China's
government has formally established a new minerals giant that aims to give
Chinese steel producers more bargaining power over prices for Australia's most
important export iron ore. The organisation will reportedly be headed by
a team of heavyweights from China's steel and aluminium sector
·
The creation of the group is seen as
an attempt to gain long-term leverage in price negotiations with
Australian exporters
·
Australian industry insiders do not
expect much change in fundamental industry practices
The
move, first touted by the steel industry earlier this year, comes
as speculation mounts that Beijing will soon back down on its unofficial ban on
Australia's coal exports, which could reopen trade worth almost $14 billion
a year at its peak.
The
ban on coal was imposed in 2020 as Beijing stepped up pressure in a diplomatic
dispute, but China's heavy reliance on Australia for iron ore — the
key ingredient in steelmaking — meant those exports remained unaffected.
And
last year as prices spiked, Chinese steel producers paid more than $130 billion
— a record — to Australian miners, entrenching iron ore as Australia's most
lucrative export by a wide margin.
Prices
have since slumped, but customer concerns they could rise again appears to be
driving the formation of what some commentators dub a new Chinese iron ore
cartel.
Chinese
state media outlets this week reported the registration of the China Mineral
Resources Group, headed by a management team of heavyweights from the country's
steel and aluminium sector.