Fortescue calls for fair negotiations on iron ore between China and Australia

Fortescue’s Executive Chairman Andrew Forrest has called on China and Australia to always conduct negotiations in good faith, as the mining company faces pressure from the state-owned buyer China Mineral Resources Group (CMRG). This is according to Bloomberg.

China accounts for the vast majority of Australia’s iron ore exports, making the dispute a test of Beijing’s influence over pricing and procurement of this raw material, the agency notes.

CMRG has stepped up pressure on Fortescue after the parties reached an impasse over a supply agreement. The state-owned buyer is coordinating its actions with traders, steel mills and port operators.

“If this trade is conducted in accordance with fair and proper market practices, it can continue and be strengthened, and also serve as an excellent example of partnership for the rest of the world in bilateral and multilateral relations,” Forrest remarked at a forum in Perth.

He added that Fortescue “has never been merely a ‘friend in good times’ for China”. In his view, both countries should maintain strong ties even when political relations are strained.

It should be recalled that in July, China Mineral Resources Group stepped up pressure on Fortescue. The parties have been unable to reach an agreement on the terms for supplying iron ore to China. In particular, CMRG asked the mining company to maintain the discounts it had been offering to certain plants, once purchases were redirected via a state-owned buyer to other consumer enterprises. Fortescue rejected the proposal.

In early July, China Mineral Resources Group informed steelworks and traders of its plans to restrict access to certain stocks of Fortescue ore held in Chinese ports — specifically the ‘Super Special Fines’ grade.