A BEIJING-backed entity controlling China’s iron ore procurement has emerged as the primary concern for global miners, altering negotiations in the world’s second-most traded commodity market.
China Mineral Resources Group has begun asserting its influence in price discussions, disrupting established dynamics between suppliers and buyers, said the Financial Times on Wednesday. Major producers including BHP and Vale endured prolonged contract talks with CMRG last year, which serves as the centralised purchasing agent for state-controlled steelmakers.
“The key risk is CMRG,” Dino Otranto, co-CEO of Fortescue, the fourth-largest global iron ore producer told the newspaper. Current market dynamics have enhanced its position, he added. “As the market is getting a bit more constrained, and supply is coming on line, the natural negotiating leverage is with the consumer.”
Australian authorities are monitoring CMRG’s activities closely given iron ore exports have generated over $1.2 trillion for the economy across two decades. Prime Minister Anthony Albanese expressed concern in October, stating he wanted Australian iron ore exported to China “without hindrance”.
November data revealed Australian exports declined three percent from the previous month, with the metals and mining sector contracting nine percent. Commonwealth Bank economist Ashwin Clarke suggested this “may indicate the reported iron ore pricing dispute between BHP and CMRG is reducing export volumes”.
Industry leaders and governments fear state-controlled CMRG, established in 2022 under Beijing’s state asset manager, could extend its purchasing dominance to additional commodities. Chairman Yao Lin has highlighted China’s vulnerability, warning of “significant risks for the security of industrial and supply chains” stemming from foreign resource dependence.
