Australian miners locked out of Chinese iron ore market

Australia’s largest mining companies BHP Billiton and Rio Tinto have been barred from selling iron ore on China’s daily spot market, a report said Tuesday.

The Sydney Morning Herald reported that the lockout was being managed by industry arms of the Chinese government and had already cost the miners millions of dollars in exports.

“Neither BHP Billiton nor Rio Tinto have been able to send a single spot shipment into China since January 1,” the newspaper said, quoting an unnamed executive from one of the companies.

“Each time we sign a deal with a Chinese mill they get rejected.”

The article said other companies, including Australia’s OneSteel Ltd. and others from India and Iran, continued to sell into the spot market.

The newspaper said China’s steel association denied any official government directive to ban the miners and said that the Chinese companies were operating on their own accord.

The development comes as China’s huge demand for raw materials, which has fuelled Australia’s resources boom, has made the Asian powerhouse the nation’s number one trading partner.

But China has concerns about the power of BHP Billiton and Rio Tinto, the world’s largest and third largest miners respectively, in setting iron ore prices, particularly given BHP’s desire to merge with its smaller rival.

It is understood that the Australian miners sell iron ore on the spot market at about double the price for long-term contracts.