China’s State buyer seeks scrutiny of new Fortescue iron-ore
China’s State-backed iron-ore buyer China Mineral Resources Group (CMRG) has instructed some steel mills to ask questions about Fortescue's new low-grade product as negotiations over a long-term supply contract hit a rough patch.
CMRG has asked steelmakers with significant exposure to Fortescue ore to check with the miner about quality, according to people familiar with the matter. The low-grade product, known as Fortune Fines, has yet to be shipped.
Talks over a long-term contract have not progressed as smoothly as expected, despite fellow miner BHP Group reaching a settlement with CMRG earlier this year, said the people, who asked not to be named discussing private matters. They cautioned, however, that disputes over quality and marketing are relatively common when new ore products are introduced.
A Fortescue spokesperson said it continues to engage with CMRG, while declining to comment further on confidential commercial discussions. CMRG couldn’t immediately comment.
The Australian miner was expected to finalize a long-term agreement with CMRG in the coming months, with existing short-term arrangements extended while negotiations continue. Any escalation in tensions over Fortune Fines, which has 55% iron content, could complicate efforts to reach a final deal.
The move marks the latest attempt by CMRG to shift bargaining power in iron ore negotiations away from the major global miners. BHP was locked in a months-long standoff with the group before reaching an agreement in April that runs through June 2027 and includes some yuan-denominated pricing indexes.
Fortescue, the world’s fourth-biggest iron-ore producer, has sought to strengthen its position in China this year, beefing up its senior leadership presence in the country and highlighting its investments there. Executive chairperson Andrew Forrest has nevertheless criticized CMRG’s efforts, warning that the group was attempting to create a “cartel.”
