China Mineral Resources Group here to stay and set to grow as meeting brings bad news for WA’s iron ore miners

The organisation menacing the bedrock of WA’s economy has officially cemented its status as a key part of China’s political apparatus.

Iron ore procurer China Mineral Resources Group last Wednesday held a “first congress” meeting in Beijing to elect its inaugural trade union and financial review committees.

CMRG was set up in 2022 to consolidate the purchasing power of China’s steel mills, who are the main customers of WA’s iron ore miners.

The state-owned enterprise’s ultimate goal is to push iron ore’s value down. CMRG started to seriously flex its market muscle in the latter half of last year, with BHP the prime target in its cross hairs.

BHP has been embroiled in a tense stand-off with CMRG since late September and on Thursday — a day after the first congress meeting — CRMG reportedly widened its restrictions on BHP’s Pilbara ore.

“Formalising CMRG’s union and workers’ congress indicates Beijing is embedding the company more deeply into the Chinese Communist Party’s organisational architecture,” Curtin University international relations lecturer Alica Kizekova told The West Australian.

“It underscores the strategic importance of mineral security.”

Dr Kizekova said the meeting should be read as a “routine institutionalisation” of CMRG into China’s bureaucracy.

“CMRG is moving from a ‘startup’ state-owned enterprise to ‘fully institutionalised central’ state-owned enterprise,” she said.

“The creation of a worker’s congress and union committee is a standard, routine, and expected milestone in the cycle of a central state-owned enterprise.”

University of Western Australia professor of finance Raymond Da Silva Rosa said the recent meeting signalled that CMRG is here to stay and will likely have more resources allocated to it.

CMRG is actively seeking “more reasonable pricing” and “more convenient transactions” in regards to “iron ore procurement”, according to its website.

Dr Da Silva Rosa said China’s leaders had tried for a “long time” to get more leverage over Australia’s iron ore producers.

“The surprising thing is that we’ve had an oligopoly on the iron ore supply side but on the Chinese demand side they’ve always had very small steelmakers, so demand has been splintered,” he said.

“And the steelmakers are fairly competitive, so when demand goes up, even though the Chinese government try to impose a single price, they (the steelmakers) would break ranks.”

Dr Da Silva Rosa believes the huge Simandou iron ore complex in Guinea, which Chinese firms have a large stake in, is a factor behind CMRG’s recent push.

First ore from Simandou was shipped in December.

“They (China) have a big pipeline of supply coming from Simandou which will give them greater power,” Dr Da Silva Rosa said.

“So what was previously an unsuccessful strategy to consolidate the steel mills now might work because China is both a major producer as well as the major buyer.”