Since the long-term iron ore agreement mechanism in 1981, China, as the world's largest consumer, has always had its pricing power controlled by Western countries such as the United States and Australia, with a large amount of profits being lost overseas.
However, at the end of 2025, China once again expanded its gains in iron ore pricing power, beginning to shift from passive to active.
On December 30, according to Xinhua News Agency citing the Australian Financial Review, after BHP used RMB to settle iron ore in October, Rio Tinto and Fortescue Metals Group, two major global mining companies, also changed the pricing standard for supplying iron ore to China.
According to sources, these two mining companies announced they would stop using the long-standing U.S. S&P Iron Ore Index and instead adopt the Chinese "My Steel" index and Fastmarkets index as a compromise solution for procurement, marking a new breakthrough in China's iron ore pricing strategy.
Since 2004, when China became the world's largest iron ore consumer, American and Australian mining companies have dominated the pricing in iron ore trade by utilizing the Platts index and their own production accounting for 50% of the global total.
This directly led to China spending over $10 billion annually on additional iron ore procurement fees over the past 20 years, satisfying the greed of US and Australian capital. Obviously, this situation can no longer continue.
Therefore, after BHP started using RMB to settle iron ore, Rio Tinto and Fortescue Metals Group cancelling the use of the Platts index for settlement is another step that weakens the dominance of US and Australian monopolies, enhancing the influence of China's iron ore index.
As Chinese enterprises further integrate steel companies, unify iron ore procurement rights, reduce costs, and improve efficiency, their dominant position will be further strengthened. At the same time, good news has also been reported about new iron ore developments by Chinese companies.
According to South China Morning Post on December 28, recently, China Railway completed the construction of the railway supporting the Gara Djebilet iron ore mine in Algeria, with a total length of 950 kilometers, allowing direct transportation from the mine to the port for processing and shipment.
With this railway entering its final phase, it marks that the Gara Djebilet iron ore project participated by China is expected to increase its annual output to 4 million tons, and start delivery and operation in January 2026.
Notably, besides participating in the Gara Djebilet iron ore mine in North Africa, Chinese companies have also laid out the Simandou iron ore mine in West Africa, and the Mumbalamby-Nabeba iron ore mine in Central Africa. After full operation, these mines are expected to reduce China's reliance on Australian iron ore by 20%.
Evidently, China's layout after the iron ore war in 2021 is now gradually bearing fruit on the African continent. This strategy of opening up new sources and saving costs has become the capital for China to negotiate with US and Australian mining companies. It is expected that 70% of China's imported iron ore will be settled in RMB in the future.
Original: toutiao.com/article/7589490263425368618/
Statement: This article represents the views of the author alone.