Beijing warns of risks of buying Iranian ore

SHANGHAI - Reuters

A worker operates a furnace at a steel plant in Anhui province in China. China accuses Iranian companies of severely damaging the interests of domestic companies. REUTERS photo

China yesterday warned about the risks of importing Iranian iron ore, the second major commodity from the sanctions-hit Islamic Republic under scrutiny as the two also tussle over oil payment terms.

The warning from the Commerce Ministry to domestic companies, which focused on substandard quality and on delivery problems, follows a crude imports spat that has seen China halve its Iranian oil shipments for January.

“I would consider this very similar to the crude oil import limitation by Zhuhai Zhenrong,” said an iron ore analyst in Beijing who asked not to be identified. “First, the timing is perfect, just on the heels of oil import payment concerns a few days ago by Zhuhai Zhenrong. And secondly, China also used commercial risks as the main reason.”

China’s top refiner Sinopec, both directly and through state Chinese state trading company Zhuhai Zhenrong Corp., has cut crude imports from Iran by over half in January.

Iran was China’s fifth-largest iron ore supplier in the first 10 months of the year, behind Australia, Brazil, South Africa and India.

“We have received lots of complaints from domestic companies about fraud regarding iron ore imports,” the ministry said in a statement.

Iranian companies have severely damaged Chinese companies’ interests by using substandard materials, refusing to deliver materials, or delivering less than what was originally agreed to, the ministry added.

Some Chinese businessmen who had gone to Iran for business had been physically threatened or attacked, the ministry also said.