A machine handles shipment of iron ore at Qingdao Port, Shandong Province. [CFP]

The Vietnamese ministry of finance announced yesterday that the country will raise duties on iron ore exports to 40 percent from 30 percent effective Feb. 7, in a move to preserve the raw material.

Vietnam is not alone in raising duties on the mineral. At the end of last year, India announced it would raise tax on iron ore exports from 20 percent to 30 percent as of Dec. 30, 2011. The move dealt a crushing blow to those Chinese steelmakers who viewed Indian iron ore as an alternative to the big three suppliers --BHP Billiton, Vale and Rio Tinto.

The Vietnam Steel Association suggested last year that the country should ban exports of iron ore to foreign countries, including China, as Vietnam's domestic demand for steelmaking materials would grow as a result of the steel sector's rapid expansion in capacity.

The increased rate of tax will make Vietnam's iron ore prices less competitive and hamper the efforts of Chinese steelmakers to break the market dominance of the top three suppliers.

In 2011, 64 percent of China's iron ore imports were shipped from Australia and Brazil, a level similar to 2010. By contrast, less than 1 percent came from Vietnam, among other 63 exporters.

Analysts said that while the tax increase will not greatly impact the Chinese steel sector, it does reflect the difficulty of the task facing China as it seeks to reduce its dependence on the top three suppliers.

China's business press carried the story above on Wednesday.

Contact the writer of this story at: hes@china.org.cn.