Australian Prime Minister Anthony Albanese expressed concern over a report that China’s state-owned iron ore buyer paused purchases from BHP. Bloomberg cited sources indicating that China Mineral Resources Group (CMRG) advised steelmakers and traders to halt buying BHP’s iron ore during price negotiations.
Albanese emphasised the importance of proper market functioning and the unhindered export of Australian iron ore to China. CMRG did not comment on the situation, and BHP maintained that it does not disclose negotiations. Albanese hopes for a quick resolution amid potential negotiation disputes. Australian Treasurer Jim Chalmers plans a meeting with BHP CEO Mike Henry. Following this, BHP’s shares dropped slightly, reflecting market sensitivity.
Analysts suggested China might offset BHP’s volume by sourcing from Rio Tinto, Fortescue, or Vale, though this could raise costs and impact steel margins if the pause persists. Iron ore remains Australia’s top export, but a government report predicts revenue could decrease from AUD116 billion to AUD105 billion by 2026 due to increased global supplies.
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China, which imports about 75% of the world’s seaborne iron ore, established CMRG three years ago to strengthen its negotiating position as a dominant buyer. Diplomatic ties between Australia and China have improved since May 2022, following earlier tensions related to the origins of COVID-19 and tariffs on Australian exports, which have now been lifted.
