Australia watches companies negotiate with China over iron ore

Government officials concerned about potential impact of price on federal budget

Australia is closely monitoring negotiations between major iron ore producers and Chinese state-owned buyer China Minerals Resources Group (CMRG) due to the potential impact of lower prices for this raw material on the federal budget. This was stated by the country’s Minister of Natural Resources, Madeleine King, according to Reuters.

«Iron ore is the backbone of the economy, and exports from the region are very important to the Australian community and, of course, to the federal budget,» she said.

CMRG is seeking to secure better terms for Chinese steel mills in the seaborne iron ore market by employing increasingly aggressive tactics against large companies. Since September last year, China Minerals Resources Group has banned steelmakers from purchasing certain grades of iron ore from BHP while negotiations for 2026 supplies are ongoing.

Australia accounts for about half of the world’s seaborne iron ore exports. This raw material is the country’s most profitable export, and taxes from large mining companies have a significant impact on federal revenues.

According to estimates by the Australian Treasury, the agency notes that a $10 fluctuation in the price of this raw material will affect tax revenues by 500 million Australian dollars ($350 million) in the 2025/2026 financial year.

BHP CEO Mike Henry said at the BMO conference in Miami that in previous years, the company had been able to reach agreement with the CMRG on annual supply terms despite difficult negotiations. However, this year, the parties’ views differ slightly. He expressed confidence that BHP would go all the way to resolve the issue, but it would take a little longer and the process would be more public than in the past.

As previously reported, BHP is looking for alternative buyers for ore amid a contract dispute with China. In December 2025 and January this year, the company shipped batches of Jimblebar iron ore, banned from sale in China, to Malaysia and Vietnam.