Melbourne: BHP Group has accepted lower prices for some iron ore sales while it negotiates a 2026 supply deal with China, it said on Tuesday, as it reported record first-half production of the key steelmaking ingredient. The Melbourne-headquartered miner also flagged a 20% jump in costs for its Jansen potash project in Canada.
BHP is hammering out annual contract terms with state iron ore buyer China Mineral Resources Group (CMRG). It flagged it is looking to sell more of its products in other markets. “During negotiations, we continue to optimise product placement distribution channels and take actions within our operations to preserve operational flexibility and productivity,” BHP said in a statement. “This has seen some impact to realised price.”
The statement is a rare acknowledgement from the world’s biggest listed miner about the impact of its protracted negotiations with CMRG, which has been trying to extract better terms for Chinese steelmakers, in an unfolding scenario that will be closely watched by its peers. While BHP has been raising its production of copper, iron ore is still its biggest profit generator.
Since September, China’s state-owned iron ore buyer has ordered steel mills and traders to stop purchasing multiple types of BHP iron ore, sources have told. RBC Capital Markets analyst Kaan Peker said CMRG’s restrictions on purchases by Chinese steelmakers were likely to tighten spot market availability and support the headline index price, offsetting the higher discounts BHP was facing. BHP shares were down 2% on Tuesday amid weakness in the broader mining sector.
