BHP Australia president Geraldine Slattery speaks on China iron ore ban and brings out price crystal ball

BHP’s Australia boss Geraldine Slattery has said the mining giant’s relationship with China is “strong” amid a rumoured ban on the company’s iron ore and revealed her price prediction for the vital commodity.

Reports emerged two weeks ago that Beijing’s state-run iron ore buyer — China Mineral Resources Group — had asked domestic traders to temporarily stop purchasing any WA cargoes from BHP amid a pricing dispute.

CMRG apparently wants BHP to provide a discount on the spot cargoes it sells to them and settle a larger chunk of the sales in Chinese Yuan instead of the US Dollar.

Many Australians are concerned the dispute could be a canary in the coal mine for the lucrative iron ore export relationship with China, which could see lower prices for the steel input flowing through to lower investor returns and government royalties.

Speaking at The West Australian’s Leadership Matters breakfast on Wednesday, Ms Slattery said the company’s relationship with its Chinese customers remained “strong” and negotiations were a “normal” annual event.

“I wouldn’t necessarily speak to commercial negotiations, I think what I can and will say is that our relationship with China in the iron ore sector is one that goes back decades and decades,” she told a packed out room at Crown.

“And indeed, we’ve got decades of strong business in front of us. Commercial negotiations are a normal part of that.

“They happen every year, and yes, there’s decent speculation in the press and often conflicting speculation, but I think the takeaway is we’ve got strong relationships with customers in China.”

Ms Slattery, who is tipped to be BHP’s next chief executive, also dusted off her iron ore price crystal ball. Australia’s most important mineral commodity remains above $US100 per tonne despite many analysts predicting it would be beneath $US80/t by now.

The Ireland-born mining industry veteran implied it was highly unlikely the price would dip below $US80/t for the foreseeable future.

“Our view on price is we see that you’ve got a price support range of about $US80 to $US100 a ton and and we say that because there’s about 10 per cent of the overall supply stack that sits between that $US80 to $US100 a ton cost of production,” Ms Slattery said.

“So we would expect to see that (supply) to come out of the market, if you see the price drop meaningfully into that range.

“If you look at the price over the last couple of years, you see that it rarely drops low, below the $US90s into the $US80s.”

BHP’s key WA iron ore division has faced unionism headwinds since the Albanese Government began to overhaul industrial relations laws in 2023.

Ms Slattery said union incursion is disrupting an industry dynamic that has worked well for decades for both employers and employees. She pointed to miners in WA being among the highest paid blue-collar workers in the world.

“Our fundamental argument is that we’re at a time where we need to invest in productivity and that that is best done where the workforce can engage directly with management.”

Embracing artificial intelligence is a major answer to Australia’s productivity problem, according to Ms Slattery.

She said historical events like the Luddites attacking mechanical booms or protests in Paris when Uber first started to enter the market were examples of misplaced anxiety about automation and technology.

“It’s important, I think, that these attitudes that they’re not allowed to prevail and to dominate here in Australia, because we miss out on opportunities,” she said.

BHP is using AI to cut the time it takes to sort through old drilling samples from hours to minutes and Ms Slattery said the miner would harness the technological tool to make its mines of the future disturb less land.

Ms Slattery is heavily rumoured to be the next in line to replace BHP’s global boss Mike Henry when he steps down from the role — presumably within the next two years.

She was tight lipped on Wednesday when asked if she harboured any ambitions for the top BHP job.