Prime Minister ‘concerned’ by report of Chinese ban on BHP iron ore import

ABC NEWS (Australia)

The Prime Minister admits he's "concerned" by suggestions China has paused iron ore shipments from mining giant, BHP. There are contradictory reports swirling about whether China has imposed a temporary ban. Anthony Albanese says he wants the issue resolved "quickly" while the premier of Western Australia says China is engaging in "gamesmanship"

Transcript

00:00This first kicked off last night when there was a report out from Bloomberg citing people

00:07familiar with discussions saying that there was a decision made by China's state-owned

00:12buyer for iron ore to basically no longer buy any iron ore shipments from BHP.

00:20That was followed a few hours later by a report basically stating the direct opposite from

00:25a Chinese commodities market analysis website basically saying they checked in with the

00:30relevant authorities and they said there was no such ban.

00:34We've tried to get clarity today both through the state-owned entity that's responsible

00:38for these decisions and China's foreign ministry as well as its Ministry of Commerce and we

00:43have not got any clarity and it seems at least to a degree like the Australian government

00:49is also struggling to get absolute clarity about exactly what's going on.

00:53For its part BHP has declined to comment saying it doesn't want to talk about commercial negotiations.

01:00So it's hard to be really definitive about much at the moment Joe.

01:03It does seem like there is some fire behind the smoke because an awful lot of people including

01:08in the government are worried that at the very least the prospect of a ban is being used

01:13by China to try and drive down the price.

01:16But as of this stage we have no formal confirmation or announcement that any such ban has been put

01:21in place. And talking of people in government what's the PM had to say about it?

01:25Yeah well the Prime Minister is obviously concerned and he made that clear this morning despite

01:30the lack of clarity around exactly what's going on.

01:33He said that he was aware of what was happening and he said it was a cause of concern and also

01:38disappointing. He suggested and he's not alone in this assessment that this might be a tactic

01:44that was being employed by China state-owned entities to try and put pressure on BHP to

01:50try to force them to drop the price. And the Prime Minister basically said that he didn't

01:56want to see commercial negotiations or discussions on a commercial basis in any way meddled with.

02:03Let's take a listen to what he had to say.

02:05I am concerned about that and what we want to make sure is that markets operate properly.

02:14And of course we have seen those issues in the past. I want to see Australian iron ore be

02:22able to be exported into China without hindrance. That is important. It makes a major contribution

02:30to China's economy but also to Australia's. These measures are always disappointing but

02:35let's hope certainly that they are very much short term. Sometimes when people are negotiating

02:42over price sometimes these things will occur. But I want to see this resolved quickly.

02:50Now WA's Premier Roger Cook unsurprisingly was also asked about this. This is of course a

02:56hugely consequential question for WA's economy which remains deeply reliant on exports of

03:02commodities including iron ore. The Premier when he was pressed about whether the ban did

03:07exist gave an interesting answer. He said no. He didn't think there was a ban. But then

03:12he also said that he believed the Chinese side was engaged in some sort of gamesmanship.

03:18In other words he was suggesting that perhaps China again was using the prospect or the threat

03:23of a ban to drive down the price. Let's take a listen to what Roger Cook had to say.

03:28Now look I had a briefing from Tim Day, the head of BHP, earlier in the week in Japan.

03:34He's saying the negotiations are tough. They are subject to a certain amount of strategic

03:41gamesmanship for want of a better description. But I'm confident they'll reach an agreement.

03:46And Stephen, how's BHP's share price gone today and what happens next?

03:51Look it wasn't cataclysmic today for BHP but it did take a hit down some 2% on the market.

03:58That's not a pleasant result, though not a disastrous one. I think what it speaks to is a level of concern

04:03and uncertainty. Interestingly it started off with a smaller fall before getting worse.

04:08Perhaps that just speaks to the fact that there was initially a sense of confidence and then

04:12perhaps over the day that deteriorated slightly. The long term position is probably a fairly

04:17confident one still because it's not easy for China to find a replacement for the quality

04:22and sheer scale of the iron ore that's provided by BHP. They could turn to other Australian suppliers

04:29or some offshore for a short time but finding a long term replacement at this point is probably

04:35impossible. So that might explain the underpinning confidence. Still it's a fluid situation and what

04:41it probably speaks to is an ongoing determination by China to use the new structure that it's

04:46had in place for centralised buying, it's had this for three or four years now, to try

04:51and give itself more leverage over the big miners, to try and stabilise or even force down

04:56the price. It wants to take iron ore from Australia but increasingly it wants to do it on its terms

05:02rather than on the terms of the big miners. And it looks increasingly like it's willing to resort

05:07to, at least in some instances, increasingly hardball tactics in order to get that.

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