In October 2025, global commodities markets faced a significant disruption that signalled a fundamental shift in the economic relationship between Australia and China. Reports emerged that the “China Mineral Resources Group,” or CMRG, had paused purchases of iron ore from BHP Group.
This centralised, state-backed entity was established to consolidate the buying power of the world’s largest steel industry. The immediate result was a sharp sell-off in BHP shares as prices fell to AU$41.50. While diplomatic concerns arose in Canberra, the true significance of this event extends beyond daily share price fluctuations. It serves as a clear warning of a new era in resource politics.
The incident involved conflicting reports, ranging from claims of a total ban on new dollar-denominated cargoes to denials by Chinese industry analysts. It represented a calculated pressure test of the global supply chain. Trade did not stop completely, but the move demonstrated a targeted use of leverage.
This was clear when trade resumed just days later with a 170,000-metric-ton shipment of BHP ore to a Chinese trading house. The temporary halt specifically targeted BHP’s Jimblebar blend fines and showed that CMRG has the operational capability to manipulate market flows and discipline suppliers.
This disruption is part of a broader strategic movement by Beijing. The CMRG is using its buying power to erode the pricing dominance of major miners like BHP and Rio Tinto. At the same time, the accelerated development of the Simandou project in Guinea is set to achieve first production in late 2025.
This project promises to inject a massive stream of high-grade and Chinese-controlled supply into the market. The decades-long arrangement where Australian miners enjoyed unchecked pricing power is ending. The industry is transitioning into a period of managed competition where price discovery is influenced by state-directed stockpiling and centralised negotiation.
Bypassing mining titans
The creation of the “China Mineral Resources Group” in July 2022 ended the era of fragmented buying that defined the iron ore market for over a decade. Major miners previously benefited from negotiating with hundreds of individual Chinese steel mills, which allowed them to extract premium prices. The CMRG was designed to reverse this dynamic by creating a national buyers’ group to counterbalance the supply oligopoly.
In just three years, CMRG has consolidated its position and now represents over half of China’s steelmaking capacity in negotiations. This centralisation allows the entity to act as a strategic buffer for the national economy. By aggregating demand, CMRG has reduced the volatility of iron ore futures to record lows and dampened price spikes that historically transferred wealth from Chinese steelmakers to Australian shareholders.
The group’s operational footprint has expanded aggressively. By mid-2025, CMRG was managing over 40 cargoes in transit at any given time, which gave it real-time visibility over spot market liquidity. This logistical capability enables CMRG to execute a strategic inventory policy where stockpiles are accumulated during price dips and released during spikes.
This mechanism was visible throughout 2025 as a divergence emerged between falling steel output and rising iron ore imports. This paradox is explained by CMRG’s mandate to build strategic buffers rather than purchase solely for immediate consumption.
The October 2025 dispute with BHP demonstrated CMRG’s tactical sophistication. Instead of a risky blanket ban, which could disrupt Chinese supply, CMRG reportedly targeted specific products like BHP’s Jimblebar fines, which are a blend of significant but replaceable medium-grade ore. This approach allowed CMRG to signal displeasure over pricing and inflict commercial pain on BHP without jeopardising the critical flow of premium high-grade ores.
CMRG’s formation has divided suppliers. While BHP and Rio Tinto transact with the centralised Chinese entity via spot deals, Brazil’s Vale maintains direct contracts with individual mills, bypassing the collective buyer power.
This lack of a unified supplier front benefits Beijing. A key long-term CMRG goal is promoting the Renminbi’s use in commodity trade, challenging the US dollar’s global dominance through pressure to accept local currency for portside trade.
Sleeping giant wakes up in Guinea
The Simandou project in Guinea represents a massive supply-side shift. For decades, Simandou was known as a sleeping giant because it is a massive and high-grade deposit that was stranded by political instability and high infrastructure costs.
In 2025, that giant will awaken with its first production scheduled for November of that year. The project involves the construction of over 600 kilometres of heavy-haul railway and deep-water port facilities.
This infrastructure is being delivered through a co-development model involving the “Winning Consortium Simandou” and a joint venture led by Rio Tinto and Chinese state-owned enterprises. The scale of investment is huge, with Rio Tinto’s share of capital expenditure estimated at $6.2 billion. The project is designed to export up to 120 million tonnes per annum once fully operational. This volume is sufficient to displace a significant portion of high-cost supply from the seaborne market.
The strategic implication for China is vertical integration. Unlike Australian mines where China is a passive buyer, Simandou’s ownership structure ensures that Chinese steelmakers have guaranteed offtake rights and equity ownership. This effectively treats the mine as a captive domestic asset located overseas and eliminates the costs currently paid to Western miners.
The true threat of Simandou to Australian miners lies in chemistry. Australian ores like the “Pilbara Blend” have seen a gradual decline in iron content to around 60.8%, along with rising levels of impurities. In contrast, Simandou hosts reserves with an average grade of approximately 65% iron. This quality difference is becoming critical due to the decarbonisation of the global steel industry.
The transition to green steel relies on “Direct Reduced Iron technology,” which processes iron ore using hydrogen or natural gas. This technology is chemically sensitive and requires feedstock with iron grades above 67% and very low impurities.
Most Australian ores cannot meet these specifications without expensive processing. Simandou’s high-grade hematite is ready for this transition and positions it as the premium feedstock for the future low-carbon steel economy. As carbon pricing mechanisms come into force, the premium for Simandou ore is likely to widen. This could relegate Australian output to a discount tier suitable only for older blast furnaces.
This supply expansion comes as the demand landscape in China shifts. In August 2025, China imported over 105 million tons of iron ore despite domestic steel output falling by 2.8% year-to-date. Port inventories swelled to nearly 150 million tons by late 2025. This accumulation is a deliberate policy of counter-cyclical stockpiling by CMRG. This inventory overhang allows CMRG to threaten to draw down stocks rather than buy seaborne cargoes during negotiations.
Underneath this manoeuvring lies the reality of peak steel. China’s urbanisation phase is maturing, and the property sector remains in a structural slump. Steel demand is forecast to decline by 1.5% in 2025. The growth of the scrap steel industry also threatens iron ore miners. As China’s infrastructure ages, the amount of scrap steel available for recycling grows. The government has set targets for “Electric Arc Furnace” production, which uses scrap instead of iron ore, to reach 15%-20% of total output by 2030.
Rock bottom or just the pre-game?
The events of October 2025 were not an isolated anomaly but a structural turning point. They marked the public unveiling of the China Mineral Resources Group’s capability to discipline the market. The global iron ore trade is transitioning from a seller’s market dominated by the Australian oligopoly to a buyer’s market managed by a Chinese monopoly.
Major mining houses are adopting distinct strategies to survive this squeeze. BHP is aggressively pivoting its portfolio toward future-facing commodities like potash and copper. It aims to defend its iron ore margins through cost discipline rather than volume expansion.
Rio Tinto has executed a sophisticated hedge by becoming the lead developer of Simandou. This allows it to capture value from the new high-grade market segment even as it competes with its own Australian assets. Fortescue Metals Group faces the most significant challenge due to its lower-grade products and is betting heavily on green hydrogen to create a new value chain.