Last week Australia’s Rio Tinto, the world’s second largest iron ore producer, made a bold bet on China’s steelmaking industry. There’s one small problem: The Chinese government seems to be on the other side of that bet.
Rio Tinto announced it will increase its production primarily based on positive projections about China’s steel industry, which uses iron ore as a raw material. The company estimates China, despite its current economic slowdown, will produce 1 billion tons of steel per year by 2030 — a roughly 21 percent increase on the world-leading 822.7 million tons it produced in 2014, when it accounted for roughly half of all global production.
But the Chinese government might complicate those plans. If anything, Beijing has been treating the country’s economic slowdown as an opportunity to reduce the size (and environmental impact) of its steel industry. It seems to be one part of President Xi Jinping’s blueprint, announced in January, to reorient the national economy toward a sustainable and slower-growing “new normal.”
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