China’s state-owned China Mineral Resources Group and Rio Tinto have signed a multi-year iron ore supply agreement. The contract covers the period from November of this year to May 2028. The deal is another step in a series of agreements the Chinese buyer has struck with the world’s leading producers.
CMRG was created in 2022 to consolidate purchasing by Chinese steelmakers and strengthen their negotiating position with major suppliers. Since then, the company has rapidly increased its influence on the global iron ore market.
The negotiations were not easy. In September, CMRG advised a number of mills to refrain from buying Pilbara Blend ore when discussions of the contract with Rio Tinto reached a critical point. In the end, the parties still reached a long-term agreement.
China is the world’s largest importer of iron ore, and it receives most of its cargoes from Australia and Brazil. Prices for the raw material have fallen by about 15% since the start of the year and recently dropped below $90 per tonne in Singapore. On Thursday, futures lost as much as 1.7% to $89.45 before recovering part of the decline.
In a comment to Bloomberg, Rio Tinto described its relationships with Chinese customers as longstanding and successful, declining to discuss commercial details. CMRG did not immediately respond to a request for comment.
For Rio Tinto’s competitors, negotiations with the Chinese buyer proved harder. BHP held out for months before signing a one-year contract through June 2027 with broader use of yuan settlement. Fortescue is continuing talks and this week warned that restrictions on sales could hit annual profit. Kumba Iron Ore, linked to Anglo American, has also signed an agreement with CMRG: the contract runs from April through March 2027.
The Rio Tinto deal shows that the Chinese buyer is becoming an increasingly influential player in the iron ore market. For producers, this means not only guaranteed sales but also new trading conditions, including yuan settlement and tougher negotiating procedures.
Source: MINING.COM
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