If the unconfirmed reports are true, China has taken another strategic step towards its goal of consolidating its grip on the global steel market. The step was small, but it fits into a far wider plan. On October 30, the news agency Reuters reported that China´s state buyer, China Mineral Resources Group (CMRG), had told Chinese steelmakers they could resume buying MB fines from Australia´s Hancock Prospecting. The decision thus lifted a ban which had not previously been reported. According to sources, the ban on MB fines, a type of iron ore, had come into effect in early 2024 when negotiations stalled over CMRG becoming the exclusive seller in China for Roy Hill (now part of Hancock). At the time of publishing, it is not known whether CMRG and Hancock have reached an agreement in their dispute. Nevertheless, the ore is trading once again. CMRG was set up in 2022 by the Chinese government to consolidate the hundreds of steel mills in China behind a single buyer, so as to win better prices from the world´s iron ore mining giants – of which there are only a handful, mainly Australian.

The Hancock case follows a report in September from Bloomberg that CMRG had instructed Chinese mills to stop purchasing any new iron ore cargoes from BHP. This apparent ban drew an immediate call from Australia´s prime minister, Anthony Albanese, for calm heads to prevail. China gets 13% of its seaborne iron ore from BHP. Neither side at the time confirmed the ban and both have remained tight lipped ever since. Nor is there any evidence of a disruption to trade. Ships have continued to ferry BHP’s iron ore from Western Australia to Chinese ports. However, industry observers point out that BHP had already sold most of its cargoes due to arrive in China in November and December. This means that, if any ban exists, it might not bite until later this month when BHP begins to sell “new” iron ore for delivery in January.

For decades, the hundreds of individual Chinese mills to which BHP, Rio Tinto, Fortescue and Hancock sold their product were viewed by the miners as “price takers, not price makers”. However, having risen to being the world´s dominant steelmaker, China now senses a power shift in its favour: hence the creation of the CMRG to handle price negotiations. Of course, the spat with BHP may be nothing more than a price dispute which will be resolved shortly. But some analysts also believe the CMRG is trying to force BHP to accept payment in China’s own currency, the Renminbi (RMB). Historically, the global currency of trade is the US dollar. The industry website, SteelOrbis, has gone so far as to report that BHP has accepted a new deal which would settle 30% of spot trades in RMB instead of USD.

Dr Darren Lim from the Australian National University, whose research covers geo-economics and economic statecraft, has told ABC News that more trade being moved to RMB would shift foreign exchange risks onto the big miners, rather than the buyers, who would also get more leverage when negotiating price. Dr Lim pointed out, however, that such a move would not be unprecedented as the major iron ore miners already do billions of dollars of trade in RMB by selling spot cargoes at Chinese ports. Dr Lim views the current negotiations as a natural rebalancing of power that comes with China’s economic rise. “As the world’s largest buyer of iron ore, China is increasingly able to set terms that suit its own strategic and financial interests. Pricing some trades in RMB is a logical expression of that,” Dr Lim said. He also told the ABC he doesn’t believe China’s immediate goal is to overthrow the US dollar. Rather, it is to progressively build more resilience by doing more trade in its own currency for critical products such as iron ore; gradually making it less vulnerable to US monetary policy or other tools that depend on dollar dominance – such as financial sanctions.

Marina Zhang from the Australia-China Relations Institute at the University of Technology Sydney says China is sending a signal to the rest of the world that it intends to play by new rules. “This is not just a currency swap, it’s a bid to reshape the global iron ore market and extend China’s financial and geopolitical influence. In doing so, Beijing aims to rewrite the rules of global commodity trade itself,” she told the ABC.

BHP´s Australia president, Geraldine Slattery, has insisted in a statement that the company still retained “strong relationships” with its key Chinese customers. “(These negotiations) happen every year. This is a normal part of business,” she declared. Maybe so. But it´s also possible that this dispute´s resolution could be the start of the reshaping not only of the resources industry, but also of international trade flows, global markets and the relationship between China and the West.

In other BHP news, the Big Australian and the South Korean steelmaker, POSCO, have agreed to advance the production of near zero emissions iron. This would be a major step towards manufacturing green steel. The iron will be produced at a demonstration plant at POSCO’s steelworks in South Korea’s portside city of Pohang, using a hydrogen-based production process and an electric smelting furnace. Construction is set to begin soon with commissioning targeted for early 2028. It is slated to have the capacity to make 300,000 metric tonnes a year.

Finally, as further evidence of China´s economic might, the country´s biggest listed steelmaker, Baoshan Iron & Steel (known as Baosteel) has announced that its third-quarter net profit more than doubled from a year earlier. This was thanks to better-than-expected domestic demand and robust steel exports. Baosteel´s third-quarter net profit stood at 3.08 billion yuan (US $432.4 million), up 130% from 1.34 billion yuan in the corresponding period of 2024. Baosteel is a subsidiary of the state-owned China Baowu Steel Group, the world’s largest steelmaker by output.