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(Bloomberg) — Fortescue Ltd. said actions by China’s state-backed iron ore buyer were undermining the market, prompting the miner to explore alternative customers to reduce the impact of the dispute.
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“We want just a fair market practice,” Gus Pichot, chief executive officer for growth and energy at Fortescue, said on a call with analysts Friday, adding that China Mineral Resources Group Co. was “undermining the stable supply of iron ore to China.”
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The standoff has become one of the clearest tests yet of Beijing’s push to gain greater leverage over iron ore trade through CMRG. Any prolonged disruption could reshape trade flows in a market where China buys about three-quarters of the world’s seaborne iron ore.
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China remained Fortescue’s largest market, but the company was continuing to sell through multiple channels while exploring additional demand in Southeast Asia and India, Pichot said.
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The comments came days after Executive Chairman Andrew Forrest urged China to “always negotiate fairly” after CMRG stepped up pressure on the Australian miner following stalled talks over a supply agreement.
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CMRG has coordinated with traders, steel mills and port operators to delay Fortescue cargoes, limit purchases of some of its products and discourage new buying, Bloomberg previously reported.
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Ongoing pressure on Chinese steelmakers has been a key factor behind the dispute, according to Fortescue. A lingering property downturn, slowing steel demand and excess supply have squeezed mill margins.
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“The whole reason why we’re having this pressure with CMRG is because of the margin squeeze on mills,” Chief Executive Officer Dino Otranto said on the call.
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Fortescue shipped 52.7 million tons of iron ore in the three months ended June 30, bringing full-year exports to 201 million tons.
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