No impact to BHP’s WA iron ore exports, sources say, despite reports of escalating ban orders by China

BHP is continuing to ship iron ore from the Pilbara to China at normal rates despite its protracted contract negotiations with Beijing having supposedly deteriorated. Reuters on Friday reported that China’s state-run iron ore buyer, China Mineral Resources Group, ordered the nation’s major steel producers and traders to stop purchasing Jinbao ores from BHP. This comes about two months after CMRG reportedly told Chinese steel mills to temporarily halt purchases of BHP’s Jimblebar blend fines — another type of iron ore product from its Pilbara mines. But port industry sources have told The West Australian that BHP shipped “healthy” volumes of iron ore to Chinese customers from its Port Hedland export gateway in recent weeks and current docking activity remains normal. CMRG is apparently strong-arming the mining giant force spot cargo discounts and have a large portion of sales settled in Chinese yuan instead of the US dollar. BHP and CMRG have both declined to comment. China, the world’s largest iron ore consumer, buys about 75 per cent of global seaborne iron ore. Beijing established CMRG three years ago to buy ore on behalf of its steelmakers in a bid to gain more pricing leverage as a monopolistic buyer. Many Australians are concerned that the BHP-CMRG dispute could be a canary in the coal mine for the country’s lucrative iron ore export relationship with China, which could see lower sale prices for the steel input flow through to lower investor returns and government royalties. BHP Australia president Geraldine Slattery told a Leadership Matters breakfast hosted by The West Australian last month that her company’s relationship with its Chinese customers remained “strong” and the reportedly tense negotiations were a “normal” annual event. “I wouldn’t necessarily speak to commercial negotiations, I think what I can and will say is that our relationship with China in the iron ore sector is one that goes back decades and decades,” she said at the time. “And indeed, we’ve got decades of strong business in front of us. Commercial negotiations are a normal part of that. “They happen every year, and yes, there’s decent speculation in the press and often conflicting speculation, but I think the takeaway is we’ve got strong relationships with customers in China.”