Fortescue’s Andrew Forrest blasts ‘cartel’ iron ore price tactics of China Mineral Resources Group

Fortescue founder Andrew Forrest has publicly rebuked China’s state-run iron buyer for its tactics aimed at pushing down prices of the key commodity, the first leader among Australia’s iron ore giants to do so.

BHP has so far been the main target of China Mineral Resources Group’s squeeze on Western Australia’s lucrative iron ore arm but it was Mr Forrest who fired the first shot at the Beijing-based group.

Mr Forrest said CMRG was trying to “create a cartel” and he warned it should not “poke a bear” in regards to Australia’s economy.

“I’d say to the CMRG, step away from that gun fight, it isn’t one worth having,” Mr Forrest told Bloomberg.

“Forming a cartel to force down the iron ore price will impact an economy completely. When you threaten someone who has nothing to lose, you can get any kind of response, and all I’m saying is the iron ore price is critical to Australia’s economy.”

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 the latter has reportedly banned steel mills from buying certain types of the miner’s ore.

Rio Tinto and Fortescue appear to have escaped CMRG’s wrath so far.

Both supposedly caved to some of CMRG’s demands months ago, such as settling more transactions in Chinese renminbi instead of the US dollar and using pricing indexes that Beijing prefers.

Both also maintain deeper links with China than BHP does.

Rio’s biggest shareholder is a Chinese company, while Fortescue has taken out large loans with Chinese banks and is buying most of its new mining equipment from Chinese manufacturers.

Mr Forrest said Beijing should instead focus on working with miners who have secured a large amount of equipment and finance from its businesses — like his Fortescue.

“Go for the big dividends, which is getting the renminbi accepted as a global currency, getting trade, and getting demand for your huge manufacturing and industrial base,” Mr Forrest said.

CMRG officially cemented its status as a key part of China’s political apparatus earlier this month when it held a “first congress” meeting in Beijing to elect its inaugural trade union and financial review committees.