China's state-owned China Mineral Resources Group (CMRG) has reportedly instructed some domestic steel mills to suspend negotiations with Australian miner Rio Tinto over iron ore shipments from September, according to a Reuters report citing sources familiar with the matter. The move marks the latest escalation in CMRG's campaign to strengthen its bargaining position during annual supply contract negotiations with the world's largest iron ore producers.
Under the annual contracting process, miners and steelmakers normally negotiate shipment volumes, cargo allocations and delivery schedules for the coming year. However, according to the sources, CMRG has asked certain mills not to finalize these arrangements with Rio Tinto. Wood Mackenzie estimates that CMRG now negotiates on behalf of more than half of China's annual iron ore import volumes.
Strategy aims to centralize China's iron ore procurement
Market participants said the strategy is intended to encourage steel mills that still retain their own negotiation rights to transfer those rights to CMRG, allowing the state-owned buyer to increase its procurement volume and strengthen its negotiating leverage with major global miners.
Following the reports, iron ore futures climbed sharply. The most active contract on China's Dalian Commodity Exchange rose 2.57 percent to RMB 719/mt ($106.54/mt), while the benchmark September contract on the Singapore Exchange increased 2.15 percent to $96.45/mt.
Pressure expands to all major Australian iron ore suppliers
CMRG has already applied similar pressure to Australia's other major iron ore producers, including BHP, Fortescue and privately owned Hancock Prospecting. Australia supplies more than half of China's imported iron ore, making it by far the country's largest supplier of the key steelmaking raw material.
Rio Tinto had previously been viewed as relatively insulated from such pressure because its largest shareholder is China's state-owned Chinalco, which is also Rio's partner in the Simandou iron ore project in Guinea. Nevertheless, Rio Tinto Iron Ore Chief Executive Matthew Holcz recently acknowledged that growing global iron ore supply has shifted negotiating leverage away from producers. While noting that tensions between buyers and sellers are inevitable, he said the company remains focused on maintaining long-term partnerships and mutually beneficial outcomes.
Australian miners seek government support
BHP previously faced gradual purchasing restrictions on some of its iron ore products during late 2025 and early 2026 while annual contract negotiations were underway. Those restrictions were lifted after a visit to China by then incoming CEO Brandon Craig. Fortescue, meanwhile, said last week that CMRG's actions risk undermining the stability of China's iron ore supply.
Australia's major mining companies and industry organizations have sought support from the Australian government to counter Beijing's increasingly coordinated purchasing strategy, including discussions on establishing a single selling desk for Australian iron ore exports. However, some miners believe Canberra is unlikely to take aggressive action as it continues efforts to rebuild diplomatic and trade relations with China following the unofficial trade restrictions imposed on several Australian exports between 2020 and 2023.
