Australian Iron Ore: Government eyes special dispensation for mining companies to protect against China
The Albanese Government is exploring an unprecedented move to protect Australia’s economy from China’s increasingly aggressive trade strategy.
Canberra is secretly planning to let Australia’s iron ore miners form a cartel to protect themselves — and government royalty and tax revenue — from China’s increasingly aggressive trade tactics.
The Albanese Government is investigating ways to give the miners special dispensation from antitrust laws so they can negotiate prices as a bloc.
The unprecedented move is in response to the formation of the China Minerals Resources Group — a Beijing-owned centralised buying agent acting for many of the country’s steel mills.
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By continuing you agree to our Terms and Privacy Policy.The CMRG was created in 2022 with the express aim of driving down the price of iron ore, a commodity which bankrolls Australia.
Iron ore exports underpin more than 40,000 jobs and account for the lion’s share of the $60 billion in royalties and taxes generated each year by the mining industry.
Chinese trade officials believe Australia’s miners are price gouging. They have juxtaposed the profit margins enjoyed by the likes of BHP and Rio Tinto with what they claim are meagre returns by steel mills.
Canberra fears the CMRG will continue to grow in size to the point it can overpower the forces of supply and demand and dictate prices arbitrarily.
Federal Resources Minister Madeleine King declined to comment on specifics but said the Government would “always act in the best interests of the Australian people.”
“This is a long-term relationship of mutual benefit to both Australia and China and has predominantly remained within commercial arrangements as part of a transparent, market-based system,” she said.
“It is in the best interests of all parties that it remains so. The Australian Government is aware of growing concerns and will continue to monitor this matter.”
The iron ore companies, and the Chamber of Minerals and Energy WA, declined to comment on Canberra’s plan.
The Middle Kingdom’s commitment to lowering ore prices, which are hovering around $US100 a tonne, was on show four years ago when representatives from Australia’s five iron ore miners were invited to China for a special presentation.
“We’re invited to this hall like this, 10 seats on the table, five for the iron ore miners, five for the steel mills,” Fortescue Metals chief executive Dino Otranto recounted at a recent business event.
“Up pops a schematic of the profit margins of all 10 of us . . . the contrast was stark: 70 to 80 per cent profit margins on one side, which was us, minus margins on the other side.
“Then the CMRG concept was wheeled out, and the title of the slide was ‘shared prosperity’, and everybody started clapping and the dragons came out and we all looked at each other and thought ‘it’s on’.
