Australian mining company Fortescue is looking for new buyers of its iron ore in Southeast Asia and India following a dispute with China’s state-owned China Mineral Resources Group (CMRG). According to Fortescue executives, the Chinese company has been pressuring the miner and disrupting long-established trading practices.
China remains Fortescue’s largest customer, but the company says it is determined to reduce its reliance on a single market by expanding exports to other fast-growing steel-producing regions.
Gus Pichot, Fortescue’s Executive Director of Growth and Energy, said the company expects trade to be conducted under fair market conditions. According to Pichot, CMRG’s actions are undermining the stability of iron ore shipments to China.
The dispute follows unsuccessful negotiations over a new iron ore supply agreement. Earlier, Fortescue Chairman Andrew Forrest also called on the Chinese side to negotiate on fair and transparent terms.
According to the company, CMRG has been coordinating with traders, steel producers, and port operators. As a result, some Fortescue shipments have reportedly been delayed, purchases of certain iron ore grades have been reduced, and prospective buyers have been encouraged to avoid signing new supply contracts.
Fortescue believes the tensions are partly linked to the challenges facing China’s steel industry. The country’s prolonged property market downturn has weakened steel demand, while oversupply continues to squeeze profit margins for steelmakers.
Despite the dispute, Fortescue continues to export significant volumes of iron ore. During the quarter ended June 30, the company shipped 52.7 million tonnes of iron ore. Total shipments for the financial year reached 201 million tonnes.
If Fortescue succeeds in expanding sales to India and Southeast Asia, global iron ore trade flows could become more diversified. For the mining industry, this would reduce producers’ dependence on the Chinese market while intensifying competition for emerging customers.
Source: Bloomberg
Image: Fortescue Metals
