BHP continues to send iron ore shipments to China from its Pilbara mines, despite a price stand-off between the resources giant and Beijing which threatens billions of dollars of Australian exports.
China’s state-run buyer of iron ore, China Mineral Resources Group, has told its steelmakers not to purchase iron ore from BHP, according to a Bloomberg report, escalating a stoush over pricing contracts which has cast doubt on trade worth more than $100 billion annually.
BHP has refused to confirm that China has banned imports of its Pilbara iron ore. Bloomberg
However, data from marine tracking websites show vessels carrying BHP’s iron ore to China continuing to depart from Port Hedland since news of the reported ban broke late on Tuesday. Other vessels charted by BHP are being loaded at its eight berths at the West Australian port.
A UBS analyst report on shipping data suggested that any impact on BHP, as of last Friday, before the dispute became public, “appears to be modest”.
UBS also estimated that BHP ships 85 per cent of its Pilbara iron ore volumes to China, up from 73 per cent a decade ago. Roughly 79 per cent of Rio Tinto’s Pilbara ore goes to China, while the figure is 87 per cent for Fortescue and 70 per cent for Vale.
Although the federal and West Australian governments have held talks with BHP and urged both parties to overcome the impasse, the federal opposition has criticised the approach as too “hands-off”, given iron ore’s importance to the national economy.
Opposition finance spokesman James Paterson said Australia should “back BHP in this fight”.
“If our Chinese partners are using attempted leverage to try and drive down the price [below] a competitive international market price, then that would be very concerning. And I don’t think it’s good enough for the federal government to take a hands-off attitude,” he told Sky News.
“Iron ore is Australia’s largest export and one of the single biggest contributors to the federal budget bottom line. Nothing is more important for a surplus and deficit in some financial years than the iron ore price.”
A government source said ministers were engaging with BHP, but that it was a commercial issue between the company and the Chinese counterparties. BHP chief executive Mike Henry spoke with Treasurer Jim Chalmers on Wednesday about the matter.
BHP has declined to comment on the stoush or confirm the ban, citing commercial confidentiality. However, it has not disputed the veracity of the Bloomberg report.
The miner is bound by ASX rules that require listed companies to update the market in the event of incidents that have a material impact on its shares. China is BHP’s single biggest customer for iron ore, and its refusal of the miner’s product would almost certainly constitute a material impact. BHP is yet to issue such a statement to the bourse.