China’s government-backed iron ore purchasing body has directed some of the country’s steel mills to refuse deliveries of specific iron ore products from Australian mining company Fortescue, according to industry insiders familiar with the situation.
China Mineral Resources Group, known as CMRG, verbally informed certain mills that beginning July 15, they are prohibited from accepting portside shipments of two Fortescue products — Super Special Fines and Fortune Fines — both of which are considered lower-grade iron ore. Five sources with knowledge of the situation confirmed the directive, all of whom requested anonymity due to the sensitive nature of the matter.
Fortescue declined to offer any comment on the situation. Despite the news, Fortescue’s share price remained essentially unchanged as of 12:57 GMT Thursday, while shares of competing miners BHP and Rio Tinto each dropped more than one percent.
The action represents an escalation of CMRG’s broader effort to tighten its grip on how iron ore flows into the Chinese marketplace. A similar standoff with BHP stretched on for months before concluding in April, when Beijing lifted restrictions on several of that company’s products after supply contract negotiations wrapped up.
Fortescue sends the majority of its iron ore exports to China and is currently in the middle of supply negotiations with CMRG. CMRG did not respond to requests for comment made outside of business hours on Wednesday.
According to a separate anonymous trader, stockpiles of Fortescue’s Super Special Fines sitting at major Chinese ports totaled 7.22 million tons as of June 30. Based on data from the consulting firm Steelhome, Reuters calculated that figure represents close to five percent of all iron ore held at Chinese ports.
The friction between the two parties has been building for some time. Last month, CMRG told some Chinese steelmakers not to hold any discussions with Fortescue regarding a new product called Fortune Fines, which was set to begin shipping in July.
Adding to the turbulence, Fortescue’s China president stepped down in June after only four months in the role — a departure the company confirmed last week.
CMRG was created in 2022 as part of a Chinese government initiative to consolidate iron ore purchasing and gain stronger bargaining power against major global mining companies.
