MELBOURNE: Australian Prime Minister Anthony Albanese expressed concern on Wednesday about reports that China’s state iron ore buyer had paused purchases from mining giant BHP.
Bloomberg News reported that state-owned China Mineral Resources Group asked Chinese steelmakers and traders to halt purchases of BHP’s dollar-denominated seaborne iron ore cargoes during annual price negotiations.
“I am concerned about that and what we want to make sure is that markets operate properly,“ Albanese told reporters during a press conference.
The Prime Minister emphasised his desire to see Australian iron ore exported to China without any hindrance to normal trade flows.
China Mineral Resources Group has not responded to requests for comment about the reported purchasing pause.
BHP confirmed it does not comment on commercial negotiations regarding its iron ore sales.
Albanese acknowledged that differences can occur during price negotiations but expressed hope for a quick resolution.
Australian Treasurer Jim Chalmers announced he would arrange a meeting with BHP CEO Mike Henry to discuss the situation.
BHP’s Australian-listed shares fell 1.13% in early morning trading following the news reports.
The mining company ranks as China’s third-largest iron ore supplier behind Rio Tinto and Brazil’s Vale.
RBC Capital Markets analysts suggested Chinese steel mills could offset BHP volumes by purchasing from Fortescue, Rio Tinto, and Vale.
“If prolonged, the pause risks squeezing steel margins or forcing selective output cuts but China cannot realistically walk away from BHP supply altogether,“ the analysts noted in their report.
Iron ore represents Australia’s most valuable export commodity despite projected earnings declines.
Government forecasts indicate iron ore earnings could fall to 105 billion Australian dollars for the 2025-2026 financial year from 116 billion dollars the previous year.
China consumes approximately 75% of global seaborne iron ore as the world’s largest consumer.
China established China Mineral Resources Group three years ago to coordinate purchasing for its steel industry.
The state-owned buyer aims to leverage China’s position as the world’s largest iron ore importer during price negotiations.
Australia-China diplomatic relations have improved since the Albanese government took office in May 2022.
Relations previously soured after Australia called for an international COVID-19 origins inquiry.
China responded to that call by imposing tariffs on several Australian commodities in late 2020.
Those trade restrictions have since been lifted as bilateral relations normalised. – Reuters