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Prime Minister Anthony Albanese is “concerned” by reports that China might temporarily ban buying iron ore from BHP following a pricing dispute.
On Tuesday, business news website Bloomberg reported that China’s state iron ore buyer had told steelmakers and traders to ban any seaborne cargo from BHP’s Western Australian mines.
China, which buys roughly 75 per cent of global seaborne iron ore, had been negotiating long-term commercial contracts, including the price of the commodity, with BHP since mid-September.
Albanese said he hoped the trade restrictions were “very much short term”, urging the matter be resolved “quickly”.
“I am concerned about that and what we want to make sure is that markets operate properly. Of course, we have seen those issues in the past,” he told reporters in Sydney.
“I want to see Australian iron ore to be able to be exported to China without hindrance. That is important, it makes a major contribution to China’s economy but also to Australia’s.”
According to the Department of Foreign Affairs and Trade, Australia’s iron ore exports to China surpassed $100 billion last year.
Since the middle of September, China has been in discussions with BHP to establish long-term business agreements.
In 2022, Beijing created the China Mineral Resources Group (CMRG) to consolidate its bargaining power and secure better prices with the likes of miners BHP, Rio Tinto and Fortescue.
Albanese described the reported ban as “disappointing”, suggesting CMRG could be using it as a negotiating tactic.
“Sometimes when people are negotiating over price, sometimes these things will occur. I want to see this resolved quickly,” he said.
Treasurer Jim Chalmers said he would have a discussion with BHP chief executive Mike Henry, adding that the matter pertained to “commercial arrangements” and was one “for the company to work through”.
BHP has said it does not comment on commercial arrangements.
Like Albanese, some analysts believe China’s reported move is a negotiating tactic, with RBC Capital Markets saying it could be an attempt to secure lower long-term prices.
Last month, BHP said that its annual profit fell to the lowest in five years as sluggish demand from China weighed on iron ore prices and flagged a cut in capital and exploration spending.
News of the negotiation dispute caused BHP shares to drop 1.1 per cent when the ASX opened on Wednesday.
— With additional reporting by the Reuters news agency.
