The treasurer, Jim Chalmers, will meet with the boss of BHP amid a shock report that the world’s largest mining company faces a Chinese blockade on its iron ore shipments.
Beijing’s state iron ore buyer has told steelmakers to pause imports of BHP ore, amid hardball negotiations over the price of the crucial resource, Bloomberg reported on Tuesday.
Chalmers said the reports were “concerning” but ultimately a matter for the company to work through.
“I’ll have discussions with [BHP chief executive] Mike Henry about that in due course, when we can set that up,” he told reporters in Brisbane on Wednesday.
Anthony Albanese said he was also “concerned” about the report.
“What we want to make sure is that markets operate properly. And of course, we have seen those issues in the past,” the prime minister told reporters.
“I want to see Australian iron ore be able to be exported into China without hindrance. That is important. It makes a major contribution to China’s economy, but also to Australia’s.”
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Albanese said such measures were “always disappointing”, but expressed hope they would be “very much short-term”.
“Sometimes when people are negotiating over price, sometimes these things will occur. But I want to see this resolved quickly.”
There was confusion over exactly what had happened, with sources telling AAP the mining giant was continuing to ship iron ore to China.
Chinese commodities analyst Mysteel also suggested no order was given to stop shipments from BHP.
The minerals company said it would not comment on commercial arrangements.
Australia is the world’s largest exporter of iron ore, and China is the top consumer.
In 2022, it established China Mineral Resources Group (CMRG) to buy iron ore for steelmakers, so it could purchase in larger bulk at lower prices.
Analysts believe CMRG is trying to get a better deal on BHP’s medium-grade ore, and argue the potential pause on imports is not a return to the sweeping trade bans introduced on Australian exports in 2020.
BHP is China’s third-largest iron ore supplier after Rio Tinto and Brazilian mining giant Vale. It manages five iron ore mines, four processing hubs, 1,000km of rail and two ports in the Pilbara.
Australia’s share market fell on Wednesday after reports of the potential blockade, fanning bad memories of the last trade conflict between the two countries.
The benchmark S&P/ASX 200 fell 23.1 points, or 0.26%, to 8,824.7, as the broader All Ordinaries slipped 19.8 points, or 0.22%, to 9,116.1. Shares in market heavyweight BHP tumbled 1.5% to $41.90.
“Iron ore prices are already elevated (above $US100 per tonne) as the market is tight despite seasonally weak Chinese construction demand, which would likely see competitor products trade at a premium,” the RBC Capital Markets analyst Kaan Peker said on Wednesday.
“On government instructions, steel mills could try to offset BHP volumes via Fortescue, Rio, Vale, domestic ores or stockpiles, but in aggregate it would be at higher cost and efficiency loss and this would be at the margin as competitors could currently only absorb a very small portion of BHP’s volumes.”
Shares in Fortescue jumped more than 2% in early trade, while Rio Tinto edged 0.1% higher.
In 2020, China placed trade restrictions on several Australian exports after the Coalition government raised questions about the origin of Covid-19. Relations did not thaw until early 2024, under Labor.