On September 30, 2025, China Mineral Resources Group (CMRG) issued an urgent directive to domestic iron and steel enterprises and traders: a comprehensive suspension of purchases of all BHP Billiton (BHP) seaborne iron ore cargoes denominated in US dollars, involving coercive measures such as the suspension of new contract signings and the interception of in-transit shipped goods.
On September 30, 2025, China Mineral Resources Group (CMRG) issued an urgent directive to domestic iron and steel enterprises and traders: a comprehensive suspension of purchases of all BHP Billiton (BHP) seaborne iron ore cargoes denominated in US dollars, involving coercive measures such as the suspension of new contract signings and the interception of in-transit shipped goods. This move sent shockwaves through the global commodity market instantly — BHP's stock price plummeted by 5% in a single day on the London Stock Exchange, with its market value evaporating by billions of US dollars. The main contract of Singapore iron ore futures saw its volatility expand to 8% on the same day, setting a record for the second-highest volatility in the year.
Australian Prime Minister Anthony Albanese responded urgently the next day, stating that China's move was "disappointing" and calling for "the resumption of negotiations as soon as possible". The Western Australian Treasury has launched an emergency assessment: 60% of the state's iron ore is exported through the Port of Hedland, and the disruption of BHP's supply may lead to a 25% reduction in local fiscal revenue.
The direct trigger for this trade disruption was the breakdown of negotiations that had lasted for a month, with the core contradictions focusing on two aspects:
The global iron ore price had dropped by 19% cumulatively in 2025, yet BHP insisted on raising the new contract price by 15% under the pretext of "expected recovery in China's demand", increasing the long-term contract price from US$95/ton to US$109.5/ton. This demand was clearly opposed by the China Iron and Steel Industry Association, which pointed out that it was "seriously divorced from the fundamentals of supply and demand" — the growth rate of domestic crude steel output slowed to 2.1%, and the iron ore inventory at 45 major ports reached 138 million tons, which could support 12 days of production demand.
For the first time, China made RMB settlement a core prerequisite for resuming purchases, requiring all new contracts to be denominated in RMB and linked to market-oriented pricing benchmarks such as the "Northern Iron Ore Index". BHP, however, insisted on maintaining the tradition of US dollar settlement, arguing that "US dollar denomination for commodities is a global industry practice" and refusing any adjustments to the currency settlement method. This confrontation in positions deadlocked the negotiations, eventually triggering China's tough countermeasures.
It is worth noting that this purchase suspension was characterized by precision: it only targeted BHP's US dollar orders, while spot transactions with other Australian mining companies such as Rio Tinto and FMG, as well as those denominated in RMB, continued normally. This demonstrated China's ability to control the market rhythm.
This proactive move was not an impromptu decision but a concentrated manifestation of China's long-term layout in the field of resource security:
The establishment of China Mineral Resources Group in 2022 put an end to the history of "decentralized procurement" by domestic enterprises. In 2025, it coordinated the import demand of 743 million tons of Australian ore and gained bulk bargaining power through the "group purchasing model", completely changing the weak situation where China was passively exposed to information leaks in the 2009 Rio Tinto spy case.
China has reduced its dependence on Australian ore from 62% in 2020 to less than 50% in 2025: Brazilian Carajas fine ore has urgently filled the gap in high-grade ore; Russia's railway exports to China increased by 22% year-on-year, with half of them settled in RMB; the Simandou project in Guinea will be put into operation by the end of 2025, with an annual production capacity of 120 million tons, which can directly fill the supply gap left by BHP, and its ore grade of 66% is even better than that of Australian ore.
In 2025, the proportion of domestic scrap steel recycling rose to 25%, with a utilization rate of 85%, which is equivalent to a yearly reduction of 120 million tons in iron ore demand. The expansion of electric furnace steel production capacity has further reduced the external dependence on resources.
This game has gone beyond a simple trade friction and triggered a profound transformation in the global resource pattern:
The proportion of RMB settlement in iron ore trade has risen from 5% in 2023 to 25% in 2025. If this proportion reaches 30%, China can reduce its annual foreign exchange losses by 20 billion US dollars. BHP has been forced to convert all its spot transactions with China to RMB settlement, and Rio Tinto and FMG are accelerating the follow-up negotiations, forming a demonstration effect of "resource - currency" binding.
Iron ore accounts for 20% of Australia's export volume, and 80% of it relies on the Chinese market. BHP's exports to China exceeded 120 billion Australian dollars in 2024, and its market share may drop from the current 15% - 18% to less than 10%. The mining industry in Western Australia directly employs 45,000 people, and the disruption of supply will trigger a chain reaction in employment.
The "Northern Iron Ore Index" promoted by China to replace the Platts Index has broken the quotation mechanism dominated by mining companies. Morgan Stanley predicts that by 2030, the proportion of RMB used in commodity trade will reach 25%, and the contribution rate of the steel industry chain will exceed 40%.
As of October 14, BHP has resumed consultations with China and initially accepted the "mixed settlement" plan: all spot transactions in the fourth quarter of 2025 will be settled in RMB, and long-term contracts will introduce market-oriented index references, but the demand for price increases remains uncompromised. China Mineral Resources Group stated that "RMB settlement and reasonable pricing are unshakable prerequisites for resuming purchases". Domestic steel mills, on the other hand, have maintained stable production through port inventories and alternative ore sources, and no risk of raw material supply disruption has occurred.
This contest over iron ore is essentially a key practice for the world's largest buyer to convert its market volume into the right to formulate rules. Its outcome will profoundly affect the currency choices and pricing logic of global commodity trade in the future.
