(Oct 23): BHP Group sold several iron ore cargoes to Chinese traders this week, despite a dispute with the nation’s powerful state buyer that risks disrupting shipments from the world’s largest miner to its main market.
At least four shipments, including popular Mining Area C and Newman fines, were taken by buyers including state-run and private merchants and paid for in US dollars, according to traders with knowledge of the transactions, who asked not to be named discussing private matters.
The cargoes, scheduled to load in late November and early December, were sold at a discount to benchmark prices through a private tender, they said.
China is the world’s largest iron ore consumer, while BHP is one of a handful of major suppliers that provide the bulk of the material to its steelmakers. Contract talks between the mining company and China Mineral Resources Group Co (CMRG) stalled in September, with CMRG subsequently telling major mills and traders to avoid taking new dollar-denominated seaborne cargoes from BHP.
CMRG was created by Beijing to strengthen its hand in global pricing, and while it has no formal authority over commercial operations at individual mills or trading houses, its recommendations typically carry weight because of its political clout and strategic role. Still, this week’s sales signal that some trading entities in the country remain willing to buy from BHP.
CMRG didn’t reply to an email inquiry seeking comments. A BHP spokesperson said the company couldn’t comment on commercial negotiations, when asked about the sale of the cargoes.
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Commenting at BHP’s annual meeting on Thursday, group chair Ross McEwan said the mining giant remained in commercial negotiations with CMRG, while also noting in remarks to the media at the same event that previous talks had taken as long as six months.
“We’ve had relationships in China now for decades and we have a pretty good working relationship,” McEwan said, responding to a shareholder’s question. “But this is a commercial negotiation that is going on, as it does every year.”
CMRG’s directive for local users not to take new dollar-denominated seaborne cargoes from BHP followed an earlier request for buyers not to purchase the company’s Jimblebar blend fines. All mills have now walked away from that product — a popular blast-furnace feedstock — and many remain cautious about taking other BHP cargoes, the people said. CMRG also told several large, state-owned traders last week to enhance compliance with the BHP restrictions, they said.
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The BHP cargoes were traded at a double-digit discount to the average index prices for November and December, the people said.
So far, the miner has seen minimal disruption to shipments, largely because most of its 2025 allocation has already been sold. Any impact from the CMRG curbs is likely to emerge only after BHP begins marketing cargoes for January delivery next month, the people said.
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