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China-Australia relations
EconomyChina Economy

China-Australia relations: iron ore demand powers ahead as Fortescue secures US$4 billion in deals

  • Australian-listed miner Fortescue Metals Group signed 12 memorandums of understanding (MOUs) at the China International Import Expo (CIIE)
  • China buys just over 80 per cent of Australia’s iron ore, while Australian iron ore makes up 60 per cent of China’s supply

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China buys just over 80 per cent of Australia’s iron ore, while Australian iron ore makes up 60 per cent of China’s supply. The value of that supply is likely to hit A$80 billion (US$58 billion) in 2020. Photo: Reuters
Su-Lin Tan

Australian iron ore mining giant Fortescue Metals Group secured some US$4 billion in iron ore deals at the China International Import Expo (CIIE) in Shanghai as Australia’s most important export continues to withstand rising tensions with China amid proposed bans on a number of other Australian products.

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The Australian-listed miner signed 12 memorandums of understanding (MOUs) for the purchase of its iron ore with major Chinese steel mills, procurement partners and financial institutions on Monday, the penultimate day of the third CIIE, after hosting two days of events at the expo.

It reaffirmed its deals with long-term partner and major shareholder Hunan Valin Iron & Steel Group in Changsha, Hunan province, for the supply of iron ore and its “strategic cooperation” relationship with the Bank of China, while also striking nine new agreements with future buyers including Baotou Iron & Steel, Benxi I&S Group International Economic & Trading and Lingyuan Iron and Steel.

China’s steel industry continues to outperform expectations … the strength in demand for iron ore continues to play an important role in Australia’s economy, growth and development
Elizabeth Gaines
“Fortescue’s success and that of the Australian economy has been built on the great powerhouse that is China. Now, more than ever, these strong trade relationships provide economic stability as we work together to build new opportunities for the future,” Fortescue CEO Elizabeth Gaines said in a statement.

“China’s steel industry continues to outperform expectations … the strength in demand for iron ore continues to play an important role in Australia’s economy, growth and development.”

China buys just over 80 per cent of Australia’s iron ore, while Australian iron ore makes up 60 per cent of China’s supply. The value of that supply is likely to hit A$80 billion (US$58 billion) in 2020.

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The deals come as Australia guards against the proposed suspension of a series of export products – including barley, coal, lobster, wine, copper, sugar and timber – with early indications that shipments of lobsters continue to be delayed at various Chinese ports.
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