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Commodities
OpinionComment
Dmitriy Frolovskiy
Dmitriy Frolovskiy

The View | Russia eyeing Australia’s place as China’s top iron ore supplier

  • China is searching for alternative sources to Australian iron ore, looking to India, Myanmar, Mongolia and Guinea, among others
  • Russia could be the answer given its proximity to China, its large iron ore reserves and the increasingly close political relations between the two

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BHP Billiton’s Mount Newman iron ore mine in Western Australia. China faces a difficult task in its efforts to find sources of iron ore other than Australia amid rising geopolitical tensions. Photo: AFP
Dmitriy Frolovskiy
Beijing’s quest for diversification of its iron ore supplies raises hopes in Russia. Moscow sees it as an opportunity to boost bilateral trade and hedge its exports against new Western sanctions.

China’s demand for iron ore has steadily grown in recent years. Today, it buys about 70 per cent of all seaborne iron ore and is the world’s biggest consumer of the commodity. Most of its supplies come from abroad, predominantly from Brazil and Australia.

By various estimates, about 60 per cent of China’s iron ore is imported from Australia. Domestic production makes up less than 20 per cent of local needs.

Geopolitical tensions and trade wars with the United States have raised concerns in Beijing regarding its reliance on foreign supplies of iron ore, especially from countries such as Australia. China might bear the biggest brunt as more countries plan to shift away from globalisation.

Furthermore, there is the risk Beijing might find itself isolated from major markets amid disrupted supply chains and the growing prospect of confrontation with the West.

The threat of disruption to international shipping routes such as the Strait of Malacca in case of open conflict with the Western world elevate the importance of countries that are geographically close to China. Russia can be a reliable resource supplier thanks to their shared land border and resilient political ties.

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