BHP Plays Down Iron Ore Dispute With China as Talks Continue

Bloomberg

(Bloomberg) -- BHP Group Chair Ross McEwan said the mining giant remained in commercial negotiations with China’s state-run iron ore buyer, noting that previous talks had taken as long as six months.

“We’ve had relationships in China now for decades and we have a pretty good working relationship,” McEwan said at the company’s annual meeting in Melbourne on Thursday, responding to a shareholder’s question. “But this is a commercial negotiation that is going on, as it does every year.”

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China is the largest iron ore consumer, while BHP is one of a handful of major suppliers that provide the bulk of the material to the country’s steelmakers. Bloomberg News reported in late September that China Mineral Resources Group Co. had asked major domestic buyers, including mills and state-owned trading houses, to suspend purchases of new dollar-denominated seaborne cargoes from BHP. McEwan didn’t address the disruption directly on Thursday.

In a media conference after the meeting, McEwan said that some of BHP’s previous negotiations with China had taken as long as six months.

McEwan and Chief Executive Officer Mike Henry also addressed speculation on miners accepting more sales priced in the yuan. The chair said that less than 10% of sales are in a currency other than the US dollar, while Henry added that BHP already conducted transactions in the Chinese currency for so-called portside sales, as is standard industry practice.

“It’s quite sensible that we, as BHP, have imported iron ore into China and we’re selling it to our steel mill customers from portside,” Henry said. “Those sales will be in denominated RMB,” he added, using the initials for the renminbi, as the local currency is known.

(Updates with comments on yuan in final two paragraphs.)

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