It's no wonder that BHP accepts RMB settlement. This photo reveals the behind-the-scenes truth, and Australia had to reluctantly give in!
Recently, an online photo surfaced, revealing why BHP had to make concessions. The photo shows the official opening of the railway connected with the Simandou Iron Ore Mine in Guinea.
It should be noted that just a few weeks ago, BHP was firm in the China-Australia iron ore negotiations. The negotiations were at an impasse, and China immediately informed domestic steel mills and traders to suspend receiving all BHP iron ore priced in US dollars.
This countermeasure took immediate effect. Within less than two weeks, BHP had to return to the negotiation table and accept the RMB settlement proposal put forward by China. Behind BHP's change of attitude, the presence of the Simandou Iron Ore Mine has become increasingly prominent.
At the end of September, the railway connected with the Simandou Iron Ore Mine in Guinea officially opened. The railway is now fully connected and is currently in the testing and debugging phase. More importantly, according to information from Waili International staff, the Simandou Iron Ore will start loading operations on November 11, and the first batch of iron ore is expected to arrive at domestic ports by early January next year.
This is a game-changing development. The proven reserves of the Simandou Iron Ore exceed 4.2 billion tons, with an overall ore grade of 66%-67%, ranking among the world's best. The Simandou project has an export capacity of 120 million tons. China holds about 60-65% of the shares in the Simandou project, a figure far exceeding public expectations.
The northern blocks 1 and 2 are mainly developed by the Winning Alliance, while China Baowu completed the acquisition of 49% shares in the Winning Alliance's mine and infrastructure projects on June 19, 2024. The southern blocks 3 and 4 are mainly developed by Simfer, with Rio Tinto holding 53% and China Aluminum Iron Ore Holding Company holding 47%.
In addition, China's strategy for diversifying its iron ore imports is beginning to show results, no longer relying solely on BHP. However, the situation is not very optimistic. Industry estimates suggest that the long-term annual production target of the Simandou Iron Ore is 120 million tons, which will reduce China's reliance on iron ore imports from Australia and Brazil from the current 80% to about 65%.
But China also has a backup plan. In addition to Simandou, new iron ore projects in Peru, Cameroon, and other regions are expected to bring over ten million tons of additional supply to China in 2025. Under the mounting pressure, BHP's concession has become an inevitable choice.
Original article: www.toutiao.com/article/1845832813629642/
Statement: This article represents the views of the author.