Opening Address by Mr Lim Hng Kiang, Minister for Trade and Industry at the Singapore Iron Ore Week Forum 2013 on Wednesday, 8 May 2013, 9.20am, Resorts World Convention Centre
Mr Magnus Bocker, CEO of Singapore Exchange (SGX)
Distinguished Guests,
Ladies and Gentlemen,
Good morning to all of you.
Introduction
It is my pleasure to be here at the inaugural Singapore Iron Ore Week Forum, jointly organised by the Singapore Exchange and China’s CUSTEEL, a major iron ore and steel online information portal spearheaded by the China Iron and Steel Association. This event marks an important milestone for the iron ore trading community in Asia, and I am heartened to see a good turnout today.
Asia is a major commodity-consuming region
Asia has become a vital driver of growth for many of your companies. This is not surprising as we foresee the growth momentum in Asia to remain robust. According to the Asian Development Bank, Asia’s real GDP is expected to grow by more than six per cent this year, largely due to our healthy demographics and good growth in domestic consumption.1 Within the region, we have also witnessed a deepening of trade links, which has partially offset the impact of slower growth in the European and US economies.
During the last decade, Asia has also grown to be a major commodity-consuming region, and leading this growth is China. In 2011, China alone consumed 20 per cent of the world’s non-renewable energy resources and 40 per cent of base metals.2 In addition, according to the World Steel Association, China accounts for 45 per cent of global steel usage as it continues to move aggressively towards greater urbanisation and industrialisation. Overall, Asia’s continual focus on growing domestic consumption is set to accelerate the demand for commodities.
Metals and mining companies have been responding to this growing demand in Asia. Fortescue Metals Group, the fourth largest iron ore producer in the world, is a good example. To feed the growing demand in the region, it has embarked on plans to ramp up its production of iron ore by over 50 per cent to 155 million tonnes per annum by end 2013.
Singapore’s efforts in developing itself into Asia’s premier metals trading hub
Turning to Singapore, we have seen good growth in the metals and mining sector. In 2012, offshore trade turnover for this sector has gone up by nearly 20 per cent per year to hit almost S$90 billion. The activities sustained by this sector contributed S$1.7 billion in total business spending to the Singapore’s economy.
The data that I have just shared is a reflection of Singapore’s commitment and efforts to attract a strong ecosystem of global players of the entire value chain. Major miners such as BHP Billiton, Rio Tinto and Vale have set up substantial operations here. More recently, we welcomed Anglo-American into Singapore as it aims to grow its commercial presence in Asia. Several Asian steel producers such as Bao Steel, Shagang and Tata Steel have also established their presence here. Meantime, GlobalOre, an iron ore physical trading platform was set up in Singapore. They all point towards Singapore’s increasingly significant role in metals trading.
In order to support the activities of metals and mining companies, Singapore has actively developed our trade infrastructure to improve our offerings and create value for those companies operating here.
Singapore has developed depth in our commodities sector, where we serve as an ideal trading location of physical commodities and derivatives, which is critical in managing risks. This is also largely because of Singapore’s proposition as a neutral location for traders, where we are neither a big consumer nor a big producer of metal products. Over the years, the Singapore Exchange (SGX) has increased the diversity of products traded on its exchange, which have given traders the increased flexibility and liquidity for their businesses. Its iron ore contracts have also given a boost to the growth of the metals market.
We have also built up an intricate and healthy ecosystem for traders in Singapore. Today, trading companies can easily access a variety of support services, ranging from finance to insurance, risk management, shipping and arbitration.
On this note, I would like to encourage all of you and many others in the commodity trading community, to anchor or expand your key business activities in Singapore. Our central location between the metals producing nations and the metals consuming countries means that both metals players and metals traders will stand to benefit. For the metals players, you will be able to meet conveniently in Singapore to transact deals. As for the traders, you will be able to effectively cover your geographical markets out of Singapore, thus bringing value to your business. Equally important attributes which all of you can tap on are our pool of highly-skilled talent, our strong rule of law and political stability.
I would also like to take this opportunity to urge the industry to engage in discussions with IE Singapore, our government agency which promotes internationalisation and international trade, to grow and develop this cluster together. We hope to work closely with you as we develop Singapore into Asia’s premier metals trading hub.
With this, I wish all of you a fruitful session ahead. Thank you.
2 Source: Asia Development Bank Report, “Asian Development Outlook 2013: Asia's Energy Challenge” http://www.adb.org/sites/default/files/pub/2013/ado-2013.pdf