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FILE PHOTO - Heavy smog is seen during a polluted day at the Daming Lake in Jinan, Shandong province, January 5, 2017. REUTERS/Stringer/File Photo REUTERS/Stringer

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By Muyu Xu and Manolo Serapio Jr

QINGDAO, China (Reuters) - China will cancel about a third of its iron ore mining licences, mostly belonging to small polluting mines as part of Beijing's efforts to improve air quality, a mining association official said on Wednesday.

Over 1,000 mining rights will be eliminated under China's campaign against pollution, Lei Pingxi, chief engineer at the Metallurgical Mines' Association of China, told an industry conference.

"Some small miners who didn't pay attention to environmental issues simply closed down temporarily to cope with inspections," said Lei.

"However, these small miners will be forced to upgrade their production processes in order to survive, otherwise they will be cleared out."

Mining in places within natural reserves will also be banned, Lei said, citing regulations issued by the Ministry of Environmental Protection in July.

The number of iron ore mines in China have dropped from more than 3,000 to around 1,900 in recent years and was continuing to fall, Peter Poppinga, executive director at top iron ore producer Vale said at the conference.

"Some of the mines are even importing some low-grade seaborne cargoes and upgrading them instead of investing the money in their own mines," said Poppinga.

China's raw iron ore is mostly low grade, with iron content of around 30 percent or less, compared with more than 60 percent for iron ore produced by international miners such as Brazil's Vale .

In 2016 China's iron ore output dropped 3 percent to 1.28 billion tonnes.

"According to official data, the mining industry in China is investing less and less capex (capital expenditure) in replacement tonnage which will lead to lower production down the road," said Poppinga.

(Reporting by Manolo Serapio Jr. and Muyu Xu; Editing by Greg Mahlich)

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