip on copper. Xstrata’s Las Bambas mine in Peru had been set to be sold to secure the approval of China’s Ministry of Commerce (MOFCOM), but Glencore also agreed eight-year commitments covering the supply of copper, zinc and lead to China. Glencore and Xstrata combined account for roughly 7% of global copper supply. Glencore will have to find a buyer for Las Bambas – a major mine expected to produce an annual 400,000 metric tons of copper for at least four years from 2015 – by the end of August 2014 or sell alternative assets. Glencore agreed to supply a minimum of 900,000 tons of copper to Chinese clients a year for eight years from 2013. The price for at least 200,000 tons will be priced in accordance with the benchmark level. It also agreed to supply zinc and lead concentrate on “fair and reasonable” terms.

Baosteel, China’s largest listed steel company, gave a subdued outlook for steel demand in China this year, forecasting demand growth of only 3%. “We have entered a period of stability,” said He Wenbo, Chief Executive of Shanghai-based Baosteel, referring to steel demand. “Compared with last year, this year will not be any worse. But the steel industry had become used to rapid growth, so now that it slows down, it will take some time to get used to that.” If the 3% expansion materializes, it will be the second year in a row of slow growth for China’s steel industry, which produces nearly half of the steel in the world and accounts for 60% of seaborne trade in iron ore. He said he had been telling Baosteel’s suppliers, including BHP, Rio and Vale, that they should prepare for a “big fall” in iron ore prices in several years’ time, as the high iron ore price is unsustainable. He Wenbo also revealed that Baosteel plans to settle more of its iron ore trade in renminbi instead of dollars. Baosteel was one of the first Chinese firms to use the renminbi to settle purchases of iron ore overseas, mostly through Hong Kong and Singapore. Baosteel does not yet use the renminbi to pay for iron ore from Australia or Brazil, the Financial Times reports.

China Zhongwang Holdings posted a 63.5% jump in net earnings. The Liaoning province-based firm, which claims to be the world’s second largest maker of industrial aluminum extrusions, said net profit for last year was CNY1.81 billion, up from CNY1.1 billion in 2011. Sales grew 31% to CNY13.5 billion. The gross profit margin rose to 24.1% from 21.6%. Vice President Lu Changqing said this reflected higher processing fees, due to an increased focus on more lucrative “deep processing” to produce semi-finished or finished products, including electric vehicle and railway car bodies and parts. Stripping out non-recurring income – mainly CNY211.7 million of government subsidies – pre-tax income grew 53%. The subsidies were provided by local governments in three cities in which the firm built production facilities, and to subsidize research and development (R&D). Chief Financial Officer Vincent Cheung said the subsidies are discretionary and any further subsidies will depend on the firm’s “actual development”. The company increased its stocks in the belief that the aluminum price has bottomed.