Rio Tinto has acknowledged China’s move to centralise iron ore purchases, but said it is not concerned by the new iron ore buyer.
With a registered capital of 20 billion yuan ($4.24 billion), China Mineral Resources Group has been established to purchase iron ore on behalf of Chinese steel producers, which has been considered an attempt to gain long-term leverage in its commercial negotiations with exporters.
Rio Tinto’s chief executive of Australia Kellie Parker said it had long-term ties with its China customers – relationships that hold the major miner in good stead.
“How the Chinese are organising themselves, they want some certainty about price and around what does that look like for them. And they’ve very exposed to that price,” Parker said at a Melbourne Mining Club luncheon on Friday.
“Of course, the short-term price hurts them, so they want some certainty as we want on our input products as well. So not concerned, but certainly working with them and would ideally love to spend more time with them when their borders open.”
The company will be headed by outgoing chair of Chinalco, the state metals giant and largest shareholder of Rio Tinto.
BHP is also unperturbed by the new company, suggesting it would instead be focused on maintaining relationships with its Chinese customers.
“Let me say upfront, at the end of the day we believe that markets will sort out where the price needs to be based on supply and demand,” Lamont said at a business forum in Melbourne in July.
“So we’re not worried about that. It’s something that’s been talked about for a period of time.
“Our key focus is the customer relationships that we have on the ground in China, which are very robust and very strong.”
According to Mysteel, the price for 62 per cent seaborne Australian iron ore fines at the port of Qingdao rose by $US3 on Monday to $US109.65 ($156.84) per dry metric tonne.