Auto industry concerned by price hike in iron ore

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Brussels  –  The  European  automobile industry is very
concerned  by the sudden and massive increase in the price of iron ore, a
crucial  material  for  producing  steel.  The leading iron ore exporters
announced,  yesterday, steps to raise their prices by more than 80%. Such
excessive   and   unpredictable   pricing   policy   would   affect   the
competitiveness  of  manufacturing  in  Europe,  including the automotive
industry.

The   automobile   industry  needs  broad  access  to  raw  materials  at
competitive   conditions,   especially   in  times  of  fragile  economic
circumstances.  With  roughly  one tonne of steel per car, the automotive
sector  is  a  major  client  of the steel industry and – hence, iron ore
exports.  Cost  pressure  in  the  sector  is  already  high due to large
investments  in  environmental  and  safety  technologies, while economic
recovery and consumer demand are still slow.

The  main iron ore exporters are Australia’s Rio Tinto, Brazil’s CVRD and
Australia  BHP  Billiton  (often called the ‘big three’). Major producers
like  India  and  Russia  hardly  export  their iron ore. The ‘big three’
represent  around  70% of the exports of iron ore and, subsequently, hold
the  significant  pricing power of an oligopoly. In addition, BHP and Rio
Tinto  have announced their intention to create a joint venture and merge
their Australian iron ore productions, leading to further concentration.

ACEA,  the  automobile  industry’s  trade  association, asks the European
Commission  and Member States to urgently use all appropriate channels to
tackle  distortive  developments.  ACEA also encourages the EU to rapidly
develop  and implement a raw materials strategy to ensure a level playing
field  on the world’s raw material markets and facilitate broad access to
raw materials from third countries at competitive conditions.