China Requires Thorough Analysis of New Iron Ore Batch from Fortescue

The Chinese state company China Mineral Resources Group Co. (CMRG) has instructed certain steel mills that consume significant volumes of raw materials from the Australian Fortescue to approach the supplier with inquiries regarding its new low-grade product, Fortune Fines (with an iron content of 55%), reports agronews.ua.

The reason for these actions is that negotiations between Fortescue and CMRG regarding a long-term supply contract have reached an impasse, despite expectations that they would proceed without complications. This step is yet another attempt by CMRG to strengthen its position in negotiations concerning iron ore trade with the largest global mining corporations.

It is worth noting that in April, another industrial giant, BHP Group, after months of confrontation, finally reached an agreement with CMRG. This agreement will be in effect until June 2027 and includes the use of certain price indices denominated in yuan.

Bloomberg sources indicate that disputes over quality and marketing are quite common when introducing new iron ore products to the market. However, against this backdrop, Fortescue's shares fell by 3.1%, hitting a low of 21.82 Australian dollars on Tuesday.

Discrepancies regarding Fortune Fines ore may complicate the achievement of a final agreement. Meanwhile, existing short-term arrangements between the parties may be extended while negotiations continue.

Fortescue, which is the fourth-largest iron ore producer in the world, has actively sought to strengthen its position in China this year. The company has expanded the presence of its senior management in the country and emphasized the importance of investments in the region. Despite this, Fortescue's CEO Andrew Forrest criticized CMRG's activities, warning that this group is effectively trying to create a “cartel.”

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