Prime Minister ‘concerned’ by reports of Chinese ban on BHP iron ore imports

ABC NEWS (Australia)

The Prime Minister admits to being concerned by China pausing iron ore shipments from mining giant BHP. There are contradictory reports swirling about whether China has imposed the temporary ban.

Transcript

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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