Shares in ASX-listed iron ore miners experienced a significant downturn on Friday following reports that China Mineral Resources Group (CMRG), a state-backed iron ore buyer, has urged traders to refrain from purchasing new BHP cargoes. This directive follows findings that some traders were circumventing restrictions on iron ore purchases. The move has triggered concerns about potential disruptions to the iron ore trade between Australia and China.
At 11 am on Friday, BHP shares were down 6.5 per cent, adding to a 1 per cent loss on Thursday as it traded ex-dividend. Fortescue also experienced a decline, falling by 3.6 per cent, while Rio Tinto’s shares dropped by 4.4 per cent. The renewed warning on dollar-denominated purchases creates fresh challenges for BHP when it seeks to market shipments for April.
China Mineral Resources Group has reportedly signalled a toughening of enforcement in conversations with both domestic and foreign traders. While CMRG lacks formal authority over Chinese steel mills, its political influence makes its orders effectively binding. CMRG and BHP have been engaged in a months-long standoff during negotiations for long-term contracts on behalf of China’s mills.
A spokesperson for BHP declined to comment on commercial matters. China Mineral Resources Group is a state-backed entity that represents the interests of Chinese steel mills in iron ore negotiations and procurement. BHP Group is a leading global resources company that extracts and processes minerals, oil, and gas from its production operations primarily located in Australia and the Americas.
