BHP confirms end to seven-month trade standoff with China Mineral Resources Group

BHP has finally confirmed an end to a tense standoff with China’s state-backed iron ore buyer, settling seven months of negotiations as the Middle Kingdom sought to shift the balance of power with WA producers

The Big Australian on Wednesday reported Pilbara iron ore production slipped in the third quarter, dragged lower by a near-halving of output from its Jimblebar operation — the same operation that had been at the centre of the protracted dispute.

Total production for the three months to the end of March was 62.8 million tonnes, down 10 per cent from the previous quarter.

BHP’s Newman, Mining Area C and Yandi joint ventures all turned out slightly improved results for the period but tonnes from Jimblebar plunged from 19.3mt in the last three months of 2025 to just 10.9mt in the third quarter.

The China Mineral Resources Group last year banned steel mills from purchasing its Jimblebar Fines blend as it sought better terms, including price discounts and settling more sales in Chinese renminbi rather than US dollars.

Steelmakers were not allowed to take delivery of those blends already unloaded at ports, and the ban was later extended to other BHP products.

CMRG, set up in 2022 to centralise iron ore procurement, had progressively tightened curbs on steel mills and traders buying up BHP’s iron ore since last September while it negotiated supply contracts for 2026.

A breakthrough in the high-stakes feud came last week after incoming chief executive Brandon Craig travelled to Shanghai to discuss industry challenges and strategic co-operation.

The ban was reportedly lifted shortly after and ship-tracking data later showed two vessels carrying Jimblebar Fines were headed to China.

BHP, which has repeatedly refused to comment while the talks were ongoing, made little mention of the standoff in its third-quarter update, saying only “we have concluded iron ore sales contract negotiations with the China Mineral Resources Group”.

Terms that broke the deadlock, including pricing mechanisms and contract duration, were not disclosed.

Despite the slip in third-quarter production, year-to-date output was up 2 per cent to 197mt compared to the same period a year ago as South Flank ran at above annualised nameplate capacity.

BHP said it was keeping full-year guidance unchanged at between 258mt and 269mt.

Elsewhere across BHP’s diversified commodities portfolio, copper production dropped 3 per cent for the third quarter — compared to the same time last year — primarily due to planned lower concentrator feed grade at its Escondida mine in Chile.

That was partially offset by a better performance from its operations in South Australia, where production rose 3 per cent.

The miner said it now expects full-year guidance to be in the upper half of its range of between 1.9mt and 2mt.

Like rival Rio Tinto, BHP is chasing more from its copper assets as demand for the red metal, crucial for electrification, soars as the world decarbonises and billions of dollars are invested in data centres.

“We continue to make steady progress across our copper growth program, consistent with our focus on long-life, high-quality copper supply and disciplined capital allocation,” BHP said.

“During the quarter we submitted a permit application for Escondida’s new concentrator, and Resolution Copper achieved a key milestone, allowing the project to progress drilling required to complete its mine design and feasibility study.”

The company is also set to enter the market for potash — a mineral used in fertilisers — with its Jansen mine in Canada to come online next calendar year. Stage one of Jansen is 78 per cent complete, but a second expansion project is under review after a series of cost blowouts.

The miner shrugged off major concerns about the fallout from a global fuel crisis sparked by war in the Middle East, saying its “centralised procurement capability and our low-cost operations have positioned us advantageously in the face of industry wide pressure on the cost of energy and consumables”.