00:00It's not really clear exactly what's going on here.
00:05This story first broke yesterday evening when Bloomberg reported that the state entity that
00:11China has set up to negotiate with the big miners and exporters of iron ore had decided
00:17to put a temporary block or pause on all iron ore shipments from BHP in the midst of a very
00:24hardball negotiation over price.
00:27The broader context here is that China set up this body to try and give itself more negotiating
00:32room with these big miners to try and stabilise or drive down the price of iron ore.
00:38Clearly there have been pretty tough negotiations and the suggestion was from the initial reporting
00:43that China was taking this a step further by effectively blocking all imports in order to
00:49give itself more leverage over BHP and to eventually get its way on pricing.
00:54In the hours after that, other reports contradicting that emerged, including one from a pretty
01:00well-known analytics firm that provides information on commodities saying that they'd been in touch
01:06with the Chinese government and that the rumour about the block, as they put it, was not true.
01:11So at this point in time it's simply not clear exactly what's going on, whether this has been
01:15trailed deliberately as a bit of misinformation, whether there's a misunderstanding or whether
01:20there is in fact a block on iron ore imports from BHP to China.
01:27It's a very murky picture indeed.
01:29Despite all of those uncertainties, the Prime Minister didn't hesitate to weigh in and express
01:34quite a level of concern over what's going on.
01:37He suggested that this might be a negotiating tactic that was being done in the midst of discussions
01:43over price to try and put a bit of pressure on BHP.
01:46He said that he wanted to see the market rather than governments or others decide what the
01:51price for iron ore should be.
01:53And he said that he wanted it to be resolved quickly.
01:56He even mentioned in passing indirectly China's recent campaign against China, against Australia
02:03of economic coercion under the Morrison government, although he didn't in any way directly compare
02:07the two.
02:08The message from the Prime Minister seemed to be very clear.
02:11He was unhappy about exactly what's happening and he wanted it resolved as quickly as possible.
02:16Let's take a listen to what he had to say.
02:19I am concerned about that and what we want to make sure is that markets operate properly.
02:27And, of course, we have seen those issues in the past.
02:32I want to see Australian iron ore be able to be exported into China without hindrance.
02:40That is important.
02:42It makes a major contribution to China's economy but also to Australia's.
02:46These measures are always disappointing but let's hope certainly that they are very much
02:52short term.
02:54Sometimes when people are negotiating over price, sometimes these things will occur.
03:00But I want to see this resolved quickly.
03:02Analysts in the market say that maybe because the assessment that shareholders and others are
03:07taking is simply that this is probably, if anything, a bluff from China and from its state
03:13entity.
03:14In the end, they say there isn't a ready replacement for the high quality iron ore that BHP supplies.
03:20They could turn to other providers including Australian providers and overseas providers
03:23for a short while.
03:25But to get it at that volume, they are probably inevitably going to have to turn back to BHP.
03:30So the market doesn't seem too phased by this but of course now the Prime Minister
03:33has weighed in.
03:34It does have a slightly more political hue potentially which could have unpredictable consequences.
03:39So we'll simply have to wait and see exactly how this plays out.
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