China's first non-official iron ore trading platform will begin operations this week, the latest sign that the country's new leadership is serious about free market reforms.

China Daily reports the re-opening Rizhao platform was set up by private iron ore trading firms in 2009, but closed by authorities "due to concerns that it would introduce speculation and destabilise the "benchmark" mechanism then used to set annual iron ore prices."

China last month also announced plans to scrap its decade-old import licensing system in an attempt to eliminate middlemen in the market who charge commissions for importing ore. The new rules are designed to lower costs for steel mills which will now be allowed to import directly.

In the long run if the rules were to be implemented it would favour the big three exporters – Vale SA (NYSE:VALE), Rio Tinto (LON:RIO) and BHP Billiton (LON: BHP) – by lowering the cost of imported ore for China's steel industry relative to domestic supplies.

The liberalization of the iron ore trade marks something of retreat for Beijing which has made many attempts to wrest control over pricing away from the major Brazilian, Australian and South African miners.

The huge swings in the price of iron ore in recent years has one more than on occasion prompted China's national planning agency to allege that Vale, Rio Tinto and BHP Billiton are manipulating the price, but attempts to improve transparency in the industry have met with little success.

The new Rizhao platform is a third option for traders of the steelmaking ingredient and should help the trade move closer to a true spot market.

The launch of the China Beijing International Mining Exchange (CBMX) in May last year was largely deemed a flop and trading volumes remain very low despite official support from Vale and others.

The Singapore-based globalORE rival to CBMX spearheaded by BHP Billiton handles more trades and iron ore swaps and futures volumes have also grown significantly, but all these systems remain a small part of price-setting within the industry. At the same time price volatility has only increased.

Iron ore exchanged hands for $121.90 on Monday, up from 2013 lows of $110.40 over a month ago, but still down 20% from its 2013 high of $159 hit in February. The recent sharp pullbacks and subsequent rallies were beginning to resemble the trading patterns during the fall of 2011 and again in 2012.

Iron ore hit an all time record in February 2011 of over $190 and famously eight months later suffered a $60 drop over the duration of 28 days.

The market suffered a similar shock in August-September last year when the Chinese import price dropped 25% over a month to a three-and-a-half year low of $86.70.