Chinese Iron Ore Buyer Strives to Restart Stalled Pricing Talks With BHP

China Mineral Resources Group Co. Ltd. (CMRG), a state-owned iron ore buyer established three years ago to boost China’s influence in the global iron ore market, is currently locked in a stalemate with BHP Group Ltd. over annual pricing talks. As negotiations on long-term contracts broke down, CMRG instructed domestic steelmakers to halt purchases of BHP’s Jimblebar blend fines and later extended this suspension to all BHP U.S. dollar-denominated seaborne iron ore cargoes, seeking to strengthen Beijing’s position in price negotiations [para. 1][para. 2][para. 3]. However, some steel mills have reported not receiving the notice, indicating that CMRG may be open to further discussion if BHP returns to the negotiating table [para. 4].

Founded in July 2022, CMRG combines both state and private sector steelmakers and traders on a single platform, aiming to secure more advantageous terms from global iron ore suppliers [para. 5]. The Chinese government and CMRG’s efforts have drawn international political attention, with Australian Prime Minister Anthony Albanese emphasizing the importance of uninterrupted Australian iron ore exports to China, as the trade is significant for the economies of both countries [para. 6]. BHP, while declining to comment specifically, reiterated its commitment to strong, long-term relationships with Chinese customers, including CMRG [para. 7].

Industry analysts believe that pricing, particularly whether transactions can be settled in yuan instead of U.S. dollars, is at the center of the deadlock [para. 8]. With about 80% of China’s annual steel industry iron ore demand covered by imports, the stakes are high. In 2024, China imported roughly 1.2 billion tons of iron ore, valued at approximately $132 billion, making it the country’s second-largest imported commodity after crude oil [para. 9]. The world’s four top exporters—BHP, Rio Tinto, Vale, and Fortescue—collectively account for around 70% of all seaborne iron ore shipments, benefiting from production costs as low as $20 per ton and overall delivered costs to China of $30-$40 per ton, ensuring substantial profit margins [para. 10]. In the 2025 fiscal year, iron ore contributed $14.4 billion to BHP’s earnings before interest, taxes, depreciation, and amortization, a 24% decline year-on-year. Meanwhile, Chinese steel industry profits dropped 55% year-on-year to 29.2 billion yuan ($4.1 billion), indicating that rising raw material costs are putting severe pressure on Chinese mills [para. 11].

CMRG’s crucial function is to negotiate favorable long-term deals and shift some pricing leverage away from the mining giants. Nevertheless, insiders question whether CMRG has enough financial firepower to invest in its own mining assets, potentially limiting its leverage in negotiations. In 2024, CMRG’s talks with BHP spanned from June to September, covering the volume, discounts, and shipping fees [para. 12][para. 13][para. 14].

The deadlock has coincided with the recent launch of the yuan-denominated Iron Ore Portside Index by the Beijing Iron Ore Trading Center, intended as an alternative to the U.S. dollar-based Platts 62% Iron Ore Price Index. The new index seeks to diversify pricing mechanisms, better reflect supply-demand dynamics, and amplify China’s pricing influence globally [para. 15][para. 16]. Yuan-settled trades at Chinese ports now total 300–400 million tons annually, about one-third of all China’s iron ore imports, representing a shift that helps steelmakers mitigate exchange rate and inventory risks [para. 17][para. 18].