【By Observer Net, Xiong Chaoran】On September 30 local time, Bloomberg cited anonymous sources reporting that China Mineral Resources Group Co., Ltd. has asked domestic buyers to suspend purchasing any BHP seaborne cargoes priced in US dollars this week.

The report said this means the signing of new contracts will be completely suspended, including iron ore cargoes already shipped from Australian mines. Currently, BHP only has a small amount of iron ore spot available for trading that has already arrived at Chinese ports, and these resources are all priced in RMB.

According to insiders, this decision was made after multiple rounds of negotiations between both sides last week but without results.

On October 1 local time, Australian Prime Minister Albanese claimed that China's suspension of purchases of BHP iron ore "was disappointing," and hoped that this issue could be resolved quickly.

"I hope to see Australian iron ore being able to be exported to China without obstacles. This is important, not only making a significant contribution to the Chinese economy, but also to the Australian economy."

Bloomberg mentioned that in early September, China Mineral Resources Group had asked steel mills to suspend purchasing BHP's Jimblebar Fines, and this ban on iron ore marks an escalation of actions, showing China's determination to enhance its pricing influence.

A BHP iron ore plant, photo taken for reference

According to reports, China is the world's largest consumer of iron ore, accounting for about 75% of global seaborne iron ore imports.

Three years ago, China established China Mineral Resources Group with the aim of representing domestic steel companies to purchase iron ore collectively, in order to gain more bargaining power as a single major buyer.

On the other hand, BHP, the world's largest mining company, is one of the three major suppliers of iron ore to Chinese steel manufacturers.

Reuters pointed out that iron ore is Australia's most valuable export product, but a report by the Australian government in June this year stated that with increased global supply, iron ore export earnings may fall from A$116 billion in the previous financial year to A$105 billion by June next year.

"We hope to ensure the market operates normally. We have encountered similar issues in the past," Albanese said on October 1 local time: "These measures are always disappointing, but of course we hope they are temporary. Sometimes, when people negotiate prices, these things happen. But I hope this issue can be resolved quickly."

Currently, China Mineral Resources Group Co., Ltd. has not responded to requests for comment. A spokesperson for BHP stated that the company cannot comment on commercial arrangements.

Australian Broadcasting Corporation (ABC) reported that Australian Treasurer Jim Chalmers will meet with BHP CEO Mike Henry to discuss this issue.

Since mid-2017, the Turnbull and Morrison governments in Australia blindly followed the United States, comprehensively undermining bilateral relations with China, including hyping up the "China threat theory," obstructing normal trade activities between the two countries under the pretext of "national security," and responding to the United States, leading the charge to stir up a presumptuous "virus origin investigation" against China. Since then, Sino-Australian relations and trade have plummeted to a low point.

At the same time, due to the improper actions of Australia in bilateral trade, China imposed prohibitive tariffs on Australian barley and wine, and suspended the export qualifications of several Australian beef suppliers. The Chinese Customs also implemented inspection and quarantine, quality and safety checks, and environmental project tests on imported products including Australian lobster and coal at import ports in accordance with laws and regulations.

Reuters mentioned in its report on Sino-Australian relations that since the Labor Party led by Albanese took office (May 2022), diplomatic relations between the two countries have improved.

Hong Kong's South China Morning Post previously pointed out that with the rise of the Albanese government, Australia has begun to consciously attempt to improve its relationship with China. In late March last year, China announced the cancellation of anti-dumping duties that had been in place since March 2021, which could reach as high as 218.4%.

Previously, Lin Jian, a spokesperson for the Chinese Foreign Ministry, stated when answering questions about Sino-Australian economic cooperation that China has always believed that economic and trade cooperation is the ballast stone of Sino-Australian relations, and China is willing to work with Australia to provide a fair, open, and non-discriminatory business environment for enterprises of both countries to invest and operate in each other's countries, promoting continuous development of economic and trade cooperation between the two countries.

This article is an exclusive publication by Observer Net. Without permission, it cannot be reprinted.

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